Economics Theses and Dissertations

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Aggregate Consequences of Innovation and Informality
(University of Oregon, 2014-09-29) Schipper, Tyler; Chakraborty, Shankha
The fundamental question in development economics is what causes some countries to become more prosperous than others. The literature, starting with Hall and Jones (1999), has identified differences in total factor productivity (TFP) as being the driver of cross-country income differences. I investigate policies that may give rise to these differences in TFP. I pay particular attention to the influence of informal economies in developing countries and how macroeconomic policies can distort firm-level incentives to innovate and operate formally. To address these questions, I construct a series of macroeconomic models which have several common elements. First, I model firm-level decisions with regard to innovation. These firm-level decisions ultimately give rise to differences in productivity across countries. Second, I embrace the role of firm heterogeneity in productivity to examine the dynamics of firm choice. Finally, through the use of computational methods, I simulate these models to evaluate the macroeconomic effects of policy distortions on firm-level decision making. Subject to the common elements above, each chapter answers a specific policy question. Chapter II asks whether size-based tax distortions can generate firm-size distributions often observed in developing countries. I find that a model with innovation and firm-level heterogeneity can explain the prevalence of large firms in response to tax distortions, but additional frictions are necessary to explain the ubiquity of small firms in most developing countries. It also illustrates tax distortions may have little impact on aggregate output while dramatically reducing innovation. Chapter III documents that tax rates can negatively affect growth by inducing firms to participate in the informal sector rather than the formal sector. Finally, Chapter IV shows how tax revenues are affected by changes in tax rates given the provision of a productive public good.
Open Access
Behavioral Biases in General Equilibrium: Implications for Wealth Inequality and Human Capital Formation
(University of Oregon, 2018-09-06) Nighswander, Tristan; Chakraborty, Shankha
My research focuses on the integration of behavioral economics into well understood general equilibrium macroeconomic models populated by overlapping generations of heterogeneous agents. Specifically, I analyze the implications of populating model economies with present-biased agents who are finitely lived, subject to idiosyncratic labor income shocks, and heterogeneous in both exponential and present-biased discount factors. My primary goal is characterizing the contribution of behavioral biases towards resolving several issues in the literature pertaining to human capital investment and aggregate wealth inequality. Further, the inclusion of present bias in carefully calibrated model economies allows me to rationalize empirical differences in consumption, wealth, and education that arise between observationally similar households that models of homogeneous, exponential discounters are unable to match.
Open Access
Culture and Economic Growth
(University of Oregon, 2015-08-18) Thompson, Jonathan; Chakraborty, Shankha
The most fundamental question in economics is what causes some countries to prosper. An emerging literature has focused on the role of culture in determining growth. I interpret culture as "the collective programming of the mind which distinguishes the members of one group or category of people from those of another," following Hofstede. I focus on the role of culture in determining economic decision making and cooperation, with an emphasis on how cross-cultural differences in how strangers are viewed may influence economic activity by narrowing the scope of interaction. I use modern econometric techniques and neoclassical economic models to formalize the role of culture in economic decision making and test the power of culture to explain cross-country differences in long run growth paths. Throughout my research I assume that agents behave rationally but that culture influences the expectations or beliefs they have about different activities. Subject to the common elements above, each chapter answers a slightly different question. Chapter II focuses on how colonial history may influence decisions over risk-taking in certain countries, leading to a dearth of entrepreneurial activity. Chapter III focuses on how interactions across and between cultural groups may explain the decision of minority immigrant groups to assimilate or segregate over time and how public policy may influence this decision making. Chapter IV looks at the effect of culture through the media of trust and government. Using an instrumental variables strategy, I ask which is more important to economic development, contract quality or interpersonal trust, and find strong evidence that interpersonal trust is more important.
Open Access
Essays on India's Economic Development
(University of Oregon, 2022-10-04) Gupta, Saurabh; Chakraborty, Shankha
This dissertation is on the economic development of India during the past three decades with a focus on its changing industrial and household structure. Chapter 1 provides a brief introduction of the Indian economy and motivates the theme of the dissertation. In Chapter 2, I study the effects of transportation infrastructure on regional manufacturing activity. I exploit geographical and temporal variation in project implementation to argue for causal effects on the regional industrial outcomes. I investigate how highways can improve market competition between firms situated in geographically distant locations, and as a result, create incentives to invest in activities that improve productivity. The results show that highways had no direct effect on India’s manufacturing output growth and led to a decline in average manufacturing productivity. I argue that these results can be attributed to lack of improvements in allocative efficiency within regions, and slow movement of skilled labor into the manufacturing sector. These results are contrary to some recent work on India but in line with evidence presented in the wider literature on low-income countries In Chapter 3, I investigate the relationship between highways and female labor force participation (FLFP). Using census level data from India, I estimate how the construction of highways may have opened up market opportunities for households and consequently affected FLFP. I find that the effects are heterogeneous across districts with some districts experiencing an increase while others experiencing a decline in FLFP. The decline was driven mostly by married and educated women withdrawing from the manufacturing and services sectors. I also find suggestive evidence that highways led to an increase in labor force participation of low skilled women. In Chapter 4, jointly with Dr. Shankha Chakraborty, we examine how household decision making can explain India’s declining FLFP over the last three decades. We propose a tractable analytical model in which married women respond to opportunity costs of their labor hours when dividing their time between household and market production. The model incorporates cultural costs attached to female work and its negative effect on female labor supply. We highlight competing mechanisms at play that suggest a U-shaped pattern of FLFP in response to economic growth. Finally, Chapter 5 summarizes the results of the dissertation and presents a concluding remarks.
