Essays in applied microeconomics
Title: Essays in applied microeconomics
Author: GAARDER, Ingvil
Citation: Florence : European University Institute, 2014
Series/Number: EUI PhD theses; Department of Economics
The first chapter of this thesis examines the incidence and distribution effects of VAT. The context of the study is a sharp change in the VAT policy on food items in Norway. I examine the direct impact of the policy change on the consumer prices of food items as well as any cross-price effects on other goods. The estimates suggest that taxes levied on food items are completely shifted to consumer prices, whereas the pricing of other goods is not materially affected. To understand the distributional effects of the VAT reform, I use expenditure data and estimate the compensating variation of the tax induced price changes. I find that lowering the VAT on food attenuates inequality in consumer welfare. Chapter 2 and 3 investigates how technology adoption in firms affects productivity and labor market outcomes. In chapter 2 (joint work with A. Akerman and M. Mogstad), the focus is on whether adoption of broadband internet in firms enhance labor productivity and increase wages. We find that broadband adoption favors skilled labor by increasing its relative productivity. By comparison, broadband internet is a substitute for workers without high school diploma, lowering their marginal productivity. Consistent with the estimated changes in labor productivity, wage regressions show the expansion of broadband internet improves (worsens) the labor outcomes of skilled (unskilled) workers. We explore several possible explanations for the skill bias of broadband internet. We find suggestive evidence that broadband internet complements skilled workers in executing nonroutine abstract tasks, and substitutes for unskilled workers in performing routine tasks. In chapter 3, I move attention to why firms differ so much in their abilities to convert inputs into output. One possible explanation is that firms choose different technology, giving variation in output that cannot be explained based on observable inputs like standard labor or capital measures. I find that broadband internet accounts for about 2 to 3 percent of the standard deviation in TFP across firms. I decompose aggregate TFP in the economy into an unweighted average of firm-level TFP and the covariance between market share and firm-level TFP. I find that the contribution of the covariance term to aggregate TFP is reduced substantially when I account for the variation in output that can be explained by broadband adoption in firms. This suggests that broadband internet accounts for some of the allocation of production to more productive firms.
Defence date: 29 September 2014 Examining Board: Prof. Jérôme Adda, EUI & Bocconi University, Supervisor; Prof. Andrea Ichino, EUI; Prof. Kjell G. Salvanes, Norwegian School of Economics; Prof. Guy Michaels, LSE
Type of Access: openAccess; openAccess