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School of Economics

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Ivan Allen College of Liberal Arts

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Analyses of Short-Run Airport Costs in the U.S.: Pre- and Post-COVID-19

(Georgia Institute of Technology, 2023-07-27) Yang, Yushuo

Airports are crucial for passenger and cargo transportation, as well as for employment generation and GDP growth. A better understanding of airport cost structure enables airport managers and policymakers to more efficiently allocate their limited resources and design policies, respectively. This dissertation conducts short-term multi-output cost analyses for 50 medium and large U.S. airports. Using a multi-product translog cost function methodology, the dissertation addresses three research questions: what are the effects of negative attributes on short-run airport cost structures; what impact did COVID-19 have on airport short-run operating costs; and for aircraft departures, how does the short-run marginal social cost differ from marginal private costs. Based on 2012 – 2019 data, the first essay estimates a translog cost function with three positive outputs (departures, workload, and non-aeronautical revenue) and three negative attributes (delay, congestion, and air pollution). The results show that delay and congestion have statistically significant and positive effects on airport total operating costs. Compared to the cost analysis with negative attributes, the cost analysis without negative attributes produces unreliable estimates of production properties. Extending the data to cover two COVID-19 years, 2020 and 2021, the second essay examines the effects of COVID-19 and related policies on airport short-term costs. In addition, the essay decomposes the percentage change in average variable costs between pre-COVID-19 and COVID-19 periods. The results indicate that COVID-19 (cases and deaths) and associated policies (state face mask and COVID-19 vaccine mandates) significantly and positively affect the total operating costs. COVID-19 cases and the time/technical efficiency effect are the two most influential factors for the percentage change in average variable costs. The third essay focuses on aircraft departures and estimates a measure of marginal social cost that includes negative externalities (delay, congestion, and air pollution). The essay examines whether the current landing fees cover marginal departure social costs. The results find that, on average, current landing fees only cover the marginal private costs but are significantly less than the marginal social costs per departure. This strongly suggests that current airport landing fees do not internalize the negative externalities, resulting in pricing inefficiency from the social perspective. Each of the three essays conducts sub-sample analyses between large and medium hubs, as well as between cargo and non-cargo airports. The results find differences across different airport types in each analysis. In summary, the dissertation uniquely contributes to existing knowledge on the impacts of negative attributes, COVID-19, and the extent to which existing landing fees fall short of the marginal social costs of airport departures. The first essay contributes by incorporating negative attributes into the airport cost analysis and examining production properties after controlling for the negative attributes. The second essay contributes by analyzing the impact of COVID-19 and related policies on airports’ short-term costs and decomposing the percentage change in average variable costs between pre-COVID-19 and COVID-19 periods, which offers new insights into the pandemic’s impact on airports’ costs and technical characteristics. The third essay contributes by estimating the marginal social cost using a broader sample and assessing the pricing efficiency of current landing fees from the social perspective.
Essays in Environmental and Development Economics

(Georgia Institute of Technology, 2023-07-24) Kamble, Vikrant Kashiram

Over the last few decades industrial growth, agricultural activities, and increasing population have contributed to accelerated environmental degradation in India. Policymakers have been implementing various strategies to curb environmental degradation and ultimately slow down climate change effects. My dissertation evaluates the mitigation responses to climate change and environmental degradation in India. The first chapter analyzes the institutional response to the loss of forest cover by implementing one of the most ambitious privately sponsored afforestation projects implemented in the Rajasthan state of India. This research finds evidence of the long-term effect of planting trees over 100,000 hectares of land on rainfall and agricultural activities in the region. We find that post-implementation of the project, Rajasthan state observed an increase in rainfall after 5-6 years. Consequently, the availability of excess water in the region leads to an increase in cultivated area, production, and yield. Contrary to existing literature, our results find that the forest and agriculture sectors can grow together sustainably. The second chapter analyses a natural experiment of closing down mining activities in the iron ore hub of India. As a result of environmental degradation due to illegal mining, the Supreme Court of India banned iron ore mining in the Karnataka State of India in 2010-11. This ban had an effect on the direct and indirect labor market affecting more than 50,000 unskilled laborers. We hypothesize that these laborers will find work in other primary sectors such as agriculture. In our analysis, we find that post-ban on mining, there was a decrease in field labor wages for male and female laborers due to a shift in labor supply. The wages bounced back after the ban was lifted in 2013. In the third chapter, the thesis discusses how individuals mitigate the effects of air pollution. This paper evaluates the labor supply decisions of married individuals affected by pollution. Using a household utility model, I find empirical evidence that due to caregiving responsibility towards their spouse, individuals are forced to adjust their participation in the labor market when their partners fell sick due to pollution exposure.
Peer Effects and Human Capital Accumulation

