Essays on the Empirical Analysis of Economic and Political Development in Sub-Saharan Africa

In Sub-Saharan Africa, non-democratic events, like civil wars and coup d'etat, destroy economic development. This study investigates both domestic and spatial effects on the likelihood of civil wars and coup d'etat. To civil wars, an increase of income growth is one of common research conclusions to stop wars. This study adds a concern on ethnic fractionalization. IV-2SLS is applied to overcome causality problem. The findings document that income growth is significant to reduce number and degree of violence in high ethnic fractionalized countries, otherwise they are trade-off. Income growth reduces amount of wars, but increases its violent level, in the countries with few large ethnic groups. Promoting growth should consider ethnic composition. This study also investigates the clustering and contagion of civil wars using spatial panel data models. Onset, incidence and end of civil conflicts spread across the network of neighboring countries while peace, the end of conflicts, diffuse only with the nearest neighbor. There is an evidence of indirect links from neighboring income growth, without too much inequality, to reduce the likelihood of civil wars. To coup d'etat, this study revisits its diffusion for both all types of coups and only successful ones. The results find an existence of both domestic and spatial determinants in different periods. Domestic income growth plays major role to reduce the likelihood of coup before cold war ends, while spatial effects do negative afterward. Results on probability to succeed coup are similar. After cold war ends, international organisations seriously promote democracy with pressure against coup d'etat, and it seems to be effective. In sum, this study indicates the role of domestic ethnic fractionalization and the spread of neighboring effects to the likelihood of non-democratic events in a country. Policy implementation should concern these factors.

A threshold hypothesis of institutional change: collective action in the Italian Alps during the 13th - 19th centuries.

This dissertation is about collective action issues in common property resources. Its focus is the “threshold hypothesis,” which posits the existence of a threshold in group size that drives the process of institutional change. This hypothesis is tested using a six-century dataset concerning the management of the commons by hundreds of communities in the Italian Alps. The analysis seeks to determine the group size threshold and the institutional changes that occur when groups cross this threshold. There are five main findings. First, the number of individuals in villages remained stable for six centuries, despite the population in the region tripling in the same period. Second, the longitudinal analysis of face-to-face assemblies and community size led to the empirical identification of a threshold size that triggered the transition from informal to more formal regimes to manage common property resources. Third, when groups increased in size, gradual organizational changes took place: large groups split into independent subgroups or structured interactions into multiple layers while maintaining a single formal organization. Fourth, resource heterogeneity seemed to have had no significant impact on various institutional characteristics. Fifth, social heterogeneity showed statistically significant impacts, especially on institutional complexity, consensus, and the relative importance of governance rules versus resource management rules. Overall, the empirical evidence from this research supports the “threshold hypothesis.” These findings shed light on the rationale of institutional change in common property regimes, and clarify the mechanisms of collective action in traditional societies. Further research may generalize these conclusions to other domains of collective action and to present-day applications.

Essays in Macroeconomics

The dissertation consists of four papers that aim at providing new contributions in the field of macroeconomics, monetary policy and financial stability. The first paper proposes a new Dynamic Stochastic General Equilibrium (DSGE) model with credit frictions and a banking sector to study the pro-cyclicality of credit and the role of different prudential regulatory frameworks in affecting business cycle fluctuations and in restoring macroeconomic and financial stability. The second paper develops a simple DSGE model capable of evaluating the effects of large purchases of treasuries by central banks. This theoretical framework is employed to evaluate the impact on yields and the macroeconomy of large purchases of medium- and long-term government bonds recently implemented in the US and UK. The third paper studies the effects of ECB communications about unconventional monetary policy operations on the perceived sovereign risk of Italy over the last five years. The empirical results are derived from both an event-study analysis and a GARCH model, which uses Italian long-term bond futures to disentangle expected from unexpected policy actions. The fourth paper proposes a DSGE model with an endogenous term structure of interest rates, which is able to replicate the stylized facts regarding the yield curve and the term premium in the US over the period 1987:3-2011:3, without compromising its ability to match macro dynamics.

