Date of Award
Spring 2023
Document Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
Department
Economics
First Advisor
Peters, Michael
Abstract
I present three essays in growth and inequality. The first chapter considers the geographic distribution of research and development (R&D). A few cities perform a large share of R&D in the United States. The social return to R&D depends not only on the size of knowledge spillovers but also on the size of profits. To the extent that knowledge transmission is imperfect across space, these two objects vary across space.While prior literature has documented local knowledge spillovers, there is little systematic evidence on geographic variation in private profits from R&D. In this direction, I document a new fact from the market for technology: patent sales from inventor to firm decline steeply with distance, other things equal. My interpretation is that it is hard for inventors to commercialize their ideas in distant markets. Through the lens of a spatial growth model, I then infer that the private returns to R&D are low in remote regions. By contrast, spillovers are relatively flat across space because patent citations decline slowly with distance. Place-based R&D policy subsidizes research not in dense cities, but in remote locations where private returns are low. The optimal policy reallocates research workers across space so as to increase aggregate consumption by about 1% in the long run, with minimal effects on inequality. The second chapter examines spatial inequality through the lens of housing markets. Why are Americans with and without college degrees are increasingly choosing to live in different cities? I assess the role of housing demand. I first show the demand for housing is nonhomothetic: that is, housing expenditure shares decline with income. High-income households spend relatively little on housing and choose to live in expensive cities, while low-income households devote a high budget share to housing.Differences in cost of living therefore drive spatial sorting between skill groups. Increases in the aggregate skill premium amplify these differences and intensify sorting. To quantify this mechanism, I augment a standard quantitative spatial model with flexible nonhomothetic preferences, disciplining the strength of the housing demand channel using consumption microdata. I find that the rising skill premium caused 23% of the increase in spatial sorting by skill since 1980. The third chapter assesses worker retraining programs. Retraining is a policy tool to support workers displaced by trade, yet there is little in the way of theory or evidence on policy effectiveness. Using administrative data from Germany, a highly open economy with extensive government-subsidized retraining programs, I provide evidence that workers retrain in response to import competition. I then show how retraining changes the gains from trade. I propose a search model in which heterogeneous workers may choose to retrain while unemployed. Retraining changes job-finding rates and labor productivities across sectors. Retraining increases the gains from trade by 7% in the aggregate by speeding labor supply adjustment to trade. Relative to an environment without retraining, some workers gain five times as much while others gain virtually nothing.
Recommended Citation
Williams, Trevor Colton, "Essays on Growth and Inequality" (2023). Yale Graduate School of Arts and Sciences Dissertations. 1000.
https://elischolar.library.yale.edu/gsas_dissertations/1000
