Three essays in applied microeconomics

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(Thesis) Ph.D.
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In chapter one, Dr. Hendrik Wolff and I examine the effect of an Alabama immigration law on documented immigrants. Alabama's 2011 immigration law (H.B. 56) specifically targets, significantly limits the economic opportunities of, and intensifies the prosecution of undocumented immigrants. Using demographic and citizenship data we test whether the law has led to an unintended reduction of the documented immigrant population of the state. Our hypothesis is that documented immigrants will choose not to locate in Alabama, due to their connections with undocumented immigrants who choose not to live in Alabama because of HB.56. Using synthetic control on data from 2006-2017, we find a significant downward effect on the percentage of the population that is foreign-born non-citizens, and no effect of the law on immigrant citizens. Using data measuring new permanent residents we see no effect on new PRs after the passage of H.B 56. This suggests that the drop in Alabama's immigrant population is likely due to the intended effect of the law discouraging undocumented immigrants from living in Alabama, and that there does not seem to be a similar effect on documented immigrants. In chapter two, Dr. Eric Werker and I estimate community benefits stemming from the signing of benefit sharing agreements associated with two mining projects. Benefit-sharing agreements determine how resource extraction companies and stakeholder communities share the economic rents created by extractive activities. Besides direct financial compensation, BSAs can include preferential access to contracting opportunities for local firms, guarantees of direct employment for local individuals, and other benefits that can be economically quantified. This paper seeks to demonstrate that BSAs can be quantitatively modeled by estimating the expected size of benefits from two BSAs: the Newmont Ahafo gold mine in Ghana, and the Baffinland iron mine in Nunavut, Canada. We compare the levels of expected BSA benefits to a counterfactual scenario in which we imagine the companies carry out their extractive activities in the absence of signing a BSA and estimate the relative contribution from each of financial transfers, jobs, and contracting opportunities. We find that in the Ahafo case the impacted community's discounted benefits from the BSA amount to 1.08\% of the estimated life-of-mine revenue and 2.10\% in the Mary River case, with the primary contributions coming from jobs and financial transfers respectively. Quantifying potential BSA benefits can have practical value for future BSA negotiations and for monitoring the implementation of agreements. In chapter three Dr. Eric Werker and I use a newly created dataset to test hypotheses about what determines the government "take" of gold mining operations worldwide. We define government take as the share of net revenue of a mine collected by the mine's host country government in taxes and other payments. We construct a theoretical model to predict the government take, and then use linear regression to test the agreement between theory and the data. Investment decision theory predicts that governments should decrease their tax rate on mining operations to compensate multinational corporate investors for increased local development costs and political risks. However, higher political risk, and local development requirements are actually associated with higher government take. We find that country-level political economy variables have more predictive power in explaining the patterns determining the government take than the basic investment theory model. We interpret this as evidence that the conventional wisdom surrounding mining investment decisions is incomplete, and that political economy channels may have a role to play in describing the underlying process of determining government take of mining projects.
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Thesis advisor: Wolff, Hendrik
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