Designing Electricity Auctions in the Presence of Transmission Constraints

This paper analyzes the effect that different designs in the access to fnancial transmission rights has on spot electricity auctions. In particular, I characterize the equilibrium in the spot electricity market when financial transmission rights are assigned to the grid operator and when financial transmission rights are assigned to the firm that submits the lowest bid in the spot electricity auction. When financial transmission rights are assigned to the grid operator, my model, in contrast with the models available in the literature, works out the equilibrium for any transmission capacity. Moreover, I have found that an increase in transmission capacity not only increases competition between markets but also within a single market. When financial transmission rights are assigned to the firm that submits the lowest bid in the spot electricity auction, firms compete not only for electricity demand, but also for transmission rights and the arbitrage profits derived from its hold. I have found that introduce competition for transmission rights reduces competition in spot electricity auctions.

The drivers and implications of environmental innovations: European evidence at different levels of analysis

The present work is a collection of three essays devoted at understanding the determinants and implications of the adoption of environmental innovations EI by firms, by adopting different but strictly related schumpeterian perspectives. Each of the essays is an empirical analysis that investigates one original research question, formulated to properly fill the gaps that emerged in previous literature, as the broad introduction of this thesis outlines. The first Chapter is devoted at understanding the determinants of EI by focusing on the role that knowledge sources external to the boundaries of the firm, such as those coming from business suppliers or customers or even research organizations, play in spurring their adoption. The second Chapter answers the question on what induces climate change technologies, adopting regional and sectoral lens, and explores the relation among green knowledge generation, inducement in climate change and environmental performances. Chapter 3 analyzes the economic implications of the adoption of EI for firms, and proposes to disentangle EI by different typologies of innovations, such as externality reducing innovations and energy and resource efficient innovations. Each Chapter exploits different dataset and heterogeneous econometric models, that allow a better extension of the results and to overcome the limits that the choice of one dataset with respect to its alternatives engenders. The first and third Chapter are based on an empirical investigation on microdata, i.e. firm level data extracted from innovation surveys. The second Chapter is based on the analysis of patent data in green technologies that have been extracted by the PATSTAT and REGPAT database. A general conclusive Chapter will follow the three essays and will outline how each Chapter filled the research gaps that emerged, how its results can be interpreted, which policy implications can be derived and which are the possible future lines of research in the field.

Educational mismathc in Italian an European labour markets (starting from the UK)

The present doctoral thesis is structured as a collection of three essays. The first essay, “SOC(HE)-Italy: a classification for graduate occupations” presents the conceptual basis, the construction, the validation and the application to the Italian labour force of the occupational classification termed SOC(HE)-Italy. I have developed this classification under the supervision of Kate Purcell during my period as a visiting research student at the Warwick Institute for Emplyment Research. This classification links the constituent tasks and duties of a particular job to the relevant knowledge and skills imparted via Higher Education (HE). It is based onto the SOC(HE)2010, an occupational classification first proposed by Kate Purcell in 2013, but differently constructed. In the second essay “Assessing the incidence and wage effects of overeducation among Italian graduates using a new measure for educational requirements” I utilize this classification to build a valid and reliable measure for job requirements. The lack of an unbiased measure for this dimension constitutes one of the major constraints to achieve a generally accepted measurement of overeducation. Estimations of overeducation incidence and wage effects are run onto AlmaLaurea data from the survey on graduates career paths. I have written this essay and obtained these estimates benefiting of the help and guidance of Giovanni Guidetti and Giulio Pedrini. The third and last essay titled “Overeducation in the Italian labour market: clarifying the concepts and addressing the measurement error problem” addresses a number of theoretical issues concerning the concepts of educational mismatch and overeducation. Using Istat data from RCFL survey I run estimates of the ORU model for the whole Italian labour force. In my knowledge, this is the first time ever such model is estimated on such population. In addition, I adopt the new measure of overeducation based onto the SOC(HE)-Italy classification.

