Economists typically understand the firm as an organization comprised of a series of incomplete contracts among input suppliers e.g. Coase, 1937), Williamson, 1985)). The ultimate right to make decisions that are not subject to a pre-existing contractual arrangement – hereafter referred to as decision-control rights, are assigned to some person or group associated with the enterprise. The entity with decision-control rights has the final say over how to organize essential firm operations that range from the determination of production techniques, to deciding how to monitor or compensate the firms members. To the extent that firm members have competing interests or are asymmetrically affected by such decisions, those members with decision-control rights may be confronted with important normative issues regarding which firm objectives should be pursued. In my dissertation, I employ a behavioral economic perspective in order to examine how workplace governance practices interact with both the level of satisfaction and motivation of workers. In the first essay of the dissertation, I collected data from a real-effort experiment to compare changes in the performance of research participants that were subjected to an identical set of wage incentives that were either implemented 1) endogenously by the group to which subjects belong through a simple majority vote, 2) endogenously by only one member of the group who had all decision-control rights, or 3) a random process completely exogenous to the group. The 3 3 distinct decision-control rights regimes) X 2 2 distinct incentive contracts) between-subjects design allows for a clean comparison of performance under different decision-control rights treatments. I report evidence suggesting that the decision-control rights arrangement used to select the compensation contract can significantly influence the subsequent level of performance of research subjects. The second essay co-authored with Michael Carr), analyzes the relative effects of voice, autonomy, and wages in explaining job satisfaction using subjective evaluations of work conditions and satisfaction recorded in the 2004 wave of the Workplace Employment Relations Survey WERS). We show that the amount of autonomy and voice that a worker has over the firm is an important omitted variable, biasing the estimated coefficient on the wage upwards. And, conditional upon having a job, voice and autonomy are considerably more important determinants of job satisfaction than the wage. The final essay offers a critique of the traditional economics of work organization in consideration of the literature developed in behavioral and experimental economics. I argue that many models of worker motivation developed using the rational choice model RCM) carry the cost of ignoring common sentiments and behaviors that have been systematically demonstrated in experimental studies. After providing an extensive review of the experimental economics literature as it may inform various workplace organizational faculties, I conclude that the literature suggests that establishment of work teams and incentive schemes that reward teams for collective success would carry the expectation of sustained satisfaction and productivity of workers more than firm environments that rely on employee competition as a motivational device.

This dissertation is comprised of three essays on the economics of high school-to-college transition programs and teacher effectiveness. The first essay studies the two largest credit-based transition programs in the United States: Advanced Placement and Dual Enrollment. While these programs are distinct, both of them allow students to earn college credits while in high school. Using student-level statewide data from Florida, I examine the relative power of these two programs for predicting students’ college access and success. In the second essay, I gauge the causal effect of one of the programs, Dual Enrollment, exploiting Florida’s eligibility requirements for participation. I conduct two regression-discontinuity analyses. The first analysis evaluates the effect of dual enrollment using a general grade point average requirement for participation in any course. The second analysis measures the effect of one particular challenging and popular dual enrollment course, college algebra, using an eligibility criterion that is specific to that course. While the standard regression-discontinuity methods are appropriate for the first analysis, the participation criterion for college algebra is used not only for dual enrollment but also for college students. I therefore propose an extension of standard regression-discontinuity methods to account for sequential treatments. My third essay, coauthored with Jonah Rockoff, considers ways in which policymakers can improve teacher accountability systems. Using data from New York City public schools, we study the relative predictive power of value-added performance data and subjective evaluations (made by mentors or hiring committees) on teachers’ future performance as measured by students’ achievement gains.

