Microeconomic Policy for Development: Essays on Trade and Environment, Poverty and Education

University dissertation from University of Gothenburg

Abstract: Abstracts This thesis contains three papers analyzing different issues. Paper 1: “Do Countries with Lax Environmental Regulations Have a Comparative Advantage in Polluting Industries?” We study whether lax environmental regulations induce comparative advantages, causing the least-regulated countries to specialize in polluting industries. We seek to improve three areas in the empirical literature based on the Heckscher-Ohlin-Vanek’s factor content of trade, more specifically in Tobey’s (1990) approach: the measurement of environmental endowments, the possible endogeneity due to an omitted variable that has not been considered, and the influence of the industrial level of aggregation. For the econometrical analysis, we use a cross-section of 71 countries to examine the net exports in the most polluting industries in the year 2000. As a result, we find that industrial aggregation matters and we find some evidence in favor of the pollution-haven effect. Paper 2: “Poor Areas or Poor People: Decomposing differences in living standards and poverty” Several studies report large and persistent differences in standards of living and poverty within a country. In this paper, we study whether the observed differences in poverty incidence in urban areas are due to differences in the attributes of the population living in these zones or come from differences in the value of these attributes in the different areas. For this purpose, we apply decomposition analysis. We illustrate the methodology comparing urban areas in 13 Chilean regions for the year 2003. We found that even after controlling for an ample set of household characteristics, differences in the parameters are an important determinant of household income and poverty within a country. Paper 3: “Absenteeism and Time-Inconsistent Behavior. Should we make lecture attendance compulsory?” We investigate the problem of absenteeism in an educational program with timeconsistent and naïve time-inconsistent students and the effect that mandatory attendance has on the behavior and well-being of the students. We observe that time-inconsistent students tend to postpone lecture attendance such that they are more likely to be absent from lectures located in the first part of the term while they later show up in the second part of the course. Absenteeism rates are not necessarily lower for naïve time-inconsistent vis-àvis time-consistent students; nevertheless, the performance of time-inconsistent students is worse in any case. We showed that the well-being of myopic time-inconsistent students could be dramatically reduced because of the shortcoming in their intertemporal preferences. Therefore, it seems as mandatory attendance could benefit these students in the classroom, although there is some possibility of harming the time-consistent. The outcome depends on the distribution of the benefits and costs of lecture attendance along the term, which requires empirical evaluation.

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