Date of Award

8-2016

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Economics

Major Professor

Mohammed Mohsin

Committee Members

Matthew N. Murray, Marianne H. Wanamaker, LeAnn Luna

Abstract

My dissertation consists of three essays related to policy analysis. In the first essay we ask, how can developing nations who face revenue mobilization issues and large informal sectors use taxation as a means of nation building? To answer this, we design a dynamic general equilibrium model that accounts for a large informal sector. Contrary to previous studies that model the informal economy, we focus on the importance of the government maintaining its social fiscal contract with its constituents by including the provision of productive public goods in the model. By doing so, we show that increasing taxes can be used to encourage formal sector activity and increase revenue simultaneously. In the second essay, I develop a theoretical outline explaining why treatment effects may lag the treatment event in the context of local labor shocks, and examine the impact properly identifying of treatment date. Using the Clean Air Act Amendments (CAAA) of 1990 as a case study for a negative labor demand shock in the Appalachian coal mining industry, I find lags in treatment effects on the mining industry relative to policy implementation, as well as secondary lags in the multiplier effects on the aggregate economy relative to the labor shock. Building on this, the third essay tests the predictions of the theory in the case of a positive labor demand shock and explores the timing of multiplier effects at the sector level. Using the CAAA as the source of a positive labor demand shock in the Western United States coal industry, I again find lags in the treatment effect on the mining sector, but find variety in the timing of responses of individual sectors. I also discuss the implications these findings have for local policy makers whose communities may experience such shocks, as well as national policy makers concerned with future policy initiatives such as the Clean Power Plan.

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