Economic Development of Urban Areas

In this dissertation I study the development of urban areas. At the aggregate level I investigate how they may be affected by climate change policies and by being designated the seat of governmental power. At the household level I study with coauthors how microfinance could improve the health of urban residents. In Chapter 1, I investigate how local employment may be affected by electricity price increases, which is a likely consequence of climate change policies. I outline how previous studies that find large, negative effects may be biased. To overcome these biases I develop a novel estimation strategy that blends border-pair regressions with the synthetic control methodology. I show the conditions for consistent estimation. Using this estimator, I find no effect of contemporaneous price changes on employment. Consistent with the longer time-frame for manufacturing decisions, I do find evidence for negative effects from perceived permanent price shocks. These estimates are much smaller than previous research has found. National capital cities are often substantially larger than other cities in their countries. In Chapter 2, I investigate whether there is a causal effect from being a capital by studying the 1960 relocation of the Brazilian capital from Rio de Janeiro to Brasília. Using a synthetic controls strategy I find that losing the capital had no significant effects on Rio de Janeiro in terms of population, employment, or gross domestic product (GDP). I find that Brasília experienced large and significant increases in population, employment, and GDP. I find evidence of large spillovers from the public to the private sector. Chapter 3 investigates how microfinance could increase the uptake of costly health goods. We study the effect of time payments (micro-loans or micro-savings) on willingness-to-pay (WTP) for a water filter among households in the slums of Dhaka, Bangladesh. We find that time payments significantly increase WTP: compared to a lump-sum up-front purchase, median WTP increases 83% with a six-month loan and 115% with a 12-month loan. We find that households are quite patient with respect to consumption of health inputs. We find evidence for the presence of credit and savings constraints.

ESSAYS ON THE WTO ACCESSION, HOUSEHOLD INCOME AND MULTIDIMENSIONAL POVERTY: EVIDENCE FROM CHINA

In the course of integrating into the global market, especially since China’s WTO accession, China has achieved remarkable GDP growth and has become the second largest economy in the world. These economic achievements have substantially increased Chinese incomes and have generated more government revenue for social progress. However, China’s economic progress, in itself, is neither sufficient for achieving desirable development outcomes nor a guarantee for expanding peoples’ capabilities. In fact, a narrow emphasis on GDP growth proves to be unsustainable, and may eventually harm the life quality of Chinese citizens. Without the right set of policies, a deepening trade-openness policy in China may enlarge social disparities and some people may further be deprived of basic public services and opportunities. To address these concerns, this dissertation, a set of three essays in Chapters 2-4, examines the impact of China's WTO accession on income distribution, compares China’s income and multidimensional poverty reduction and investigates the factors, including the WTO accession, that predict multidimensional poverty. By exploiting the exogenous variation in exposure to tariff changes across provinces and over time, Chapter 2 (Essay 1) estimates the causal effects of trade shocks and finds that China’s WTO accession has led to an increase in average household income, but its impacts are not evenly distributed. Households in urban areas have benefited more significantly than those in rural areas. Households with members working in the private sector have benefited more significantly than those in the public sector. However, the WTO accession has contributed to reducing income inequality between higher and lower income groups. Chapter 3 (Essay 2) explains and applies the Alkire and Foster Method (AF Method), examines multidimensional poverty in China and compares it with income poverty. It finds that China’s multidimensional poverty has declined dramatically during the period from 1989-2011. Reduction rates and patterns, however, vary by dimensions: multidimensional poverty reduction exhibits unbalanced regional progress as well as varies by province and between rural and urban areas. In comparison with income poverty, multidimensional poverty reduction does not always coincide with economic growth. Moreover, if one applies a single measure ─ either that of income or multidimensional poverty ─ a certain proportion of those who are poor remain unrecognized. By applying a logistic regression model, Chapter 4 (Essay 3) examines factors that predict multidimensional poverty and finds that the major factors predicting multidimensional poverty in China include household size, education level of the household head, health insurance coverage, geographic location, and the openness of the local economy. In order to alleviate multidimensional poverty, efforts should be targeted to (i) expand education opportunities for the household heads with low levels of education, (ii) develop appropriate geographic policies to narrow regional gaps and (iii) make macroeconomic policies work for the poor.