(Georgia Institute of Technology, 2023-04-30) Gu, Xin

Human capital accumulation is not only an individual decision but also an interactive process. This dissertation studies how peers affect individual human capital accumulation in the context of in-person education and online training. Firstly, the dissertation examines classmate and close friend peer effects on the cognitive ability formation of middle school students. The results suggest that peers generate a significant positive impact on student cognitive ability development. The size of peer effects is heterogenous across student ability distribution and jointly determined by two channels, peer conformity and peer complementarity. Secondly, the dissertation investigates peer effects on the online training participation of young teachers. The virtual instruction platform data contain the accurate duration of attendance for every individual-lecture pair and allow for the control of individual, lecture, and peer group unobserved heterogeneity. The estimation shows significant positive peer effects on the likelihood of joining an online lecture and the duration of staying. The magnitude of peer effects differs by group and increases with the relationship closeness. The potential driving mechanisms are online social interactions, peer pressure, and reputation concerns. Thirdly, the dissertation develops a two-step estimator that identifies peer effects on the duration of lecture attendance by accounting for the self-selection into lecture participation. The application of the online training data demonstrates significant positive peer influences on the duration of lecture attendance. Overall, the dissertation finds strong evidence of causal peer effects on human capital formation in the traditional in-person environment as well as in the emerging online setting. It sheds light on how peer effects can be utilized to improve the effectiveness of human capital accumulation.
Multidimensional poverty, telehealth, and perinatal healthcare

(Georgia Institute of Technology, 2023-04-26) Dong, Xiaoyu

This dissertation commences with an evaluation of multidimensional poverty in America among various racial and ethnic groups throughout the past decade. The analysis reveals that a higher and notable percentage of individuals face deprivation evidenced through health indicators, regardless of their race or ethnicity, compared to the other four indicators. To delve deeper into this issue, the next two theses concentrate on the impact of public health policies on reducing health costs and enhancing health outcomes. The first thesis presents alternative indices to estimate multidimensional poverty in the USA over the last decade with a focus on analyzing trends by race and ethnicity. Individual level data on five different dimensions of well-being were compiled over the last decade using annual Census surveys. The results indicate a decline in multidimensional poverty over time, with different indices highlighting different aspects of poverty. The second thesis investigates the impact of telehealth parity laws (TPLs) on healthcare expenses. TPLs remove barriers for patients from using telehealth services, and the study finds that passing TPLs decreased total healthcare expenses, hospital care expenses, and physician service expenses significantly. The effects were observed to increase over time, suggesting that telehealth could be an effective substitute for in-person visits in reducing healthcare costs. The final thesis examines the impact of e-cigarette policies on birth outcomes, specifically the effects of vaping during pregnancy on birth weight and compares the results with smoking only and dual-use. The study finds negative effects of vaping on birth outcomes, but these effects are about half the magnitude of those associated with smoking alone on birth weight. Overall, this dissertation sheds light on the issue of multidimensional poverty and the impact of public health policies on reducing health expenses and improving health outcomes. This highlights the importance of considering multiple dimensions of poverty, the potential benefits of telehealth and effective policy interventions in improving public health.
Bilateral negotiations, vertical contracting, and firm behaviors in network