Open Access
Labor And Financial Market Frictions In Developing Economies
(University of Oregon, 2020-09-24) Duong, Hoa; Chakraborty, Shankha
This dissertation investigates the implications of frictions in labor and financial markets, with a focus on developing economies. Through theoretical and empirical analyses, I first analyze the effects of a large informal labor sector on labor policies and outcomes. I then provide evidence on the effects of access to credit on export performance measured along the extensive and intensive margins of trade. Lastly, I study the implications of various finance measures at the country level on export quality upgrading. The results highlight the importance of policies that promote financial soundness at the macroeconomic level.
Open Access
The Macroeconomic Consequences of Poverty and Inequality
(University of Oregon, 2014-09-29) Allen, Jeffrey; Chakraborty, Shankha
This dissertation examines the macroeconomic effects of poverty and inequality. The second chapter considers the effect of poverty and subsistence consumption constraints on economic growth in a two-sector occupational choice model. I find that in the presence of risk taking, subsistence consumption constraints result in a dramatic slow down in terms of economic growth. The third chapter (joint with Shankha Chakraborty) proposes a model in which agents face endogenous mortality and direct preferences over inequality. I find that the greater the scale of relative deprivation the worse the mortality outcomes are for individuals. The fourth chapter looks at the relationship between inequality and the demand for redistribution when individuals have social status concerns. I show that under social status concerns an increase in consumption inequality results in higher taxation and lower growth. This dissertation includes unpublished coauthored material.
Open Access
MARRIAGE MARKETS IN DEVELOPING COUNTRIES
(University of Oregon, 2024-08-07) Dudhe, Pramod; Chakraborty, Shankha
This dissertation studies, using the tools of dynamic macroeconomics, marriage markets in developing countries. The goal is to understand how the marriage market affects marital fertility, female labor supply and parents' human capital investment in girls. Chapter 1 provides the rationale for considering marriage markets in developing countries. It also presents an overview of the three research chapters. Chapter 2 develops an intergenerational model with gender bias in female education and dynamic marriage market. The model features skill-based positive assortative matching (PAM) and accounts for the gender-specific skill imbalance observed in developing countries. Within a household, spouses work in the labor market and decide about consumption, fertility and children’s education. We show how the equilibrium fertility distribution depends on different types of households that arise from marriage market matching and differences in fertility outcomes based on the quality-quantity tradeoff and parental skill levels. We estimate the model using Indian data, numerically derive the steady state and establish its local stability. Based on simulation results, the model does a good job of replicating the observed skill ratios. Chapter 3 builds on the model of chapter 2. The model is used to develop several policy-relevant results. An increase in marital sorting - as has been observed in India over time - worsens income inequality, and the gender bias in education and income. Elimination of gender bias as well as exogenous increases in returns to education and skilled-labor productivity contribute toward gender equality. Whereas gender-neutral subsidies are ineffective, the subsidies to poorer households aimed towards encouraging female higher education reduces the gender gap in education, labor supply and income. Dynamic policy analysis reveals that it takes 2 generations to reduce the gender gap in education by one-third. We conclude that gender-targeted policy can significantly weaken taste-based gender discrimination against female higher education. Chapter 4, joint work with Shankha Chakraborty, adapts the previous framework to better suit marriage markets in developing countries. A large percentage of marriages occur through family connections ("consensual arranged") that prioritize economic security and cultural values. Our framework captures the central tenet of these arranged marriages: parental decision to invest in girls' education is influenced by expectations of their marriage market outcome. We construct an intergenerational model with two-stage arranged-marriage market search model, which rationalizes parents' subjective gains from marrying off their offspring. The theoretical model is loosely calibrated to Indian data. Preliminary results indicate that there are significant returns to girls' education in the marriage market. In the future, we plan to extend the framework to identify the "social returns" of female education, considering its effect on marriage formation, marital fertility, labor supply and intergenerational education transmission. This dissertation includes previously unpublished coauthored material.

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