The political economy of inequality and growth: Essays on sovereign debt, democracy and saving

This dissertation addresses three issues in the political economy of growth literature. The first study empirically tests the hypothesis that income inequality influences the size of a country's sovereign debt for a sample of developing countries for the period 1970–1990. The argument examined is that governments tend to yield to popular pressures to engage in redistributive policies, partially financed by foreign borrowing. Facing increased risk of default, international creditors limit the credit they extend, with the result that borrowing countries invest less and grow at a slower pace. The findings do not seem to support the negative relationship between inequality and sovereign debt, as there is evidence of increases in multilateral, countercyclical flows until the mid 1980s in Latin America. The hypothesis would hold for the period 1983–1990. Debt flows and levels seem to be positively correlated with growth as expected. ^ The second study empirically investigates the hypothesis that pronounced levels of inequality lead to unconsolidated democracies. We test the existence of a nonmonotonic relationship between inequality and democracy for a sample of Latin American countries for the period 1970–2000, where democracy appears to consolidate at some intermediate level of inequality. We find that the nonmonotonic relationship holds using instrumental variables methods. Bolivia seems to be a case of unconsolidated democracy. The positive relationship between per capita income and democracy disappears once fixed effects are introduced. ^ The third study explores the nonlinear relationship between per capita income and private saving levels in Latin America. Several estimation methods are presented; however, only the estimation of a dynamic specification through a state-of-the-art general method of moments estimator yields consistent estimates with increased efficiency. Results support the hypothesis that income positively affects private saving, while system GMM reveals nonlinear effects at income levels that exceed the ones included in this sample for the period 1960–1994. We also find that growth, government dissaving, and tightening of credit constraints have a highly significant and positive effect on private saving. ^

Three essays on a longitudinal analysis of business start-ups using the Kauffman Firm Survey

This dissertation focused on the longitudinal analysis of business start-ups using three waves of data from the Kauffman Firm Survey. ^ The first essay used the data from years 2004-2008, and examined the simultaneous relationship between a firm's capital structure, human resource policies, and its impact on the level of innovation. The firm leverage was calculated as, debt divided by total financial resources. Index of employee well-being was determined by a set of nine dichotomous questions asked in the survey. A negative binomial fixed effects model was used to analyze the effect of employee well-being and leverage on the count data of patents and copyrights, which were used as a proxy for innovation. The paper demonstrated that employee well-being positively affects the firm's innovation, while a higher leverage ratio had a negative impact on the innovation. No significant relation was found between leverage and employee well-being.^ The second essay used the data from years 2004-2009, and inquired whether a higher entrepreneurial speed of learning is desirable, and whether there is a linkage between the speed of learning and growth rate of the firm. The change in the speed of learning was measured using a pooled OLS estimator in repeated cross-sections. There was evidence of a declining speed of learning over time, and it was concluded that a higher speed of learning is not necessarily a good thing, because speed of learning is contingent on the entrepreneur's initial knowledge, and the precision of the signals he receives from the market. Also, there was no reason to expect speed of learning to be related to the growth of the firm in one direction over another.^ The third essay used the data from years 2004-2010, and determined the timing of diversification activities by the business start-ups. It captured when a start-up diversified for the first time, and explored the association between an early diversification strategy adopted by a firm, and its survival rate. A semi-parametric Cox proportional hazard model was used to examine the survival pattern. The results demonstrated that firms diversifying at an early stage in their lives show a higher survival rate; however, this effect fades over time.^

