Economics - Theses
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ItemEssays on competition, product design and firm formation(University of Melbourne, 2008)
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ItemEssays in corporate governance, innovation and R&D alliances(University of Melbourne, 2008)
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ItemThe socially optimal level of education and human capital(University of Melbourne, 2008)
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ItemEssays on the economics of services outsourcing : the case of the Indian software services industry(University of Melbourne, 2007)
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ItemThe attainment and influence of skill in Australia(University of Melbourne, 2007)
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ItemEssays in public economics: The effects of major policies on old and young Australians( 2019)This thesis consists of three essays examining the causal effects of major policy changes affecting old and young Australians. In the first essay, I examine the distributional effects of a reform in 1994 that gradually increased women’s eligibility age for the retirement pension from 60 to 65. Using detailed longitudinal data, I find strong negative effects on household incomes for low to middle income households but little impact on households in the top half of the distribution. These unequal impacts meant that, among households containing older women, the reform increased relative poverty rates by 33 to 39 percent and inequality measures by 12 to 15 percent. These results demonstrate that increases in pension-eligibility ages, which are occurring in many countries as the population ages, can have strong regressive effects. In the second essay, I study the impact of the same reform on female labour force participation. Specifically, I replicate and extend the work of Atalay and Barrett (Review of Economics and Statistics 2015, 97(1): 71–87). Using repeated household surveys and a differences-in-differences design in which male cohorts form the comparison group, Atalay and Barrett estimate that the reform increased female participation rates by 12 percentage points. I successfully replicate this estimate but show, using earlier data, that the underlying parallel-trends assumption did not hold before the reform because of a strong female-specific participation trend across cohorts. Accounting for this trend, the estimated effect of the reform on female participation falls by two-thirds and becomes statistically insignificant at conventional levels. In the third essay, I focus on a policy affecting much younger adults. Specifically, I examine the effects of a road-safety restriction in New South Wales, Australia that prohibits probationary drivers from driving late at night with multiple passengers. Using linked administrative data on drivers’ licences and crashes, I estimate that the restriction caused a 57 percent reduction in late-night crashes involving probationary drivers with multiple passengers. Interestingly, the decline persists after the probation period, albeit in a weaker manner. This appears to result from a persistent reduction in late-night driving with passengers, which suggests that long-term driving habits can be shaped by such restrictions.
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ItemEmpirical studies of consumer search and market power( 2019)This thesis explores the interplay of search frictions and market power. In the first essay, we study how prices are negotiated between consumers and firms. In the electricity market that we study, with competitive retailers, fixed and variable charges vary widely across consumers. We implement an audit study to identify the sources of price dispersion. We create a call centre staffed by actors that call real call centres to obtain rates for fictitious consumers with experimentally-assigned combinations of consumer characteristics. We find that of offline search leads to larger discounts than online search. Firms reduce their profit margins by 30% for call-in consumers who are informed about and who negotiate using low reference prices. We also document cross-sectional price discrimination between new consumers in a market and existing consumers. Holding price informedness and other consumer characteristics fixed, firms are less willing to negotiate lower prices with new arrivals than with existing clients of rival firms. My second essay investigates the impact of a mandatory information disclosure policy on market competition in the retail gasoline context. Information disclosure policies enhance search and are implemented with the aims of increasing demand elasticities and creating competition. However, if price transparency also makes it easier for firms to monitor their rivals’ behaviour, this raises concerns about tacit collusion. As such, the equilibrium impact on competition depends on which effect dominates. My study shows that the price disclosure policy leads to margin-enhancing effects in small regional markets. Digging deeper, I find that these margin-enhancing effects are directly associated with an equilibrium price transition, where a dominant firm uses price leadership to communicate their intention to transit from a price cycle equilibrium to a more profitable fixed price equilibrium. This transition, which occurred immediately after the information disclosure policy was introduced, suggests that firms were potentially using the platform to coordinate with each other. The final essay investigates how consumer search on price transparency platforms varies across socio-economic groups. In recent years, there has been a push for demand-side policies that aim to help consumers, especially disadvantaged households, make more informed decisions. However, it is not well-known who these initiatives benefit most. Therefore, this essay investigates how users on a price transparency platform who belong to different socio-economic backgrounds respond to changes in price dispersion. In the context of retail gasoline, my analysis reveals heterogeneous search responses to changes in price dispersion across socio-economic groups. In particular, I find that users who get the most value from search relative to income, such as the most vulnerable households, are least engaged in search.
