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Essays on inequality and poverty
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Dissertation
Essays on inequality and poverty
2003
Overview
Chapter 1 explores the sources of change in educational wage inequality in the U.S. between 1965–1999. I present new empirical estimates of the impact of factor nonneutral technological change and capital-skill complementarity on the demand for college-educated workers, based on a translog production model with four (and five) factors and separate trends for the factor biases of technical change. I show that skilled labor-using innovations and the acceleration in the decline of unskilled labor efficiency constitute the main forces behind increased wage inequality. On the other hand, capital-skill complementarity is restricted to a very small fraction of equipment capital, information technology. Furthermore, this complementarity effect is falling over time and it can only account for a small fraction of increased wage inequality after 1980. Chapter 2 investigates the factor bias of technical change at the U.S. industry level, and relates this bias with industry investments in information technology and their exposure to international trade. Using industry data for the U.S. between 1965–2000, this chapter finds that the absolute efficiency of unskilled workers has declined within the largest industries in the economy. Simultaneously, technical change has increased the efficiency of skilled labor within virtually all industries. Results also show that IT investments are associated with both faster increases in the efficiency of skilled labor, and faster declines in the efficiency of unskilled labor. Chapter 3 examines how the design of cash transfer schemes influences household welfare outcomes with particular reference to the impact of transfers on schooling, health, food security, and investment. This is accomplished by examining two innovative cash transfer schemes initiated by the Mexican government in the last decade: PROGRESA, which is a national anti-poverty scheme directed at chronic rural poverty, and PROCAMPO, which is a scheme designed to compensate farmers for the negative price effects of NAFTA. The results suggest that conditionality may have little effect in terns of short-term welfare outcomes, but do influence both longer-term (human capital) and medium term (productive) investment.