Three Essays on Taxation, Growth and Consumption

The purpose of this dissertation is to examine three distributional issues in macroeconomics. First I explore the effects fiscal federalism on economic growth across regions in China. Using the comprehensive official data set of China for 31 regions from 1952 until 1999, I investigate a number of indicators used by the literature to measure federalism and find robust support for only one such measure: the ratio of local total revenue to local tax revenue. Using a difference-in-difference approach and exploiting the two-year gap in the implementation of a tax reform across different regions of China, I also identify a positive relationship between fiscal federalism and regional economic growth. The second paper hypothesizes that an inequitable distribution of income negatively affects the rule of law in resource-rich economies and provides robust evidence in support of this hypothesis. By investigating a data set that contains 193 countries and using econometric methodologies such as the fixed effects estimator and the generalized method of moments estimator, I find that resource-abundance improves the quality of institutions, as long as income and wealth disparity remains below a certain threshold. When inequality moves beyond this threshold, the positive effects of the resource-abundance level on institutions diminish quickly and turn negative eventually. This paper, thus, provides robust evidence about the endogeneity of institutions and the role income and wealth inequality plays in the determination of long-run growth rates. The third paper sets up a dynamic general equilibrium model with heterogeneous agents to investigate the causal channels which run from a concern for international status to long-run economic growth. The simulation results show that the initial distribution of income and wealth play an important role in whether agents gain or lose from globalization.

Three Essays on a Longitudinal Analysis of Business Start-ups using the Kauffman Firm Survey

This dissertation focused on the longitudinal analysis of business start-ups using three waves of data from the Kauffman Firm Survey. The first essay used the data from years 2004-2008, and examined the simultaneous relationship between a firm’s capital structure, human resource policies, and its impact on the level of innovation. The firm leverage was calculated as, debt divided by total financial resources. Index of employee well-being was determined by a set of nine dichotomous questions asked in the survey. A negative binomial fixed effects model was used to analyze the effect of employee well-being and leverage on the count data of patents and copyrights, which were used as a proxy for innovation. The paper demonstrated that employee well-being positively affects the firm's innovation, while a higher leverage ratio had a negative impact on the innovation. No significant relation was found between leverage and employee well-being. The second essay used the data from years 2004-2009, and inquired whether a higher entrepreneurial speed of learning is desirable, and whether there is a linkage between the speed of learning and growth rate of the firm. The change in the speed of learning was measured using a pooled OLS estimator in repeated cross-sections. There was evidence of a declining speed of learning over time, and it was concluded that a higher speed of learning is not necessarily a good thing, because speed of learning is contingent on the entrepreneur's initial knowledge, and the precision of the signals he receives from the market. Also, there was no reason to expect speed of learning to be related to the growth of the firm in one direction over another. The third essay used the data from years 2004-2010, and determined the timing of diversification activities by the business start-ups. It captured when a start-up diversified for the first time, and explored the association between an early diversification strategy adopted by a firm, and its survival rate. A semi-parametric Cox proportional hazard model was used to examine the survival pattern. The results demonstrated that firms diversifying at an early stage in their lives show a higher survival rate; however, this effect fades over time.

An investigation of the effects of mothers' participation in adult literacy classes on interactive literacy activities (ILAs) at home

The National Center for Family Literacy (2003a) and the National Even Start Association (2005) have stated that the single most effective and influential factor in increasing student academic achievement is parental involvement. The purpose of this qualitative study was to determine how participation in adult literacy courses influences parent-child interaction in various educationally related activities known as Interactive Literacy Activities (ILAs). This study investigated ILAs from the mothers? perspective, and examines the changes that occur in parental involvement or ILAs when immigrant parents of a limited educational background participate in an adult education program. The principal method of data collection was key informant interviews (Gall, Borg, & Gall, 1996). Other methods of data collection included observations of parent-child interactions and field observations. Data analysis methods included Memo-ing (Miles & Huberman, 1994), within case analysis and cross-case analysis. ^ Findings demonstrate that changes occurred in the parent-child relationship when mothers of a limited educational background participated in an adult literacy course. When participating in ILAs or English literacy activities related to second language acquisition (including reading and speaking for comprehension and pronunciation), the children of these mothers took on the role of the adult. Participation in literacy activities was often initiated by the child and the children were frequently concerned with their mother's literacy acquisition. Mothers reported that their children were more confident, worked harder on school related activities and were more open to communication. ^ It can be concluded from this study that, in the case of these immigrant families, a mother's participation in adult literacy classes is influential in the relationship between mother and child. These children participated in ILAs for the benefit of their mothers and initiated literacy activities more frequently. The children responded better to their parents during literacy activities because there was a positive change in the relationship between mother and child. The relationship between mother and child appeared to be strengthened by greater trust, a sense of pride and more communication. ^