(Georgia Institute of Technology, 2022-08-03) Zhu, Lian

In the last two decades, the internet industry has changed dramatically, especially for interconnection relationships. With the booming video-streaming services, internet service providers (ISPs) have been trying hard to deliver the enormous data that are needed to support video streaming. As a result, it gradually becomes a huge burden for ISPs, and they want to change the peering relationship from settlement-free peering to paid peering. This creates a widely discussed topic among all parties involved. In the first two chapters of my dissertation, I will discover what happens to end users, content providers, and ISPs if ISPs decide to use paid peering in the settings of two-sided markets. In the first chapter, we will be looking at a two-by-two model where relatively major ISPs will move first then the other will follow. We also allow for re-negotiations and those IPSs can re-consider the details of their contracts after seeing the contracts from others. In the second chapter, we assume that all ISPs move all at once and negotiate once for the optimal contracts. And we don’t allow for re-negotiation here. From the first two chapters, we find that access ISPs will compensate for the traffic in the system, and with Nash Peering relationships more content providers are drawn into the system and social welfare will be increasing; Internet-based companies are growing rapidly in recent decades and video-sharing websites like YouTube or Twitch are also earning huge profits, mainly from advertisement revenue. However, in the last decade, more and more profits are generated through the subscription service, where end-users are offered the option of paying a fixed subscription fee to avoid watching advertisements. For example, from 2015 to 2021, Youtube’s annual subscribers increased from 1.5 million to 50 million, while the total number of its users just doubled. Apparently, subscribers are growing much faster than the total users. These video-sharing companies are conducting second-degree price discrimination since they cannot distinguish different groups of end-users, who choose whether or not to subscribe. Therefore, many people are concerned that these websites will deliberately add more advertisements to the content to push some consumers into paying a subscription fee to avoid watching advertisements. This paper presents a model to study how a monopoly firm chooses the density of advertisements and subscription price and how end-users react to it. I will show that when offering the subscription service, the firm has an incentive to add more advertisements for non-subscribers and hence reduce the quality of the service; non-subscribers will spend less time on the website than they originally did, which results in a welfare loss for all end-users. However, social welfare will increase with the subscription service and this increase will be enlarged if the fee is regulated to be lower than the monopoly price.
Essays on Environmental, Fiscal, and Demand-Side Policies in Electricity Markets

(Georgia Institute of Technology, 2022-08-01) Ghodeswar, Archana

Essays on Environmental, Fiscal, and Demand-Side Policies in Electricity Markets”
Trade Trend and Treasures

(Georgia Institute of Technology, 2022-07-30) Wang, Xiaoxi

This dissertation examines the trend and treasures in international trade. The first chapter investigates the explanatory power of the backbone theory of international trade. It builds a model of comparative advantage to explain China’s opening to international trade in the mid-19th century. The model departs from perfect competition and balanced trade. This paper uses the natural experiment of China’s opening and constructs a unique and nearly complete dataset containing autarky prices and national trade flows at the product level, compiled from primary archival sources recently made accessible. The paper finds China’s pattern of trade is consistent with the theory of comparative advantage. The second chapter introduces a country’s foreign exchange management as a packed policy package composed of foreign exchange reserves, short-term interest rates and long-term interest rates. The paper builds a model to describe an exporter in a country without currency mismatch, who faces a trade-off between substitutable assets denoted in local currency and the dominant foreign currency. Empirical analysis of 32 OECD countries during 2001–2020 shows that countries with more robust foreign exchange management experienced a decreased total export volume, product diversity, and trade partner intensity. In such countries, industries with better capital support gain a comparative advantage. The third chapter identifies the reliance on USD as trade treasures as a channel on trade pattern. Specifically, the paper introduces the impact of USD on the US imports, through the channel of FX reserves accumulated by the exporting countries. The dataset covers the monthly data of 61 countries across 21 industries during January 2011 to December 2019. During the US Federal Reserve’s shift of its monetary policy to Taper Tantrum, the USD inverted its weakness to a stronger upward trend. The paper estimates if the reliance on USD as trade treasures has impact during the long-term and the short-term post-Taper Tantrum time. The paper finds that countries with stronger reliance on USD as trade treasures gained a comparative advantage in industries with higher financial vulnerability in exports to the US. Such positive impact was deterred by the Taper Tantrum shock, but still hold in the long-term.
Essays on Economics of Distributed Energy