Shareholder protection and stock market development

The dissertation contains five parts: An introduction, three major chapters, and a short conclusion. The First Chapter starts from a survey and discussion of the studies on corporate law and financial development literature. The commonly used methods in these cross-sectional analyses are biased as legal origins are no longer valid instruments. Hence, the model uncertainty becomes a salient problem. The Bayesian Model Averaging algorithm is applied to test the robustness of empirical results in Djankov et al. (2008). The analysis finds that their constructed legal index is not robustly correlated with most of the various stock market outcome variables. The second Chapter looks into the effects of minority shareholders protection in corporate governance regime on entrepreneurs' ex ante incentives to undertake IPO. Most of the current literature focuses on the beneficial part of minority shareholder protection on valuation, while overlooks its private costs on entrepreneur's control. As a result, the entrepreneur trade-offs the costs of monitoring with the benefits of cheap sources of finance when minority shareholder protection improves. The theoretical predictions are empirically tested using panel data and GMM-sys estimator. The third Chapter investigates the corporate law and corporate governance reform in China. The corporate law in China regards shareholder control as the means to the ends of pursuing the interests of stakeholders, which is inefficient. The Chapter combines the recent development of theories of the firm, i.e., the team production theory and the property rights theory, to solve such problem. The enlightened shareholder value, which emphasizes on the long term valuation of the firm, should be adopted as objectives of listed firms. In addition, a move from the mandatory division of power between shareholder meeting and board meeting to the default regime, is proposed.

Three Essays in Economics of Gender

During recent decades, economists' interest in gender-related issues has risen. Researchers aim to show how economic theory can be applied to gender related topics such as peer effect, labor market outcomes, and education. This dissertation aims to contribute to our understandings of the interaction, inequality and sources of differences across genders, and it consists of three empirical papers in the research area of gender economics. The aim of the first paper ("Separating gender composition effect from peer effects in education") is to demonstrate the importance of considering endogenous peer effects in order to identify gender composition effect. This fact is analytically illustrated by employing Manski's (1993) linear-in-means model. The paper derives an innovative solution to the simultaneous identification of endogenous and exogenous peer effects: gender composition effect of interest is estimated from auxiliary reduced-form estimates after identifying the endogenous peer effect by using Graham (2008) variance restriction method. The paper applies this methodology to two different data sets from American and Italian schools. The motivation of the second paper ("Gender differences in vulnerability to an economic crisis") is to analyze the different effect of recent economic crisis on the labor market outcome of men and women. Using triple differences method (before-after crisis, harder-milder hit sectors, men-women) the paper used British data at the occupation level and shows that men suffer more than women in terms of probability of losing their job. Several explanations for the findings are proposed. The third paper ("Gender gap in educational outcome") is concerned with a controversial academic debate on the existence, degree and origin of the gender gap in test scores. The existence of a gap both in mean scores and the variability around the mean is documented and analyzed. The origins of the gap are investigated by looking at wide range of possible explanations.

Essays on geography and diseases

This dissertation explores how diseases contributed to shape historical institutions and how health and diseases are still affecting modern comparative development. The overarching goal of this investigation is to identify the channels linking geographic suitability to diseases and the emergence of historical and modern insitutions, while tackling the endogenenity problems that traditionally undermine this literature. I attempt to do so by taking advantage of the vast amount of newly available historical data and of the richness of data accessible through the geographic information system (GIS). The first chapter of my thesis, 'Side Effects of Immunities: The African Slave Trade', proposes and test a novel explanation for the origins of slavery in the tropical regions of the Americas. I argue that Africans were especially attractive for employment in tropical areas because they were immune to many of the diseases that were ravaging those regions. In particular, Africans' resistance to malaria increased the profitability of slaves coming from the most malarial parts of Africa. In the second chapter of my thesis, 'Caste Systems and Technology in Pre-Modern Societies', I advance and test the hypothesis that caste systems, generally viewed as a hindrance to social mobility and development, had been comparatively advantageous at an early stage of economic development. In the third chapter, 'Malaria as Determinant of Modern Ethnolinguistic Diversity', I conjecture that in highly malarious areas the necessity to adapt and develop immunities specific to the local disease environment historically reduced mobility and increased isolation, thus leading to the formation of a higher number of different ethnolinguistic groups. In the final chapter, 'Malaria Risk and Civil Violence: A Disaggregated Analysis for Africa', I explore the relationship between malaria and violent conflicts. Using georeferenced data for Africa, the article shows that violent events are more frequent in areas where malaria risk is higher.