The first chapter of this dissertation uses new data collected by the author on cigarette taxation in 443 municipalities from 1990 to 2009. These data are combined with state-level price and tax information to measure the relative effects of state and local taxes on cigarette prices. The results suggest that a $1 increase in the state excise cigarette tax increases cigarette prices by $1.10 to $1.13, but that a $1 increase in city or county-level excise taxes has a significantly smaller positive effect on prices of $1.06. These findings are similar between premium and generic cigarette brands. The second chapter uses a recent increase in Wisconsins tobacco tax as a natural experiment to measure the economic incidence of tobacco taxation, using micro-level data on cigarette prices from retail locations in Wisconsin and states that share its border. We find that Wisconsins $1.00 tobacco tax increase was over-shifted to consumersï¼› they pay the entire amount of the tax as well as a premium of between $0.08–0.17 per pack of cigarettes. We also use geo-coded data to test if the incidence of the tobacco tax is different for locations near the border of states with different tobacco taxation. The third chapter examines the effects of a fertility subsidy that was instituted in specific regions in Korea in 2004. The value of the subsidy ranged from $4,000 to $9,000 2004 US$) depending on area of residence. Using a difference-in-differences estimation strategy, we measure the effects of the policy on migration in and out of subsidized areas, childbearing, and the sex ratio of newborns. Our estimates for migration suggest that the policy significantly increased the net inflow of females into subsidized areas. This effect is driven roughly equally by a decrease in the outflow from and an increase into the subsidized areas. Our estimated effects on fertility are in line with previous results from the literatureï¼› we find that a $1,000 increase in fertility subsidies leads to a 0.108% increase in the chance of bearing a child for all age groups 21 to 45), and that the policy increased total births in 2005 by 11,000. We find no effect of the subsidies on the sex ratio of children.

This dissertation contains three essays. The first essay presents new empirical regularities on cross-country differences on wage inequality. The second essay develops a theory of labor compensation that hinges on the ability of agents to leverage their knowledge across different occupations, and explores the theoretical and quantitative implications of barriers to entrepreneurship on wage inequality The last essay investigates the effect of openness to trade on innovative activity.

The three chapters of the dissertation illustrate the interplay between financial and labor markets. The chapters examine how removal of geographical restrictions on bank branching in the United States between 1960 and 1999 affected union membership, distribution of income, and black-white wage differential in the non-banking sectors. In the first chapter of the dissertation I use bank branch deregulation as an instrumental variable to identify an exogenous increase in the competitiveness of the non-financial sector and evaluate its impact on union membership. The results indicate that by making the economy more competitive, branch deregulation has a first-order negative impact on union membership in the non-banking sectors. The second chapter of the dissertation is a joint work with Thorsten Beck from Tilburg University and Ross Levine from Brown University. In this chapter we find that bank branch deregulation materially tightened the distribution of income in the United States by boosting incomes in the lower part of the income distribution while having little impact on incomes above the median. Our findings are explained by rising relative wage rates and working hours of unskilled workers following bank deregulation. The third chapter of the dissertation is a joint work with Ross Levine and Yona Rubinstein, both from Brown University. Here we use bank branch deregulation as an instrumental variable to identify an exogenous increase in the competitiveness of the non-financial sector and evaluate its impact on black-white wage differential in the entire U.S. economy. We find that bank deregulation reduced the racial wage gap by spurring the entry of nonfinancial firms. Consistent with taste-based theories, competition reduced both the racial wage gap and racial segregation in the workplace, particularly in states with a comparatively high degree of racial prejudice. The dissertation relates to an emerging literature that examines the channels underlying the “finance-growth nexus” and advertises the role of labor markets in driving this relationship.

This dissertation contributes to the emerging empirical literature on the developmental impact of international migration in the source developing economy. Given the policy priority placed on job creation and the emphasis on wage impacts in recent work, the focus here is on the consequences of emigration on the extent of employment and the nature of that employment of those left behind. In particular, our questions are (i) does international migration and remittances have an impact on unemployment rates in the source country? and (ii) do remittances encourage entrepreneurship, as reflected by the share of workers classified as self-employed? We investigate these questions using census data from Mexico, unlike much of previous work that has relied on household survey data. Our empirical strategy attempts to address the typical issues of self-selection and endogeneity that migration impact studies encounter. We classify workers into skill groups and employ the Borjas (2003) empirical strategy, carrying out our analysis at the national level. We also introduce the fractional logit estimator (Papke and Wooldridge (1996)), unused in this field before, to address the fact that the dependent variables of concern are both proportions, and thus avoid the flaws in typical studies that investigate the impact of selected variables on the conditional expectation of a proportion or vector of proportions. Our results show that (i) emigration and remittances decrease native unemployment rates, and (ii) remittances intensify self-employment activities among the receivers. These results are even stronger once we control for sample bias and endogeneity. In terms of economic policy, we therefore provide indirect evidence that migration and remittances could be growth enhancing through their effects on employment in the source country.

