This dissertation consists of three separate papers on topics in the economics of labor markets and economic development. The first chapter is “Education and the Evolution of Comparative Advantage.” We provide substantial evidence that education is helpful for workers in low- and middle-income countries to accumulate human capital and is helpful for the countries to develop comparative advantage in products unrelated to what they have been exporting. In contrast, controlling for the relatedness of target products to these countries’ exports, education appears unimportant for developing comparative advantage in products that are intrinsically complex or education intensive.

The second chapter is “The Influence of Foreign-born Directors on the US Film Industry.” This paper studies the effect of high-skilled immigrant labor on the production of cultural products in the U.S. With director-distributor matched data, I disentangle the director’s effect from the distributor’s effect by controlling for a full set of individual distributors’ fixed effects. I further controlled for the estimated production budget to capture the value added by a director assignment that is additional to the quality of a film prior to director assignment. A foreign-born director results in a differential effect on the box office revenues in the domestic and international domain–29.9% international box office and 16.4% lower domestic box office, and it suggests that the value of a foreign-born director is likely in mitigating the “foreignness liability” of the American films in the international market and generating a higher revenue overseas.

The final chapter is “Gender Gaps in Productivity and Labor Market Opportunities: The Celluloid Ceiling and Film Directors’ Career Trajectories.” We estimate the gender gap in employment outcomes and its interaction with productivity by following the careers of film directors. We proxy productivity with the audience and critical responses to the director’s previous film. According to our analysis, there are no discernible gender gaps among high-productivity directors, but low-productivity women are much less likely to direct another film than comparable men.

In this dissertation, I use data from publicly listed companies to explore factors that affect corporate investment decisions. In Chapter 1, I investigate the sensitive of investment to cash flow. I argue that the sensitivity is partly driven by agency-conflict within stockholders, namely, controlling shareholders extracting firms’ resources at the expenses of minority shareholders. To test this finding, I use the mandatory Split-Share Structure Reform in China, which exogenously converted all non-tradable shares to tradable, and reduced the incentives of controlling shareholders’ expropriation by better aligning the interests of all shareholders. By employing a theoretical model and conducting empirical analysis, I find a significant reduction in the sensitivity for firms with higher levels of pre-reform expropriation, and the effect is more pronounced for private firms. Moreover, I find that manager’s over-investment, financial constraints, and measurement errors in investment opportunities do not drive the reduction in sensitivity. Overall, my findings support the view that controlling shareholders’ expropriation leads to investment-cash flow sensitivity. Given that controlling shareholders’ expropriation is widely prevalent, my findings have broad relevance for explaining investment and financing decisions.

Chapter 2 examines whether investment-cash flow sensitivity is a good measure of financial constraints in emerging markets. We exploit a staggered industrial regulation in China as a natural experiment to identify the impact of increasing financial constraints on the sensitivity. We find that the investment-cash flow sensitivity becomes significantly larger by 7.6% after the enactment of regulation policy in treated industries using a difference-in-differences methodology. Consistent with political favoritism explanations, we show that such a positive association is stronger for state-owned enterprises and more bank-dependent firms, but is smaller under credit easing. The findings empirically suggest that investment-cash flow sensitivity indeed measures financial constraint.

In Chapter 3, I investigate the causality between government intervention and investment efficiency. I use the staggered industrial regulation in Chapter 2 as a policy instrument to changes in government intervention. With a difference-in-differences methodology, I find that investment efficiency becomes significantly larger after the enactment in treated industries. Moreover, I show that the association between higher investment efficiency, measured as increasing investment-Tobin’s Q sensitivity, and decreasing government intervention is stronger for state-owned enterprises. In addition, I argue that for private firms, such association is significantly stronger for those with political connections. My findings empirically suggest that government intervention distorts the efficiency of corporate investment.

