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Essays on Macroeconomics

  • Author(s): Ji, Ting
  • Advisor(s): Ohanian, Lee
  • et al.
Abstract

In these essays, I examine the role of allocating human capital and labor in an economy. The first chapter documents occupational inheritance–interpreted as children inheriting their parents' occupations–in China, India, and the US. I argue that the prevalence of occupational inheritance in China and India is largely due to two categories of impediments: (1) labor market frictions, e.g., parents' social networks and household registration, which ties rural families to agriculture in China, and the caste system, which restricts young workers' occupational choices in India, and (2) barriers to acquiring human capital, i.e., it is much easier for the young in the US to accumulate human capital from sources other than senior family members compared with the young in China and India. Based on a new tractable occupational choice model using techniques from Eaton and Kortum (2002), this chapter quantitatively evaluates the aggregate implications of occupational inheritance. Counterfactual experiments suggest that if the impediments mentioned above could be reduced to the US level, labor productivity would grow 57 to 73% in China and over fourfold in India. In addition, China has realized 60 to 74% of this growth potential from the 1980s to 2009.

The second chapter builds on three empirical facts in the US labor market: from 1980 to 2005, there was (1) about 30% growth in low-skill service jobs, (2) about 9% increase in female labor force participation, and (3) almost constant average home production hours conditional on employment status and gender. I propose a hypothesis that the increase in female labor force participation decreases home production and leads households to purchase substitutable goods from the market. A simple accounting framework produces a benchmark quantitative exercise showing that this theory can explain about 50% of the increase in low-skill service jobs.

In the third chapter, I develop a theory of efficient innovation. Individuals are heterogeneous in innovation ability, and the allocation of innovative agents into process innovation and product innovation determines the level of innovation efficiency and output growth rate. I identify several sources of inefficiency of the competitive economy, notably the frictions in the innovator market.

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