Sanctions and public enforcement of insider trading laws in Europe

The recent financial crisis triggered an increasing demand for financial regulation to counteract the potential negative economic effects of the evermore complex operations and instruments available on financial markets. As a result, insider trading regulation counts amongst the relatively recent but particularly active regulation battles in Europe and overseas. Claims for more transparency and equitable securities markets proliferate, ranging from concerns about investor protection to global market stability. The internationalization of the world’s securities market has challenged traditional notions of regulation and enforcement. Considering that insider trading is currently forbidden all over Europe, this study follows a law and economics approach in identifying how this prohibition should be enforced. More precisely, the study investigates first whether criminal law is necessary under all circumstances to enforce insider trading; second, if it should be introduced at EU level. This study provides evidence of law and economics theoretical logic underlying the legal mechanisms that guide sanctioning and public enforcement of the insider trading prohibition by identifying optimal forms, natures and types of sanctions that effectively induce insider trading deterrence. The analysis further aims to reveal the economic rationality that drives the potential need for harmonization of criminal enforcement of insider trading laws within the European environment by proceeding to a comparative analysis of the current legislations of height selected Member States. This work also assesses the European Union’s most recent initiative through a critical analysis of the proposal for a Directive on criminal sanctions for Market Abuse. Based on the conclusions drawn from its close analysis, the study takes on the challenge of analyzing whether or not the actual European public enforcement of the laws prohibiting insider trading is coherent with the theoretical law and economics recommendations, and how these enforcement practices could be improved.

Essays on Asset Trade

The overreaching methodology of my Ph.D. thesis is to substitute noise traders with rational traders. I do so by considering liquidity asymmetry between informed trader and uninformed traders. Liquidity asymmetry creates a motive for trade. Under this new setup, I study the impact of asset trade on the real economy, represented by a firm with an investment opportunity, in chapter 1 ("Efficient Asset Trade - A Model with Asymmetric Information and Asymmetric Liquidity Needs"). I find conditions for which asset trade leads to inefficient investment. Chapter 2 ("(In)Efficient Asset Trade and a Rationale for a Tobin Tax") characterizes a tax which can restore efficient investment. In chapter 3, I show that finitely repeated trade, as in Kyle (1985) and Ostrovsky (2012), does not necessarily lead to information revelation if traders are fully rational.

Technological trajectories and environmental policy: the transformation of the automobile

This thesis aims to fill the gap in the literature by examining the relationship between technological trajectories and environmental policy in the automotive industry, focusing on the role of environmental policies in unlocking the industry from fossil fuel path-dependence. It first explores the inducement mechanism that underpins the interaction between environmental policy and green technological advances, investigating under what conditions the European environmental transport policy portfolio and the intrinsic characteristics of assignees' knowledge boost worldwide green patent production. Subsequently, the thesis empirically analyses the dynamics of technological knowledge involved in technological trajectories assessing evolution patterns such as variation, selection and retention, in order to study the impact of policy implementation on technological knowledge related to electric and hybrid vehicle technologies. Finally, the thesis sheds light on the drivers that encourage a shift from incumbent internal combustion engine technologies towards low-emission vehicle technologies. This analysis tests whether tax-inclusive fuel prices and technological proximity between technological fields induce a shift from non-environmental inventions to environmentally friendly inventive activities and if they impact the competition between alternative vehicle technologies. The findings provide insights into the effectiveness of environmental policy in triggering inventive activities related to the development of alternative vehicle technologies. In addition, there is evidence that environmental policy redirects technological efforts towards a sustainable path and impacts the competition between low-emission vehicles.