Why capital does not flow more heavily into poorer countries with lower capital-labor ratios is a

question that development economists have been asking for decades. Caselli and Feyrer (2007)

developed adjusted marginal product of capital (MPK) models that are very similar across rich and

poor countries, proving that capital is indeed allocated efficiently across the world and there are

no major frictions preventing optimal allocation of capital. This paper uses updated and improved

national accounts data to replicate the methodology set forth in Caselli and Feyrer (2007), testing

the long-term validity of their conclusions as well as the effects of the Great Recession on

international capital flows between developed and developing countries. I find that while the Great

Recession negatively impacted MPKs in both rich and poor countries, capital flows and output

growth have since recovered, and MPKs are still very similar across all countries. This study

provides support for Caselli and Feyrer’s conclusions on the causes of low capital-labor ratios in

poorer countries, as well as the view that capital is indeed allocated efficiently across countries.

This dissertation explores the responses of different dimensions of health to temperature changes in tropical developing countries in three separate essays. The first studies the relationship between temperature and mortality in Colombia. I show that even at narrow temperature ranges, which are characteristic of the tropics, anomalously hot or cold days increase mortality. Unlike temperate locations, I find that deaths attributed to infectious diseases and respiratory illnesses drive this relationship in the hot part of the distribution, affecting children aged 0-5 primarily. These findings uncover new factors and populations at risk after the occurrence of hot temperature shocks. I calculate that the average person who dies after a hot temperature shock loses approximately 30 years of life. The second essay focuses on the relationship between temperature and health services usage in Colombia. I find that hospitalization rates monotonically increase with temperature. Infectious diseases and maternal-related care mainly explain these results, suggesting that children, fetus in-utero, and women could be significantly affected by changes in temperature. Assuming temperatures will continue to rise as they did in sample and no further adaptation measures are undertaken, my estimates imply 1,161.3 additional hospitalizations per 100,000 inhabitants per year (33.6\% of the average annual rate of 3458.87). These findings suggest that changes in temperature could impose a burden on the health system, but alternatively it could be an important mediating factor between climate change and mortality. In the last essay, my collaborators and I ask if temperature shocks differentially affect children's health by gender in sub-Saharan Africa. We find that hot temperature shocks decrease anthropometric measures for children under five, with girls seeming to bear much of the effect after exposure to extreme hot days.

This dissertation consists of three works that analyze real estate markets from macroeconomic perspectives. In the first essay, a Reverse Mortgage Loan (RML) allows senior homeowners to smooth consumption across time and generations in response to uninsurable shocks. Meanwhile, RML borrowers lose the opportunity to bequeath the whole equity of their home. Borrowing an RML is an intertemporal choice problem, which depends on various factors. This essay studies how intergenerational risk-sharing affects RML origination and intergenerational transfers during the housing boom and bust. Ibuild an overlapping generations model with one-sided altruism to explain how a parent strategically behaves to maximize a dynasty’s utility. I find that parents owning a relatively smaller home and scarce liquid assets are the principal borrowers of an RML. As children’s income increases, the RML take-up rate initially decreases and then increases. As the size of the bequest motive increases, the RML take-up rate decreases; however, more slowly during the recession.

In the second essay, open enrollment policies provide more public school options by allowing a student to transfer to a public school of her choice regardless of residency. This essay investigates the effect of open enrollment on housing prices and income inequality. I consider school districts in Arizona and North Carolina, as opposite extremes in enrollment policies. I find some evidence on the effect of open enrollment on housing prices and income inequality. In a state with open enrollment, housing prices increase with the number of better schools far from home. The Gini coefficient decreases with the quality of public education in a state with open enrollment. In an overlapping generations modelwith altruism, I examine how changes in the quality of public education, private school tuition, and transportation cost affect housing prices and income inequality across states.

The third essay studies how the composition of businesses of different qualities changes between a gentrifying and a non-gentrifying neighborhood in response to higher rent. I investigate how actively commercial gentrification is going on in some neighborhoods in Los Angeles, USA, using Yelp data. Then, I construct a search and matching model with heterogeneous neighborhoods, rents, and search friction. The model predicts a higher proportion of high-quality businesses and rents in a gentrifying neighborhood than a non-gentrifying neighborhood. Depending on whether high and low-quality goods are complements or substitutes, changes in the composition of businesses and rents showdifferent patterns between a gentrifying and a non-gentrifying neighborhood.