Essays on Macroeconomic Trends and Cycles

This dissertation describes two studies on macroeconomic trends and cycles. The first chapter studies the impact of Information Technology (IT) on the U.S. labor market. Over the past 30 years, employment and income shares of routine-intensive occupations have declined significantly relative to nonroutine occupations, and the overall U.S. labor income share has declined relative to capital. Furthermore, the decline of routine employment has been largely concentrated during recessions and ensuing recoveries. I build a model of unbalanced growth to assess the role of computerization and IT in driving these labor market trends and cycles. I augment a neoclassical growth model with exogenous IT progress as a form of Routine-Biased Technological Change (RBTC). I show analytically that RBTC causes the overall labor income share to follow a U-shaped time path, as the monotonic decline of routine labor share is increasingly offset by the monotonic rise of nonroutine labor share and the elasticity of substitution between the overall labor and capital declines under IT progress. Quantitatively, the model explains nearly all the divergence between routine and nonroutine labor in the period 1986-2014, as well as the mild decline of the overall labor share between 1986 and the early 2000s. However, the model with IT progress alone cannot explain the accelerated decline of labor income share after the early 2000s, suggesting that other factors, such as globalization, may have played a larger role in this period. Lastly, when nonconvex labor adjustment costs are present, the model generates a stepwise decline in routine labor hours, qualitatively consistent with the data. The timing of these trend adjustments can be significantly affected by aggregate productivity shocks and concentrated in recessions. The second chapter studies the implications of loss aversion on the business cycle dynamics of aggregate consumption and labor hours. Loss aversion refers to the fact that people are distinctively more sensitive to losses than to gains. Loss averse agents are very risk averse around the reference point and exhibit asymmetric responses to positive and negative income shocks. In an otherwise standard Real Business Cycle (RBC) model, I study loss aversion in both consumption alone and consumption-and-leisure together. My results indicate that how loss aversion affects business cycle dynamics depends critically on the nature of the reference point. If, for example, the reference point is status quo, loss aversion dramatically lowers the effective inter-temporal rate of substitution and induces excessive consumption smoothing. In contrast, if the reference point is fixed at a constant level, loss aversion generates a flat region in the decision rules and asymmetric impulse responses to technology shocks. Under a reasonable parametrization, loss aversion has the potential to generate asymmetric business cycles with deeper and more prolonged recessions.

Using a Combination of Phylogenetic Comparative and Paleobotanical Methods to Elucidate Patterns of Lineage Selection in Rosales (Plantae: Anthophyta)

An increasing focus in evolutionary biology is on the interplay between mesoscale ecological and evolutionary processes such as population demographics, habitat tolerance, and especially geographic distribution, as potential drivers responsible for patterns of diversification and extinction over geologic time. However, few studies to date connect organismal processes such as survival and reproduction through mesoscale patterns to long-term macroevolutionary trends. In my dissertation, I investigate how mechanism of seed dispersal, mediated through geographic range size, influences diversification rates in the Rosales (Plantae: Anthophyta). In my first chapter, I validate the phylogenetic comparative methods that I use in my second and third chapters. Available state speciation and extinction (SSE) models assumptions about evolution known to be false through fossil data. I show, however, that as long as net diversification rates remain positive – a condition likely true for the Rosales – these violations of SSE’s assumptions do not cause significantly biased results. With SSE methods validated, my second chapter reconstructs three associations that appear to increase diversification rate for Rosalean genera: (1) herbaceous habit; (2) a three-way interaction combining animal dispersal, high within-genus species richness, and geographic range on multiple continents; (3) a four-way interaction combining woody habit with the other three characteristics of (2). I suggest that the three- and four-way interactions represent colonization ability and resulting extinction resistance in the face of late Cenozoic climate change; however, there are other possibilities as well that I hope to investigate in future research. My third chapter reconstructs the phylogeographic history of the Rosales using both non-fossil-assisted SSE methods as well as fossil-informed traditional phylogeographic analysis. Ancestral state reconstructions indicate that the Rosaceae diversified in North America while the other Rosalean families diversified elsewhere, possibly in Eurasia. SSE is able to successfully identify groups of genera that were likely to have been ancestrally widespread, but has poorer taxonomic resolution than methods that use fossil data. In conclusion, these chapters together suggest several potential causal links between organismal, mesoscale, and geologic scale processes, but further work will be needed to test the hypotheses that I raise here.