In the last thirty years there has been a considerable change in the way people save for retirement. The once traditional defined benefit plans are steadily being replaced by now dominant defined contribution plans. The new type of plans have effectively shifted the responsibility for retirement saving from the employer to the worker and have thus contributed to the ongoing debate on the adequacy of retirement income and ways to encourage workers to save more. This dissertation studies the role of private pensions on workers savings decision in the US and the potential impact of policy interventions. The first essay co-authored with Geoffrey Sanzenbacher) documents recent trends in growing pension inequality between high and low-income workers, which has coincided with the shift towards defined contribution type of plans and workers voluntary non-participation in such plans. It examines the question whether extending tax-deferred pensions to uncovered low-income workers would result in high rates of pension participation and whether it would succeed in closing the pension inequality gap. To determine how likely uncovered workers are to participate if given the option, it is important to control for possible self-selection into jobs. Even though the majority of low-income workers currently eligible for a voluntary tax-deferred pension plan choose to participate, it is unclear whether those individuals are representative of low-income workers in general. Our estimation reveals that workers currently offered a tax-deferred pension are more likely than otherwise similar individuals to participate. Thus, current estimates over-predict the fraction of workers who would participate if voluntary retirement plans were extended to them. Ignoring selection would overestimate the percent of all low-income workers that would participate in a tax-deferred savings plan by 25 percent and the remaining pension inequality gap by 8.1 percentage points. The second essay further explores how not yet implemented policies that change the distribution or incentives of different pension plans would affect saving outcomes. For this purpose, it builds-in the endogeneity of pension coverage into a behavioral model of workers employment, consumption and saving decisions in which both wages and pensions are simultaneously determined by workers job choice decisions. The model is estimated on the Panel Study of Income Dynamics PSID) data using the method of indirect inference. Policy simulations indicate that switching from voluntary to mandatory contributions in defined contribution plans would result in lower overall pension coverage and a crowd-out effect with other forms of saving, but an overall 10 percent increase in average wealth accumulations. A complete phaseout of defined benefit plans, on the other hand, would lead to a 3 percent lower overall savings for retirement.

This dissertation studies how pay incentives interact with learning about ability and labor turnover to shape the employment dynamics at a US call center. The first chapter provides an introduction to my work and summarizes my main results. The second chapter offers a descriptive analysis of the work environment, the production process, and the effects of pay incentives. The third chapter introduces learning about ability and turnover in a model of effort choice under moral hazard. This model is then used to evaluate the effects of changing pay incentives at the call center. The effect of incentives on effort is significant but small. The results indicate that turnover is a major channel through which incentives affect average performance. Simulating the estimated model shows that neglecting learning and turnover makes estimates of the effect of incentives on effort twice as big as they should be. The fourth chapter investigates how considerations about the quality mix shape pay policy and profits. Building on the estimation approach in chapter 3, the fourth chapter presents a two-step procedure that is used to estimate a fully structural version of the model introduced in the previous chapter. The results provide the basis for counterfactual policy analysis. The optimal policy, in the class of linear contracts in output, not only induces employees to exert effort but also acts as a selection mechanism that helps the firm build a workforce of high match quality over time. The results show that turnover is the major channel through which pay incentives affect profits.