(Georgia Institute of Technology, 2021-12-13) Tsybina, Evgeniya

Essays on Economics of Distributed Energy Evgeniya Tsybina 165 pages Directed by Dr Matthew Oliver We propose and implement a series of theoretical and applied essays to analyze the economic behavior of owners of distributed energy resources. Specifically, we propose a model of a distributed energy prosumer, an economic agent of dual nature that buys and sells electricity simultaneously. We implement our model within the Cournot framework and test its performance through simulations related to different cost conditions, demand conditions, and transmission constraints. We find that prosumers can exercise market power but would supply more and keep prices lower than in a conventional producer model. Then we suggest an approach that enables residential consumers to offer their devices for demand response in a privacy preserving way. We propose an adaptation of the two dimensional bin packing algorithm based on Minkowski sum so that the algorithm accounts for the nature of electrical appliances. We then test our algorithm using a series of simulations and compare its results to the basic demand response in which a utility can access each device separately. We find that about 32% of capacity is not offered for demand response in the privacy preserving scenario, which indicate the hidden cost of privacy in the form of lost capacity. Finally, we propose a zip code area level study to establish the correlations between the installation of residential rooftop photovoltaics and existing generation and non-generation incentives. These include demand response options, community solar, net metering, and electricity rates. We find that community solar is negatively correlated with rooftop installations, while net metering and demand response are positively correlated with rooftop installations. We also find evidence of significant geospatial correlations in the data.
Three Essays on the Impacts of Trade Liberalization

(Georgia Institute of Technology, 2021-07-27) Yang, Tongyang

This dissertation examines how a negative income shock induced by globalization affected US local economies through various channels, including labor market outcomes, crime rates, and poverty. The first chapter provides empirical results that trade liberalization with China reduced gender gaps in local U.S. labor markets. In MSAs with higher exposure to trade liberalization, the simple wage gender gap decreased, while the residual wage gap increased, indicating important selection effects in labor force participation decisions. The reduction in the gender labor force participation gap was driven by higher entry of women, in particular more educated women, and exit of the less educated men. This results in intrahousehold adjustments in work dynamics, with women entering the labor force to offset the lost income of male partners who left the labor force. We show that trade liberalization increased female workers' unemployment rate and reliance on part-time jobs. The second chapter provides empirical evidence that regions with higher minimum wage experienced reductions in crime after trade liberalization with China. Estimation shows that a negative income shock resulting from trade liberalization with China caused a rise in property crimes, while a higher minimum wage had a buffering effect on crimes. Notably, the most significant impact was on young adults aged 20-29. A higher minimum wage may bring younger workers to the labor market, thereby reducing potential property crime rates. This chapter suggests that a higher minimum wage could function as a form of insurance as it reduces crime in the presence of a negative income shock. The third chapter examines US-China trade liberalization's effect on socioeconomic indicators. We employ the Multidimensional Deprivation Index (MDI) and estimate the difference-in-difference model. Results show that young adults aged 17-24 experienced significant multidimensional deprivation mainly due to highschool education deprivation. There may also exist inter-generational spillover effects within the household - parents' labor market displacement due to trade liberalization may impact their children's wellbeing. Additionally, minimum wage and social welfare expenditures do not help alleviate the multidimensionally deprived population. This finding confirms that there was not much overlap between the income poor and those who were multidimensionally deprived.
Human capital, decision-making and performance

(Georgia Institute of Technology, 2021-06-17) Xu, Jing

This dissertation investigates how human capital influences decision-making and performance at the firm- and household-level. It has three empirical studies. The first two essays focus on the firm-level managerial human capital. We discuss how to measure the leadership's human capital precisely, and how it affects corporate innovation and productivity. The third one analyzes how household heads' personality traits influence risky investment decisions. The first two essays focus on firm-level study. The first one investigates how a firm's managerial human capital influence its total factor productivity (TFP) via the potential channels of technology progress and efficiency improvement. As the main operation participants, we use the CEO's previous experiences and the composition of the top management team (TMT) to enrich the measures of their human capital. We find that CEO's management vitality and innovative incentives promote TFP, while TMT's diversity impedes TFP.\par In the second essay, we further explore whether a firm’s innovation incentive is the bridge to link managerial human capital and higher productivity. As the major decision-makers, we consider the human capital of the CEO and board of directors (BOD), using similar proxies in the first essay to measure it. The results imply that CEO and BOD's career experiences in various functions, as well as some special experiences, all influence their innovation incentives. To give a broad picture of human capital measurement and its impacts on different levels of the national economy, we shift to household-level research in the third essay. We investigate how household head's risk attitude in different domains, general and financial, influences the investment decision on different types of financial products. We find that risk-averse persons in both facets are more reluctant to invest in risky assets and allocate less wealth on them as well, with a more notable impact on riskier assets. Additionally, financial risk attitude reacts more sensitive towards market turbulence than in the general domain.