The interactive effects of predators, resources, and disturbance on freshwater snail populations from the Everglades

The origins of population dynamics depend on interplay between abiotic and biotic factors; the relative importance of each changing across space and time. Predation is a central feature of ecological communities that removes individuals (consumption) and alters prey traits (non-consumptive). Resource quality mitigates non-consumptive predator effects by stimulating growth and reproduction. Disturbance resets predator-prey interactions by removing both. I integrate experiments, time-series analysis, and performance trials to examine the relative importance of these on the population dynamics of a snail species by studying a variety of their traits. A review of ninety-three published articles revealed that snail abundance was much less in the Everglades and similar ecosystems compared to all other freshwater ecosystems considered. Separating consumptive from non-consumptive (cues) predator effects at different phosphorous levels with an experiment determined that phosphorous stimulated, but predator cues inhibited snail growth (34% vs. 23%), activity (38% vs. 53%), and reproductive effort (99% vs. 90%) compared to controls. Cues induced taller shells and smaller openings and moved to refugia where they reduced periphyton by 8%. Consumptive predator effects were minor in comparison. In a reciprocal transplant cage experiment along a predator cue and phosphorous gradient created by a canal, snails grew 10% faster and produced 37% more eggs far from the canal (fewer cues) when fed phosphorous-enriched periphyton from near the canal. Time-series analysis at four sites and predator performance trials reveal that phosphorous-enriched regions support larger snail populations, seasonal drying removes snails at all sites, crayfish negatively affect populations in enriched regions, and molluscivorous fish consume snails in the wet season. Combining these studies reveals interplay between resources, predators, and seasonality that limit snail populations in the Everglades and lead to their low abundance compared to other freshwater ecosystems. Resource quality is emerging as the critical factor because improving resources profoundly improved growth and reproduction; seasonal drying and predation become important at times and places. This work contributes to the general understanding in ecology of the relative importance of different factors that structure populations and provides evidence that bolsters monitoring efforts to assess the Comprehensive Everglades Restoration Plan that show phosphorous enrichment is a major driver of ecosystem change.

Interactive Effects of Morphine on HIV Infection: Role in HIV-Associated Neurocognitive Disorder

HIV epidemic continues to be a severe public health problem and concern within USA and across the globe with about 33 million people infected with HIV. The frequency of drug abuse among HIV infected patients is rapidly increasing and is another major issue since injection drug users are at a greater risk of developing HIV associated neurocognitive dysfunctions compared to non-drug users infected with HIV. Brain is a major target for many of the recreational drugs and HIV. Evidences suggest that opiate drug abuse is a risk factor in HIV infection, neural dysfunction and progression to AIDS. The information available on the role of morphine as a cofactor in the neuropathogenesis of HIV is scanty. This review summarizes the results that help in understanding the role of morphine use in HIV infection and neural dysfunction. Studies show that morphine enhances HIV-1 infection by suppressing IL-8, downregulating chemokines with reciprocal upregulation of HIV coreceptors. Morphine also activates MAPK signaling and downregulates cAMP response element-binding protein (CREB). Better understanding on the role of morphine in HIV infection and mechanisms through which morphine mediates its effects may help in devising novel therapeutic strategies against HIV-1 infection in opiate using HIV-infected population.

