Essays On The Economics Of Health And Optimal Taxation

Seung-Ryong Shin, University of Pennsylvania


This dissertation consists of two chapters. Chapter 1 compares the optimal and current taxation of alcohol and cigarette with the optimal subsidization of sports goods in terms of welfare gains and distributional effects using a life cycle framework. Sports goods subsidization could optimally generate a welfare gain of $171.59 per household every year, about 16 times higher than that from the optimal taxation of the unhealthy goods. The former decreases the aggregate medical expenditure by 5.3%, while the latter only by 0.2%. Positive sports goods subsidization could benefit both high and low education groups through the effects of lower premiums and tax burdens, despite the negative distribution and health effects against the low education group. Chapter 2 investigates how firms' global connectedness and market power affect their performance and resilience during crises. While global production and export networks expose firms to foreign shocks, they potentially reduce firms' susceptibility to domestic shocks through international diversification. Additionally, increases in market power could provide buffers by allowing margins for adjustment. Using weekly global stock market data combined with firm-level supply chain, export, and balance sheet information, this chapter shows that firms with higher global connectedness and market power are more resilient to domestic pandemic shocks. Global connectedness (but not market power) alleviates domestic pandemic shocks only if foreign economies experience smaller shocks. Finally, pandemic-driven cross-firm reallocations were concentrated between March and May when cross-country COVID-19 dispersion dramatically increased.