Browsing by Subject "Government Policy"

Now showing 1 - 4 of 4
  • Thumbnail Image
    Item
    Essays in Idiosyncratic Income Risk
    (2017-06) Madera Holgado, Rocio
    The three chapters in this dissertation constitute an investigation of the determinants of idiosyncratic income risk faced by individuals and households over their lives and over time, as well as the consequences for individual behavior and welfare. Chapter 1 concentrates on the business-cycle variation in higher-order income risk and the extent to which such risk can be smoothed within households or with government social insurance policies. Chapter 2 studies the role of labor market institutions and employment protection in shaping individuals' exposure to earnings uncertainty over their lives. Chapter 3 measures the response of household consumption to large and unexpected earnings fluctuations that neither labor market institutions nor government policy can insure away.
  • Thumbnail Image
    Item
    Essays on Government Policy and Productivity
    (2019-07) Dinerstein Madenfrost, Marcos
    This dissertation studies the effects of government policy on aggregate productivity by studying how government policy affects the allocation of resources across firms. Chapter 1 describes the data used in the following chapters. importantly, this data set is a plant level census of the manufacturing sector in Chile which allows to study government policy while taking into consideration firm heterogeneity. Chapter 2 was written jointly with Fausto Patiño Peña. It quantifies the effect of effective corporate tax rates on aggregate TFP through allocative efficiency. First, using the data described in Chapter 1 for the years 1998 to 2007 several characteristics of the effective tax rate distribution are documented. Two important findings are a large dispersion in the effective tax rate faced by firms and a mass of firms with a 0 percent tax rate. Next, these features are incorporated into a standard monopolistic competition model with capital and output wedges, where firms endogenously choose the tax rate they face. The model is then calibrated and the main finding is that if there were no corporate taxes in the economy, TFP would increase between 4 and 11 percent. Afterward, the effects of imposing the same tax rate on all firms are studied. A monotonically decreasing relationship between the level of the flat tax rate and TFP is found. Finally, Chapter 3 studies the interaction between financial frictions and firing costs and its effects on allocative efficiency and aggregate productivity. In particular, it quantifies the effect on aggregate productivity of an improvement in financial development in economies with firing costs. To do this, a small open economy model with heterogeneous firms that face collateral constraints and have to pay firing costs is developed. The model is then calibrated using the data described in Chapter 1. The main finding is that aggregate productivity increases by 2.5 percent following a financial reform that makes Chile's level of financial development comparable to that of the United Kingdom.
  • Thumbnail Image
    Item
    Essays on Government Policy and the Allocation of Resources
    (2019-08) Patiño Peña, Fausto
    This dissertation studies the effects of government policies on macroeconomic aggregates. Chapter 1 evaluates the impact of occupational licensing on consumer welfare, the allocation of labor, and the wage premium between licensed and unlicensed workers. In the United States, workers must undergo training and pay a fee to become licensed. Licensing policy protects consumers by alleviating an information asymmetry in the product market. However, it is an entry barrier that distorts the occupational choice of workers in the labor market. To analyze this trade-off, a framework with adverse selection in the product market and occupational choice in the labor market is developed. The model is calibrated to the US labor market using worker level micro-data. Removing licensing training requirements leads to a 4 percent reduction in consumer welfare and the wage premium falls by more than half. Chapter 2 is written jointly with Marcos Dinerstein. This chapter studies the effect of corporate taxes on aggregate total factor productivity (TFP). Using Chilean manufacturing data, this chapter documents that there is large dispersion in the effective tax rate and there is a large mass of firms facing a 0 percent tax rate. These features are used to develop and discipline a standard monopolistic competition model with corporate tax rates. When corporate taxes are eliminated, TFP increases between 4 and 11 percent. However, when all firms face the Chilean statutory tax rate, TFP decreases despite the fact that the dispersion in tax rates is eliminated. Chapter 3 is coauthored with Guillermo Cabral. This chapter analyzes the role of demographics in explaining the trends of real variables after the Great Recession. An important reason why demographics play an important role during the crisis's recovery period is that the Great Recession coincides with the “baby boomers” entering retirement age. This chapter documents that employment is converging to a different trend relative to its pre-crisis long term trend. A standard growth model with demographic features is calibrated in order to quantify the effect of demographics on output after the Great Recession. Demographics account for 35% of the change in the trend of output after 2008.
  • Thumbnail Image
    Item
    Order of Operations: A Practical Road Map for Government Policy to Increase the Well Being of Citizens in South America
    (Hubert H. Humphrey Institute of Public Affairs, 2009-05-21) Grill, John
    The purpose of public policy is to improve the welfare of citizens. How, exactly, to do that is less obvious. Development and freedom are near-universal ideals, but which government policies can developed countries achieve them? This paper seeks to provide an incremental strategy for governments to improve the wellbeing of their citizens by examining the various paths taken by the countries of South America. This paper will propose that countries should first initiate the pro-growth policies of economic liberalization until a certain level of development is achieved and only then should these countries begin to fully democratize. These democracies will be more stable and will continue the process of liberalization. The countries of South America show both the effectiveness of this pattern and the ineffectiveness of the reverse pattern. This recommendation will be supported by reviewing the theoretical literature, analyzing comparative indicators, and examining detailed case studies.