From 1848 — 1943, California enacted a policy known as political economic racism: the act of discriminating against a particular ethnic group economically through the political process. The target of their legislation was Asian immigrants, specifically the Chinese and the Japanese. As the Chinese arrived with countless others as part of the Gold Rush, they quickly faced discrimination, and legislative acts against them. During the 1850s, California enacted several laws designed specifically toward the Chinese. One such law, the Foreigner Miners Tax, generated significant revenue for the state. The Chinese were paying their portion of taxes to a government that provided services to a people that did not like Chinese. Labor groups ultimately formed, pushed for, and received in 1882 an Exclusion Act preventing Chinese laborers from entering into the U.S. The Japanese started to arrive two years after Chinese Exclusion. They faced a similar treatment from Californians as they worked well in agriculture. Labor groups fought for alien land laws preventing the Japanese from owning land in the state. Several other states, including the District of Columbia, had an alien land law similar to that of proposed Californian law. The state believed their law was in line with existing U.S. treaties with Japan. The law passed in 1913, but the state followed with more amendments in 1920, 1923, and in 1927. Each law made it more difficult for the Japanese to own, lease, or work on farms in California. California was not the only state to development political economic racism. Washington, Montana, and Wyoming, also followed in Californias footsteps and enacted the policy as well. The incidents that occurred in these states are reflection of the anti- Asian attitudes that California helped perpetuate. The following will show how California developed the policy of political economic racism and its effects on the state and on areas outside of California.

Technological change has a major role in driving up health care cost and expenditure. Yet we are not fully able to know the extent to which technological change affects cost and expenditure and the way new technologies enter the cost or expenditure functions. This paper uses historical data of US elderly males to see how health care spending associated with prostate cancer treatment behaves over time. Understanding the extent and mechanism by which a new technology actually translates into higher cost are main objectives of this study. Study design, data and organization of the report: This study uses a retrospective research design with observational historical data. The subjects are Medicare enrolled individuals aged 65 or above who were diagnosed with prostate cancer from 1991 to 2002. SEER Medicare-linked database is used in the study. In Chapter 2, I present a long run view of health care spending growth. Spending associated with prostate cancer care was calculated by diagnosis, diagnosis and treatment and method of treatment status. Chapter 3 uses outcome as a single measure of technological change. Prostate cancer caused death rate is used as the key outcome in this regard. The last key chapter is Chapter 4, which is focused on the two innovations in external beam radiation therapy. Of main interest is whether the incremental spending caused by new treatments grows over time. Two innovations in radiation therapy, 3D-CRT and IMRT, are examined. Major findings and conclusions: The average first year incremental spending following an individuals diagnosis of prostate cancer increased from $31,000 in 1993 to $66,000 in 2002, which is 113%. The increase in expenditure associated with the diagnosis and treatment was from $48,018 to $85,267 80%) during the same period. The findings suggest a substantial increase in health care expenditure that is explained by the changes in prostate cancer care during the study period. If all changes are loosely defined as technological changes, then technological change in the first year of prostate cancer care alone contributed about 100 percent increase in expenditure in 10 years period. There were more substantial changes in treatment options than in overall care. Among treatment options, surgery saw the highest and the fastest growth of spending. The estimates using the death rate as a proxy measure of technological change show that the cost per patient would add to $19,055 for the entire decline in death rate caused by prostate cancer. It also meant avoiding one prostate cancer related death in the 65 and older age group would cost $185,000 in the first year of care only. The findings imply that avoiding a death from PCa gave about 7 additional life years in the period. The first year cost of additional life year from this perspective is about $26,000. Finally, estimates show that one year average costs were $8,627 and $11,836 higher than SRT for 3D-CRT and 3D-CRT and IMRT combined respectively. Similarly, two year cost differentials were $12,242 and $14,724 higher for 3D-CRT and 3D-CRT and IMRT combined respectively. The findings show that incremental spending of 3D-CRT rose consistently for a certain period before it started subsiding. Estimates that included both 3D-CRT and IMRT show that incremental spending did not subside but kept increasing after IMRT was introduced. It is found that the incremental cost of new technology rises as the acceptance of that technology gains momentum. This suggests that technology also enters cost and expenditure functions through the strategic plans of health care providers, primarily hospitals. Therefore the role of new technologies to drive up cost and spending at least partly depends on the technology adoption behavior of the health care providers, such as who adopts the new technology first.