ESSAYS IN ECONOMICS OF LABOR, TECHNOLOGY, AND DEVELOPMENT

Carly Dollin

doi:10.7273/000006525

This thesis addresses various issues within the realms of the economics of technology, labor economics, and development economics. It applies several empirical methods in econometrics, and statistics to carry out substantial results and economic analysis aimed at guiding policy decisions. The first chapter explores the decay and diffusion rates of technological knowledge in manufacturing, specifically focusing on four out of twenty-five subsectors. Spanning the period 1995-2012, the study adopts a sampling method to gather patents and citations within the aerospace, computer, food, and motor vehicle industries. In addition, the study investigates the link between patent claims, citations, and knowledge stock across the manufacturing industries. Applying the double exponential specification coined by Caballero and Jaffe (1993), the study finds decay and diffusion rates of 0.0741 and 0.00022 for the entire sample. The aerospace subsector exhibits the highest decay (0.167), while the computer industry shows largest diffusion parameter (0.00063). Despite its low decay parameter (0.041) and relatively high diffusion rate (0.0005), due to fewer annual patents granted, the food subsector displays the lowest technological knowledge. The computer ranks highest in technological knowledge, and the aerospace lowest despite its relatively substantial number of patents. The findings highlight the sensitivity of obsolescence and diffusion on technological knowledge across subsectors. Further, the results reveal patent claims impact citations, especially backward citation which is a key determinant of knowledge stock. The research pinpoints the importance of both quantity and notably quality of patents in determining the level of technological knowledge. The second chapter examines the effect of computer technology on the real average wages across 455 U.S. manufacturing subsectors spanning from 2007 to 2012. This study explores the wage disparities across subsectors while focusing on size, capital intensity, professional and technical services, and labor productivity. To spell out the causal effects and describe the mechanisms through which computer technology explains the average wages, I carry out a two-stage least-squares (2-SLS) model with a two-way fixed effects approach. I consistently estimate the model in using for instrument a knowledge stock index derived from patent citations and authentic decay and diffusion rates of the manufacturing sector. My findings reveal a positive elasticity of computer technology on average wages ranging from 11.6% to 12.9% for hardware, and 15.7% to 18.3% for software across the high-tech subsectors. This positive linkage suggests more adoption of computers and related products at the workplace is associated with higher average wages. Further, the results display greater marginal effects of technology on wages for labor-productive, capital-intensive, and technology-intensive subsectors. Overall, the paper supports the skilled-biased technological change (SBTC) argument, which illustrates technological advancements create opportunities that benefit the high skilled while disadvantaging the low skilled workers. The third chapter examines the societal welfare adopting an inequality adjusting global wellbeing index derived from a principal component analysis (PCA). This index is developed using a data-driven approach which retains nine composite indicators encompassing various social and economic attributes across 178 countries. The method used is similar to previous studies but extends them by incorporating weights of variables, and inequality across countries. In addition to the classic dimensions of human development - health, education, access to resources - the study focuses on gender empowerment, environment, and social lifestyle indicators. The findings suggest countries excelling in health tend to perform well in other socioeconomic areas. Results also suggest the broad development story needs to incorporate more specific social and ecological dimensions. This new inequality-adjusted index (IAGWI) is compared to traditional development indices such as HDI, IHDI, and PHDI. They display similarities but also significant ranking dispersions across countries for several dimensions. Essentially, this research underscores a complexity of societal welfare, emphasizing the need for consideration from multiple social and economic perspectives.

ESSAYS IN ECONOMICS OF LABOR, TECHNOLOGY, AND DEVELOPMENT

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