Effects of academic integration on the persistence and achievement of under-prepared college students

The purpose of this dissertation was to examine the effect of academic integration, defined in terms of instructor/student contact, on the persistence of under-prepared college students and the achievement of those who persist. The overall design of this study compared instructor-initiated contact with conventional contact. The dependent variables were persistence, achievement, motivation and anxiety. Information was collected by administering the College-Level Mathematics Test (CLM), the Perceived Affective Contact Questionnaire (PAC), the expectancy and anxiety components of the Motivated Strategies for Learning Questionnaire (MSLQ), a departmental final examination, and by accessing university records. The sample consisted of 130 college algebra students at a large, public university with a Hispanic majority. The main analyses consisted of a 2 x 2 x 2 ANOVA (treatment by ethnicity by gender) to test for differences in achievement, t-tests to compare motivation, anxiety and perceived affective contact scores for the two groups, Chi-square tests to assess differences in persistence, and Pearson Product-Moment Correlation to determine the relationship between pretest scores and achievement variables. Results indicated that neither instructor-initiated contact, gender nor ethnicity is related to persistence, motivation or anxiety. A significant disordinal interaction of treatment and ethnicity was observed, with Hispanic experimental students scoring significantly higher on a test of algebra achievement than Hispanic control students. ^ Academic integration, defined in terms of instructor/student contact, has a positive influence on the achievement of Hispanic students. This may imply their positive responsiveness to the relational aspect of contact due to traditional cultural values of interdependence, acquiescence to authority and physical closeness. Such interactive feedback is a means by which students with these values are recognized as members of the university academic community, prompting increased academic effort. Training in contact initiation to promote academic integration is implied, by the results of this study, for instructors dealing with first year students, especially instructors at institutions accommodating instructional methods to the needs of diverse groups. ^

The effects of intellectual property rights on knowledge spillovers and innovation: An empirical investigation

FDI is believed to be a conduit of new technologies between countries. The first chapter of this dissertation studies the advantages of outward FDI for the home country of multinationals conducting research and development abroad. We use patent citations as a proxy for technology spillovers and we bring empirical evidence that supports the hypothesis that a U.S. subsidiary conducting research and development overseas facilitates the flow of knowledge between its host and home countries.^ The second chapter examines the impact of intellectual property rights (IPR) reforms on the technology flows between the U.S. and host countries of U.S. affiliates. We again use patent citations to examine whether the diffusion of new technology between the host countries and the U.S. is accelerated by the reforms. Our results suggest that the reforms favor innovative efforts of domestic firms in the reforming countries rather than U.S. affiliates efforts. In other words, reforms mediate the technology flows from the U.S. to the reforming countries.^ The third chapter deals with another form of IPR, open source (OS) licenses. These differ in the conditions under which licensors and OS contributors are allowed to modify and redistribute the source code. We measure OS project quality by the speed with which programming bugs are fixed and test whether the license chosen by project leaders influences bug resolution rates. In initial regressions, we find a strong correlation between the hazard of bug resolution and the use of highly restrictive licenses. However, license choices are likely to be endogenous. We instrument license choice using (i) the human language in which contributors operate and (ii) the license choice of the project leaders for a previous project. We then find weak evidence that restrictive licenses adversely affect project success.^

