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.

Structural adjustment and labor in Jamaica and the Dominican Republic

Statement of the problem. It seeks to examine whether structural adjustment in Jamaica produced the desired developmental effects for labor--both organized and non-unionized--and if there is any significant difference in the Dominican Republic, which did not undergo that economic transformation. The research hypothesis is; "Structural Adjustment leads to Marginalization of labor."^ Methodology used. The methodology is mostly a straight cross-sectional analysis using data sets and publications from the UN, ILO, World Bank and IDB, as well as local statistical sources. The dissertation is primarily an historical to contemporary analysis of the Jamaican experience under structural adjustment, as it related to labor. To a greater extent it involves a straight cross-national comparison on the historical experiences of each country and a discussion of the relative similarities and differences between them, and the impact these features had on labor.^ Summary of findings. In the end, the question is asked as to whether internal factors are important in the relative success or failure of development strategies. From the data there is some indication that under structural adjustment there has been limited economic benefits for labor in Jamaica while labor standards have not improved. In the Dominican Republic the economic performance has been similar but the labor standards have improved significantly. This thus leads to the conclusion that structural adjustment may have been a factor in the resistance to labor's empowerment.^ Nevertheless, the study also shows that there may have been a causal role which local power relations had. The suggestion from the study is that in analyzing the phenomenon, attention must be paid to internal as well as external dynamics and variables. ^

Social service provision, efficiency labor and economic development

This dissertation provides a theory of the effects and determinants of an economy's level of social services. The dissertation focuses on how the provision of social services will affect the effort decisions of workers, which will ultimately determine the economy's level of output. A worker decides on how much effort to contribute in relation to the level of social services he/she receives. The higher the level of social services received, the lower the cost—disutility—from providing effort will be. The government provides public infrastructure and social services (i.e. health services) in accordance with the economy's endowment of effort. In doing so, the government takes the aggregate effort endowment as given. Since, with higher individual work effort the higher the economy's total level of effort, failure by workers to coordinate effort levels will result in possible instances of low effort, low social services and low output; and, other instances of high effort, high social services and high output. Therefore, this dissertation predicts that in the context of social services, coordination failures in effort levels can lead to development traps. ^

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. ^

Economics of Operating An Employee Food Service

The author, who has spent 30 years as an operations executive in the food service industry seeks to acquaint management with some of the basic economics of operating an employee food service. The article is designed to assist the executive in understanding the basic philosophies and concepts of providing a food service to employees, as well as the cost factors involved in giving that service.

Labor turnover : its causes, consequences, and control strategy in five selected restaurants in the Miami area

The purpose of this study is to identify and analyze the basic causes of food service employee turnover in five selected restaurants in the Miami area. The withdrawal behavior in this study is treated in terms of controllable turnover, for the purpose of management, learning more about what action to take to solve this problem which has eaten into the fabric of the hospitality industry. The aim is to find out from the food service employees and management view of work for the purpose of identifying the variables which cause an employee to voluntarily leave a job. The objective is therefore, to analyze and describe the problem of labor turnover in these selected restaurants. Such description must precede efforts to arrive at solutions to the problem if these efforts are ever to be more than haphazard and superficial. Sigmund Freud once stated: "The true beginning of scientific activity consists in describing phenomena and only then in proceeding to group, classify and correlate them."1 The nature of the study is basically descriptive survey. Data is collected by the use of management questionnaire, food service employee questionnaire and finally employees job description index. The survey consisted of a series of well defined questions with open and closed endings dealing with employee with employee turnover. As Robert Ferber and P. J. Verdoom state in their book titled Research Method in Economics of Business: "Structured questionnaires, by supplying question formulations in very specific terms as well as the different possible answers are easier for the sample members to answer and also serve to reduce the danger of interviewer bias."2 The answers to the prepared questionnaire by sample members were then recorded. The results of the questionnaire responses were then compiled for presentation and analysis. 1 Julian Simon, Basic Research Methods in Social Science. Random House, New York, 1969, p.53. 2 Robert J. Ferber and P.J. Verdoon, Research Methods in Economics and Business, The McMillan Company, 1962, p. 20 9 .