Essays on allocation
- The aim of this work is to provide a better theoretical and empirical understanding of the importance of allocation in several distinct settings. In the first chapter I model the dynamics of asset pricing and production during crises in financial market intermediation. Financial specialists help allocate risk by intermediating trade in riskless assets between households with heterogenous risk aversion, but face an equity capital constraint. Shocks to specialist net worth disrupt risk allocation, which can have significant effects on asset pricing and output in an environment with economically meaningful risk premia. In a calibrated version of the model, including rare disasters in production, a reduction in specialist net worth leads to a sharp decline in equity values, a dramatic increase in interest rate spreads and to a gradual reduction output. The second chapter studies the large observed changes in labor supply by women in the United States over the period from 1940-2009. I investigate if the transition of broad consumption shares away from agriculture and manufacturing and towards services (structural transformation) can account for the rise in female participation. A model of structural transformation and labor supply is constructed which differentiates between mental and physical labor, with women having a comparative advantage in mental labor. Structural transformation reallocates production to mental labor intensive service production from physical labor intensive agriculture and manufacturing, drawing women into the work force. I find that this model can account for much (70%) of the observed increase in female labor force participation but fails to properly account for the dynamics of the gender wage gap. I then present empirical evidence suggesting a link between structural transformation and female labor force participation. MSAs with a higher degree of structural transformation have seen a larger increase in female labor force participation in the period from 1986 to 2006. This iv results hold even with the degree of structural transformation is instrumented for using a measure soil quality. The third chapter is joint with Edison Yu. We quantify the evolution of capital and labor misallocation in the United States, by measuring firm level wedges in the marginal products of capital and labor using the approach developed in Hsieh and Klenow (2009) and document two facts -- (1) there is evidence of a substantial increase in misallocation measured in this manner over the period from 1970 to 2004 (2) contrary to several predictions there does not appear to be a strong counter cyclical component to misallocation, misallocation is, if anything, slightly procyclical -- suggesting that allocative efficiency might act as a moderating force during recessions.
|Type of resource
|electronic; electronic resource; remote
|1 online resource.
|Stanford University, Department of Economics.
|Klenow, Peter J
|Klenow, Peter J
|Statement of responsibility
|Submitted to the Department of Economics.
|Thesis (Ph.D.)--Stanford University, 2014.
- © 2014 by Krishna Rao
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
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