UC Berkeley

Chapter 1: Using a novel combination of administrative and proprietary data from 2007 to 2011 on King County, WA (metro Seattle), I estimate the effect of owner-occupants' home equity on their probability of sale and, indirectly, mobility. I exploit plausibly exogenous variation that follows only from changes in local housing price indices, and I account for confounding economic conditions that vary by time and location. The estimates indicate that sales decline dramatically over the combined loan-to-value ratio range from approximately 70% to 100%, well before homeowners reach negative equity levels.

Chapter 2: A known shortcoming of Burdett and Mortensen's celebrated result of pure equilibrium wage dispersion is that it hinges upon the assumption of random matching. This chapter presents a modified version of their model, in which pure equilibrium wage dispersion arises under a form of balanced matching. Rather than modeling workers and firms, the model addresses workers and jobs. Matching is assumed to be random with respect to jobs, which amounts to balanced matching with respect to firms, when firm size is measured in terms of jobs. The bizarre implication of random matching with firms, whereby splitting a firm in two increases its recruitment rate, is eliminated. In addition to increasing employment, speeding up recruitment and reducing worker turnover, higher wages in the modified model also reduce the rate of job vacancy.

Chapter 3: I model the relationship between a central government and its tax-collecting proxies. The Old Kingdom was the first great age of Ancient Egypt, witnessing the construction of such wonders as the pyramids of Giza and the Sphinx. Its downfall was the culmination of a long process, whereby the balance of power gradually shifted from the royal court to an emerging provincial elite. I maintain that the process was born out of state policy: Incapable of perceiving the long-run dynamics governing the equilibrium division of resources between itself and its local proxies, the royal court set the economy on a divergent path that empowered the provincial elite at the state's expense. The underlying strategic interaction between the royal court and its proxies was present throughout the Old Kingdom period. Careful attention is paid to the question of which decisions should be modeled by optimizing behavior and which should not. The paper fills a gap in the literature by addressing why, in the short run, the royal court could not decrease the flow of state resources to the provincial elite.