Three essays on applied microeconomics

This thesis consists of three essays that study three different economic phenomena. The first essay is inspired by the strikingly large number of children left behind by migrant parents in rural China. I study the effect of parental migration on the school enrolment of their left-behind children. I used a probit regression for my empirical analysis. I find evidence of a negative effect of parental migration on children’s school enrolment, and this negative effect is larger on the school enrolment of boys than on girls’. The effect of parental migration is robust to the use of instrumental variable analysis by instrumenting for parental migration status using “the number of other migrant household members”. In the second essay, I set up a theoretical model trying to investigate why villagers redistribute farmland periodically though it is against the central government’s policy, and I study the implication of this redistribution on long-run investment. I propose a limited liability model of land tenancy in an overlapping generations setting. The model implies that without soundly established insurance institutions and farmland rental market and stable off-farm job opportunities, farmland rental market and stable off-farm job opportunities, households with more children are better off under a land redistribution regime and thus favor it. In terms of long-run investment in farmland, redistribution according to demographic changes discourages long-term investment, yet redistribution based on farming failure may mitigate this negative effect. The third essay tries to analyze three aspects of organizational hierarchy: (1) generalists or specialists: which should get to the top? (2) How many agents should get to the top? (3) Can the agents who should be at the top in the optimal hierarchy really get to the top? Using a T-period model with promotion, I finds that the optimal hierarchy form depends on the size of the externality of coordinating multiple assets by generalists. The number of agents at the top depends on the elasticity of the externality of coordinating multiple assets. Finally, promotion opportunity gives agents who should at the top more incentive to exert effort, and thus are more likely to get promoted.