Explaining the effects of class size on faculty and students

This study explored the effects of class size on faculty and students. Specifically, it examined the relationship of class size and students' participation in class, faculty interactive styles, and academic environment and how these behaviors affected student achievement (percentage of students passing). The sample was composed of 629 students in 30 sections of Algebra I at a large, urban community college. A survey was administered to the students to solicit their perceptions on their participation in class, their faculty interaction style, and the academic environment in their classes. Selected classes were observed to triangulate the findings. The relationship of class size to student participation, faculty interactive styles, and academic environment was determined by using hierarchical linear modeling (HLM). A significant difference was found on the participation of students related to class size. Students in smaller classes participated more and were more engaged than students in larger classes. Regression analysis using the same variables in small and large classes showed that faculty interactive styles significantly predicted student achievement. Stepwise regression analyses of student and faculty background variables showed that (a) students' estimate of GPA was significantly related to their achievement (r = .63); (b) older students reported more participation than did younger ones, (c) students in classes taught by female, Hispanic faculty earned higher passing grades, and (d) students' participation was greater with adjunct professors. Class observations corroborated these findings. The analysis and observational data provided sufficient evidence to warrant the conclusion that small classes were not always most effective in promoting achievement. It was found that small classes may be an artifact of ineffectual teaching, actual or by reputation. While students in small classes participate and are more engaged than students in larger classes, the class-size effect is essentially due to what happens in instruction to promote learning. The interaction of the faculty with students significantly predicted students' achievement regardless of class size. Since college students select their own classes, students do not register for classes taught by faculty with poor teaching reputation, thereby leading to small classes. Further studies are suggested to determine reasons why classes differ in size.

Three essays on labor liberalization and its effects on world economy

This dissertation consists of three theoretical essays on immigration, international trade and political economy. The first two essays analyze the political economy of immigration in developed countries. The third essay explores new ground on the effects of labor liberalization in developing countries. Trade economists have witnessed remarkable methodological developments in mathematical and game theoretical models during the last seventy years. This dissertation benefits from these advances to analyze economic issues related to immigration. The first essay applies a long run general equilibrium trade model similar to Krugman (1980), and blends it with the median voter ala-Mayer (1984) framework. The second essay uses a short run general equilibrium specific factor trade model similar to Jones (1975) and incorporates it with the median voter model similar to Benhabib (1997). The third essay employs a five stage game theoretical approach similar to Vogel (2007) and solves it by the method of backward induction. The first essay shows that labor liberalization is more likely to come about in societies that have more taste for varieties, and that workers and capital owners could share the same positive stance toward labor liberalization. In a dynamic model, it demonstrates that the median voter is willing to accept fewer immigrants in the first period in order to preserve her domestic political influence in the second period threatened by the naturalization of these immigrants. The second essay shows that the liberalization of labor depends on the host country's stock and distribution of capital, and the number of groups of skilled workers within each country. I demonstrate that the more types of goods both countries produce, the more liberal the host country is toward immigration. The third essay proposes a theory of free movement of goods and labor between two economies with imperfect labor contracts. The heart of my analysis lies in the determinants of talent development where individuals' decisions to emigrate are related to the fixed costs of emigration. Finally, free trade and labor affect income via an indirect effect on individuals' incentives to invest in the skill levels and a direct effect on the prices of goods.

The effects of fertilization and simulated grazing on the community structure of a seagrass bed in South Florida

The importance of resource supply and herbivory in driving competitive interactions among species has been an important but contentious issue within ecology. These variables exhibit different effects on species competition when manipulated in isolation but interact when manipulated together. I tested the direct and interactive effects of nutrient addition and simulated grazing (clipping) on the competitive performance of primary producers and community structure of a seagrass bed in South Florida. One square meter experimental plots were established in a mixed seagrass meadow from August 2007 to July 2009. The experiment was a 3 x 3 factorial experiment: 3 fertility treatments: control, medium (2.4 mg N d−1 and 80 µg P day −1) and high (4.8 mg N d−1 and 160 µg P day−1) x 3 clipping intensities (0, 25% and 50 % biomass removal (G)) x 5 replicates for each treatment = 45 plots). Nutrient additions and simulated grazing were done every two months. Fertilization and simulated grazing decreased sexual reproduction in S. filiforme. Fertilization increased competitive dominance within the primary producers while simulated grazing counteracted this effect by removal of the dominant species. Fertilization ameliorated the negative impacts of simulated grazing while simulated grazing prevented competitive exclusion in the fertilized plots. Nutrient addition and simulated grazing both exerted strong control on plant performance and community structure. Neither bottom up nor top down influences was eliminated in treatments where both factors where present. The effects of fertilization on plant performance were marked under all clipping intensities indicating that the system is regulated by nutrient availability both in the presence or absence of grazers. Clipping effects were strong under both fertilized and unfertilized conditions indicating that the seagrass bed can be simultaneously under top-down control by grazers.

