ESSAYS ON LABOR, NON-HOMOTHETICITY AND WELFARE IN DEVELOPING COUNTRIES
Open Access
- Author:
- Abalo, Kodzovi
- Graduate Program:
- Economics
- Degree:
- Doctor of Philosophy
- Document Type:
- Dissertation
- Date of Defense:
- February 10, 2020
- Committee Members:
- James R. Tybout, Dissertation Advisor/Co-Advisor
James R. Tybout, Committee Chair/Co-Chair
Jonathan Eaton, Committee Chair/Co-Chair
Michael David Gechter, Committee Member
Katherine Yoder Zipp, Outside Member
Barry William Ickes, Program Head/Chair - Keywords:
- Welfare
Roy Model
Income-Specific Price Index
Non-Homothetic Preferences
Reverse Dutch Disease
Child Labor
Credit Constraint
Curse of Ability - Abstract:
- This dissertation is composed of two, largely unrelated parts. In the first part (chapters 1 and 2) I explore the distributional effects of a negative terms-of-trade shock to an oil-exporting country. Specifically, I begin by developing a computable Roy model of the Nigerian economy with non-homothetic preferences, after-tax income effects, and government endogenous transfers through oil subsidies. I then use this model to simulate the impact of the global oil price shock that hits the Nigerian economy in 2016. In doing so, I focus on differential impacts across workers due to their different skills, locations, and comparative advantages. Finally, I use the model to assess whether Nigeria's policy of removing the oil subsidies was welfare improving, and to analyze complementary ways to improve the welfare outcome of low income workers in the wake of the subsidy removal. The second part of this thesis (chapter 3) develops a dynamic model of child labor that challenges the view that child labor contributes to human capital accumulation (Dessy and Pallage, 2005; Sugawara, 2011). Therein, I argue that this view is valid but only in a static framework. Indeed, when accounting for the dynamic of human capital accumulation, child labor - including normal forms of labor - always negatively impacts children's future earning. I show through a theoretical argument that the apparent positive role played by child labor in a mincer-type regression merely reflects a disguised positive role played by children's ability in a sub-optimal equilibrium characterized by constrained credit and high incidence of child labor.