Abstract
The first chapter is on a “dark” side of fiscal decentralization. I demonstrate,
with Wendun Wang in a yardstick competition model, that as fiscal expenditure is decentralized, more public resources might be misallocated between visible public goods and invisible ones. To empirically verify our theoretical model, we employ U.S. state-level data and estimate the panel data model using various econometric approaches. The empirical results provide strong evidence that fiscal decentralization can lead to distortion in public expenditure and increases the poverty rate on regional level. The second chapter is jointly written with Yang Zhou and Erwin Bulte. By proposing a portfolio choice model based on a “quantity-quality tradeoff”, we explore fertility decisions taking into account the risk of human capital investment. Our theory highlights the detrimental effect of adult mortality risks on human capital investment, and predicts heterogeneous impacts on fertility choice across income groups. Our analysis helps to reconcile the conflicting empirical evidence regarding the impact
of HIV/AIDS on fertility found in previous literature. The third chapter considers a mechanism that facilitates risk sharing when effective contract enforcement is lacking. The “emotional collateral” between friends may help people to regulate the limited commitment problem. I show that the mechanism can work effectively if gift expenses serve as signals that separate friends, who have “emotional collateral”, from non-friends. By using a unique data set containing detailed records about gift exchange in rural China, I find empirical evidence to support the association between gift expenses and risk sharing.
with Wendun Wang in a yardstick competition model, that as fiscal expenditure is decentralized, more public resources might be misallocated between visible public goods and invisible ones. To empirically verify our theoretical model, we employ U.S. state-level data and estimate the panel data model using various econometric approaches. The empirical results provide strong evidence that fiscal decentralization can lead to distortion in public expenditure and increases the poverty rate on regional level. The second chapter is jointly written with Yang Zhou and Erwin Bulte. By proposing a portfolio choice model based on a “quantity-quality tradeoff”, we explore fertility decisions taking into account the risk of human capital investment. Our theory highlights the detrimental effect of adult mortality risks on human capital investment, and predicts heterogeneous impacts on fertility choice across income groups. Our analysis helps to reconcile the conflicting empirical evidence regarding the impact
of HIV/AIDS on fertility found in previous literature. The third chapter considers a mechanism that facilitates risk sharing when effective contract enforcement is lacking. The “emotional collateral” between friends may help people to regulate the limited commitment problem. I show that the mechanism can work effectively if gift expenses serve as signals that separate friends, who have “emotional collateral”, from non-friends. By using a unique data set containing detailed records about gift exchange in rural China, I find empirical evidence to support the association between gift expenses and risk sharing.
| Original language | English |
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| Qualification | Doctor of Philosophy |
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| Award date | 8 Dec 2015 |
| Place of Publication | Tilburg |
| Publisher | |
| Publication status | Published - 2015 |