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Essays in empirical macroeconomics

University of British Columbia

This thesis presents three chapters in empirical macroeconomics. The first chapter studies how the mortgage expansions in the early 2000s affect U.S. regional economies by estimating its impact on the local labor market from 2003 to 2017. Using a plausible exogenous measure of the credit supply shock, I find that counties with higher credit supply shocks have not seen significant changes in local unemployment but have shown slower wage growth. While the high-credit counties did not experience significantly different changes in local labor markets in the expansion period, they did experience larger increases in unemployment in the recession, but also recovered faster after the recession, summing to a zero net effect in the long run. Meanwhile, these counties experienced a slowdown in wage growth since the recession, resulting in a depressed wage level until 2017. Additionally, the wage decline was accompanied by a decrease in the employment share of young firms. In Chapter 2, I propose a mechanism to explain how mortgage market fluctuations affected the labor market, slowed down wage growth, and led to labor reallocation. I introduce two financial constraints, one on the household side and the other on the production side, both tied to the collateral values of houses. I show that changes in household borrowing constraints affect housing prices and thereby affect firms’ financial condition. When working capital constraint binds, mortgage market fluctuations affect firms' labor demand, which led to labor reallocation from financially constrained to unconstrained firms and a decline in wage. In Chapter 3, we study how small and micro enterprises (SMPE) respond to the policy in reducing the corporate income tax rate in China. Using gradual increases in the qualifying threshold for SMPEs during 2010-2016 as a natural experiment, we find that the rate cut led to significant increases in sales growth, investment, and productivity of affected SMPE firms. We further show that the rate cut induced micro-sized firms to enter the market.

Text

2020-10-28

Attribution-NonCommercial-NoDerivatives 4.0 International

http://hdl.handle.net/2429/76381

Economics

University of British Columbia

UBCV

http://creativecommons.org/licenses/by-nc-nd/4.0/