Essays in Applied and Labor Economics

This thesis consists of three self-contained papers. In the first paper I analyze the labor supply behavior of Bologna Pizza Delivery Vendors. Recent influential papers analyze labor supply behavior of taxi drivers (Camerer et al., 1997; and Crawford and Meng, 2011) and suggest that reference-dependence preferences have an important influence on drivers’ labor-supply decisions. Unlike previous papers, I am able to identify an exogenous and transitory change in labor demand. Using high frequency data on orders and rainfall as an exogenous demand shifter, I invariably find that reference-dependent preferences play no role in their labor’ supply decisions and the behavior of pizza vendors is perfectly consistent with the predictions of the standard model of labor’ supply. In the second paper, I investigate how the voting behavior of Members of Parliament is influenced by the Members seating nearby. By exploiting the random seating arrangements in the Icelandic Parliament, I show that being seated next to Members of a different party increases the probability of not being aligned with one’s own party. Using the exact spatial orientation of the peers, I provide evidence that supports the hypothesis that interaction is the main channel that explain these results. In the third paper, I provide an estimate of the trade flows that there would have been between the UK and Europe if the UK had joined the Euro. As an alternative approach to the standard log-linear gravity equation I employ the synthetic control method. I show that the aggregate trade flows between Britain and Europe would have been 13% higher if the UK had adopted the Euro.

Experiments on Pro-Sociality and Environmental Issues

The thesis comprises three essays that use experimental methods, one about other-regarding motivations in economic behavior and the others on pro-social behavior in two environmental economics problems. The first chapter studies how the expectations of the others and the concern to maintain a balance between effort exerted and rewards obtained interact in shaping the behavior in a modified dictator game. We find that dictators condition their choices on recipients' expectations only when there is a high probability that the the recipient will not be compensated for her effort. Otherwise, dictators tend to balance the efforts and rewards of the recipients, irrespective of the recipients' expectations. In the second chapter, I investigate the problem of local opposition to large public projects (e.g. landfills, incinerators, etc.). In particular, the experiment shows how the uncertainty about the project's quality makes the community living in the host site skeptical about the project. I also test whether side-transfers and costly information disclosure can help to increase the efficiency. Both tools succesfully make the host more willing to accept the project, but they lead to the realization of different types of projects. The last chapter is an experiment on climate negotiations. To avoid the global warming, countries are called to cooperate in the abatement of their emissions. We study whether the dynamic aspect of the climate change makes cooperation across countries behaviorally more difficult. We also consider inequality across countries as a possible factor that hinders international cooperation.

Essays on Ethnic Diversity and Development

This dissertation consists of three papers. The first paper "Ethnicity, Migration and Conflict: Evidence from Contemporary South Africa” exploits some of the institutional changes intervened in South Africa during the end of apartheid to investigate the relationship between ethnic diversity and conflict. I find within-ethnic polarization to be significantly related to the intensity of armed confrontations among black-dominated groups. My investigation thus gives strong and robust empirical support to the theoretical arguments which identify ethnic diversity as one of the determinants of civil conflict. The second chapter, "Pre-Colonial Centralization, Colonial Activities and Development in Latin America", investigates the hypothesis that pre-colonial ethnic institutions shaped contemporary regional development in Latin America. I document a strong and positive relationship between pre-colonial centralization and regional development. Results are in line with the view that highly centralized pre-colonial societies acted as a persistent force of agglomeration of economic activities and a strong predictor of colonial state capacity. The results provide a first evidence of the existence of a link between pre-colonial centralization, colonial institutional arrangements and contemporary economic development. The third paper "Bite and Divide: Malaria and Ethnic Diversity” investigates the role of malaria as a fundamental determinant of modern ethnic diversity. This paper explores the hypothesis, that a large exposure to malaria has fostered differential interactions that reduced contacts between groups and increased interactions within them Results document that malaria increases the number of ethnic groups at all levels of spatial disaggregation and time periods (exploiting historical and current ethnic diversity). Regressions' results show that endogamous marriages are more frequent in areas with higher geographic suitability to malaria. The results are in line with the view that malaria increases intra-ethnic interactions while decreasing inter-ethnic ones.