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ItemInput-output linkages in growth and development( 2019)Do input-output linkages impact growth and development? This dissertation provides three main chapters studying the role of input-output linkages in structural change and productivity measurement. I find that (i) input-output linkages offer a new mechanism to account for structural change, which therefore complements the structural change literature; (ii) input-output linkages affect productivity measurement, particularly impact sector-level productivity measurement. Chapter 2 presents new evidence and mechanism of input-output linkages in structural change. Sectors with a larger growth of supply (forward) linkages of intermediate inputs absorb more labor to satisfy the rising demand for inputs sourcing from the downstream sectors. Sectors with a larger growth of demand (backward) linkages of intermediate inputs displace more labor, due to the increasing reliance on inputs sourcing rather than in-house production. Manufacturing sector increasingly sources services inputs, such as business services and management services, prompting a rise of services and a decline of manufacturing. Motivated by the evidence and mechanism in Chapter 2, Chapter 3 develops a general equilibrium model and quantifies the new mechanism of input-output linkages in structural change. The model features endogenous input-output linkages, nonhomothetic constant-elasticity-of-substitution (CES) preferences and technology, and heterogeneous firms. The model is structurally calibrated to the World Input-Output Database which contains 35 major economies through 1995-2007. I find that (i) the supply-linkages effects are at least comparable to other mechanisms in the literature, such as the price effects due to the sector-biased technological change; (ii) the demand-linkages effects are less critical due to the stable use of intermediate inputs across years; (iii) about half of the structural change attributes to the rising comparative advantage for supplying intermediate inputs by the services sector relative to by the manufacturing sector. Chapter 4 studies the role of input-output linkages in productivity measurement. I construct two hypothetical economies in the model. In the input-output economy, sectors produce gross output by using both intermediate and primary inputs. In the value added economy, sectors produce value added by using only primary inputs. I compare the two economies. I find that (i) aggregate productivity is theoretically equivalent; (ii) sectoral productivity measurement are different for all sectors and countries; (iii) without taking input-output linkages into account, previous measures of productivity are biased.
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ItemEmpirical studies on firm-level productivity and innovation( 2019)In Chapter 1, I define a novel concept of low productivity spells. Instead of treating productivity as a continuous variable, I define a low-productivity state as poor productivity growth over 2 years consecutively. This provides an alternative insight into understanding firms which pose a potential drag on aggregate productivity growth. Using a competing risk framework, I find that over the course of 1991--2014, the exposure of import competition from China had a significant and negative effect on the exit from these low-productivity spells into high-productivity performance for listed firms in the U.S. On the other hand, this import exposure had no effect on the same firms shutting down. Together, these imply that the growth in import penetration from China had the effect of trapping U.S. manufacturing firms in low-productivity spells for longer. In Chapter 2, I investigate the effect of the America Invents Act (AIA) in 2011 on the patents granted by small firm compared with large firms. In first constructing my dataset, I further bootstrap the algorithm proposed by Autor, Dorn, Hanson, Pisano and Shu (2017) in merging patent data from the United States Patents and Trademarks Office USPTO with firm-level data from COMPUSTAT to better correct for false positives and true negatives, as well as enabling it to be more replicable. With a difference-in-difference framework using de-trended patenting data, I find a negative effect by the AIA on patents granted to small firms compared with large firms. However, this effect appears to be driven primarily by the amount of cash holdings firms have. A triple-difference framework which includes cash holdings finds the AIA had no significant effect on the patents granted to small firms which are cash-poor compared with large firms which are also cash-poor. In Chapter 3, I examine the effect of Chinese import competition on innovation by U.S. manufacturing firms originally investigated by Autor, Dorn, Hanson, Pisano and Shu (2017) but within a framework that differentiates this effect between small and large firms. In addition, I also measure the innovation response by firms using patents granted to them instead of their patent applications per se. With a model without heterogeneous effects, I find that the import penetration growth from China had increased innovation on average by all U.S. manufacturing firms when innovation is measured by the patents granted each firm. In a model with heterogeneous effects, I find this effect to be insignificantly different for large firms compared with small firms, and for cash-rich firms compared with cash-poor firms.
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ItemEssays in macroeconomics( 2019)This thesis studies three essays in macroeconomics. The first study evaluates the welfare effects of trade in a setting with risk averse workers and uncertainty in labour market outcomes. We provide conditions under which a small change in relative prices due to trade reduces welfare in both a static as well as a dynamic economy. Using a dynamic model we quantify the set of prices that result in a welfare loss following trade. We also examine the welfare implications of large price changes due to trade. For a realistic calibration, the gains from trade exist but are smaller than in a world with risk neutral individuals. The second study examines the labour market impacts of an extension of unemployment insurance policy. Unemployment insurance benefits are typically extended during recessions. Existing research shows that this policy increases the unemployment rate, the average duration of unemployment and the long term unemployment rate. But less is known about why these changes occur. I construct a job search model with an endogenous participation decision to quantify the contributions of (i) search effort (ii) job selectivity and (iii) labour market attachment to changes in unemployment outcomes. In a model calibrated to the US economy, I show that following a permanent extension of benefits for 10 weeks the unemployment rate increases by about 0.4 percentage points. I find that increased participation accounts for about 50% of the increase, while reduced search effort and increased selectivity each explain about 25% of the increase. This finding suggests that labour market participation is the most important margin in driving changes in the unemployment rate. In the third study, I examine the relationship between income inequality, sovereign borrowing and default decisions. To this end, I extend the traditional endogenous sovereign default framework proposed by Eaton and Gersovitz (1981) to allow for ex-ante income heterogeneity and a tax/transfer system for income redistribution across households. I show that an increase in income inequality increases incentives of a government to default. An increase in income inequality increases the need for income redistribution. A (utilitarian) government may find it optimal to default in order to transfer more resources to households for consumption. I show that, in equilibrium, in response to an increase in income inequality the government may issue less debt. In turn, the incentives to default decreases. In a simulated economy, I show that for a small increase in income inequality of about 5% relative to the equilibrium, these two forces offset each other and the probability of default remains unchanged. I find that, in a model with no income inequality, the impact of an increased debt dominates and the probability of default increases.