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.

Three essays on entrepreneurial entry, serial entrepreneurship, and labor turnover

This study explores two important aspects of entrepreneurship — liquidity constraints and serial entrepreneurs, with an additional analysis of occupational choice among wage workers. In the first essay, I revisit the question of whether entrepreneurs face liquidity constraints in business formation. The principle challenge is that wealth is correlated with unobserved ability, and adequate instruments are often difficult to identify. This paper uses the son's birth order as an instrument for household wealth. I exploit the data available in the Korean Labor and Income Panel Study, and find evidence of liquidity constraints associated with self-employment in South Korea. The second essay develops and tests a model that explains entry into serial entrepreneurship and the performance of serial entrepreneurs as the result of selection on innate ability. The model supposes that agents establish businesses with imperfect information about their entrepreneurial ability and the profitability of business ideas. Agents continually observe signals with which they update their beliefs, and this process eventually determines their next business choice. Selection on ability induces a positive correlation between entrepreneurial experience (measured by previous business earnings and founding experience) and serial business formation, as well as its subsequent performance. The predictions in the model are tested using panel data from the NLSY79. The analysis permits a distinction to be made between selection on innate ability and learning by doing. Motivated by previous empirical findings that white-collar workers had higher turnover rates than blue-collar workers during firm expansion, the third essay further examines job turnover among workers with or without specific skills. I present a search-matching model, which predicts that when firm growth is driven by technological advance, workers whose skills are specific to the obsolete technology show a higher tendency to separate from their jobs. This hypothesis is tested with data from the PSID. I find supportive evidence that in the context of technological change, having an occupation requiring specific skills, such as computer specialists or engineers, increases the odds of job separation by nearly eight percent. ^

Three essays on hospital efficiency

This dissertation analyzes hospital efficiency using various econometric techniques. The first essay provides additional and recent evidence to the presence of contract management behavior in the U.S. hospital industry. Unlike previous studies, which focus on either an input-demand equation or the cost function of the firm, this paper estimates the two jointly using a system of nonlinear equations. Moreover, it addresses the longitudinal problem of institutions adopting contract management in different years, by creating a matched control group of non-adopters with the same longitudinal distribution as the group under study. The estimation procedure then finds that labor, and not capital, is the preferred input in U.S. hospitals regardless of managerial contract status. With institutions that adopt contract management benefiting from lower labor inefficiencies than the simulated non-contract adopters. These results suggest that while there is a propensity for expense preference behavior towards the labor input, contract managed firms are able to introduce efficiencies over conventional, owner controlled, firms. Using data for the years 1998 through 2007, the second essay investigates the production technology and cost efficiency faced by Florida hospitals. A stochastic frontier multiproduct cost function is estimated in order to test for economies of scale, economies of scope, and relative cost efficiencies. The results suggest that small-sized hospitals experience economies of scale, while large and medium sized institutions do not. The empirical findings show that Florida hospitals enjoy significant scope economies, regardless of size. Lastly, the evidence suggests that there is a link between hospital size and relative cost efficiency. The results of the study imply that state policy makers should be focused on increasing hospital scale for smaller institutions while facilitating the expansion of multiproduct production for larger hospitals. The third and final essay employs a two staged approach in analyzing the efficiency of hospitals in the state of Florida. In the first stage, the Banker, Charnes, and Cooper model of Data Envelopment Analysis is employed in order to derive overall technical efficiency scores for each non-specialty hospital in the state. Additionally, input slacks are calculated and reported in order to identify the factors of production that each hospital may be over utilizing. In the second stage, we employ a Tobit regression model in order to analyze the effects a number of structural, managerial, and environmental factors may have on a hospital’s efficiency. The results indicated that most non-specialty hospitals in the state are operating away from the efficient production frontier. The results also indicate that the structural make up, managerial choices, and level of competition Florida hospitals face have an impact on their overall technical efficiency.