Structure-based modeling of head -related transfer functions towards interactive customization of binaural sound systems

One of the most popular techniques for creating spatialized virtual sounds is based on the use of Head-Related Transfer Functions (HRTFs). HRTFs are signal processing models that represent the modifications undergone by the acoustic signal as it travels from a sound source to each of the listener's eardrums. These modifications are due to the interaction of the acoustic waves with the listener's torso, shoulders, head and pinnae, or outer ears. As such, HRTFs are somewhat different for each listener. For a listener to perceive synthesized 3-D sound cues correctly, the synthesized cues must be similar to the listener's own HRTFs. ^ One can measure individual HRTFs using specialized recording systems, however, these systems are prohibitively expensive and restrict the portability of the 3-D sound system. HRTF-based systems also face several computational challenges. This dissertation presents an alternative method for the synthesis of binaural spatialized sounds. The sound entering the pinna undergoes several reflective, diffractive and resonant phenomena, which determine the HRTF. Using signal processing tools, such as Prony's signal modeling method, an appropriate set of time delays and a resonant frequency were used to approximate the measured Head-Related Impulse Responses (HRIRs). Statistical analysis was used to find out empirical equations describing how the reflections and resonances are determined by the shape and size of the pinna features obtained from 3D images of 15 experimental subjects modeled in the project. These equations were used to yield “Model HRTFs” that can create elevation effects. ^ Listening tests conducted on 10 subjects show that these model HRTFs are 5% more effective than generic HRTFs when it comes to localizing sounds in the frontal plane. The number of reversals (perception of sound source above the horizontal plane when actually it is below the plane and vice versa) was also reduced by 5.7%, showing the perceptual effectiveness of this approach. The model is simple, yet versatile because it relies on easy to measure parameters to create an individualized HRTF. This low-order parameterized model also reduces the computational and storage demands, while maintaining a sufficient number of perceptually relevant spectral cues. ^

A Suite of Prey Traits Determine Predator and Nutrient Enrichment Effects in a Tri-Trophic Food Chain

Predation, predation risk, and resource quality affect suites of prey traits that collectively impact individual fitness, population dynamics, and community structure. However, studies of multi-trophic level effects generally focus on a single prey trait, failing to capture trade-offs among suites of covarying traits that govern population responses and emergent community patterns. We used structural equation models (SEM) to summarize the non-lethal and lethal effects of crayfish, Procambarus fallax, and phosphorus (P) addition, which affected prey food quality (periphyton), on the interactive effects of behavioral, morphological, developmental, and reproductive traits of snails, Planorbella duryi. Univariate and multivariate analyses suggested trade-offs between production (growth, reproduction) and defense (foraging behavior, shell shape) traits of snails in response to non-lethal crayfish and P addition, but few lethal effects. SEM revealed that non-lethal crayfish effects indirectly limited per capita offspring standing stock by increasing refuge use, slowing individual growth, and inducing snails to produce thicker, compressed shells. The negative effects of non-lethal crayfish on snails were strongest with P addition; snails increased allocation to shell defense rather than growth or reproduction. However, compared to ambient conditions, P addition with non-lethal crayfish still yielded greater per capita offspring standing stock by speeding individual snail growth enabling them to produce more offspring that also grew faster. Increased refuge use in response to non-lethal crayfish led to a non-lethal trophic cascade that altered the spatial distribution of periphyton. Independent of crayfish effects, snails stimulated periphyton growth through nutrient regeneration. These findings illustrate the importance of studying suites of traits that reveal costs associated with inducing different traits and how expressing those traits impacts population and community level processes.