Date of Award

2018

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Graduate Group

Applied Economics

First Advisor

Gilles Duranton

Second Advisor

Ann Harrison

Abstract

This dissertation consists of three chapters studying the effects of diverse public policy instruments on firm productivity and local labor markets.

The first chapter analyzes how the US's largest policy for retraining trade-displaced workers--Trade Adjustment Assistance (TAA)--affects earnings and employment outcomes. Prior research has been limited by two challenges precluding credible estimates: a lack of quality data to track worker movements across employers, and selection into training programs. Leveraging an institutional feature of TAA that assigns two otherwise equal TAA applicants to investigators of varying approval leniencies, I estimate the causal returns to retraining for roughly 300,000 displaced workers by merging Census Bureau microdata with TAA winning and losing petitions.

I find large initial returns to TAA. Ten years out, TAA-trained workers have $50,000 higher cumulative earnings. Yet \textit{annual} returns fully depreciate after ten years. Returns are concentrated in the most disrupted regions, where workers are more likely to switch industries and move to labor markets with better opportunities in response to training--consistent with adjustment frictions. Despite some inefficiencies, the results highlight that TAA may serve as an important tag for redistributing the growth from trade to adversely affected workers.

The second chapter, joint with Ann Harrison, Shanthi Nataraj, and Leslie Martin, compares the impact of command-and-control (CAC) regulations and coal price variation on firm pollution abatement, coal consumption, and productivity growth in India. Both CAC regulations and higher coal prices resulted in improved air quality. CAC regulations increased the share of large establishments investing in pollution control equipment. In contrast, higher coal prices reduced the intensive margin of coal use more broadly, with price elasticities similar to those found in the US. In terms of productivity, CAC regulations imposed a higher cost on large firms.

The third chapter reconsiders host country productivity spillovers from multinational corporation (MNC) investments. I show that the standard "backward linkage'' measure used to estimate technology spillovers implicitly assumes domestic and foreign firms share the same input structure. Mean backward linkages reduce in half when the share of locally sourced inputs is adjusted to reflect MNC’s observably higher propensity to import inputs.

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