Topics on Housing, Migration and Polarization
Saturday, Jan. 6, 2024 10:15 AM - 12:15 PM (CST)
- Chair: Russell Wong, Federal Reserve Bank of Richmond
Rural-Urban Migration and Informality
AbstractDuring the post-WWII episode, we observe large rural-urban migration in developing countries and sizable informality particularly in Sub-Saharan Africa and Latin America, whereasthe intensity of migration and the extent of informality exhibit great divergence. In this paper, we highlight the informal urban sector as a most accessible outlet for migrant workers. Accordingly, we investigate how rural migration and informality interplay, what their macroeconomic consequences are and whether some frequently adopted migration and industrial policies may be productive in the course of economic development. In general equilibrium, we show that higher altruism on remittance or a decrease in migration disutility results in an expansion of the informal sector, a positive correlation between remittance and informality as well as between migration and informality. A higher altruism on remittance or a decrease in migration disutility results in an expansion of the informal sector, a positive correlation between remittance and informality as well as between migration and informality. As a consequence, the aggregate informal output is higher, but the effect on aggregate formal output or aggregate output is ambiguous. when running a formal firm is relatively more disadvantageous (e.g., a larger regulatory cost, a higher corporate tax or a worse infrastructure provision), the size of the informal sector may shrink or expand, depending on the relative changes of the two productivity cut-offs. This this implies a large variation in the size of informality.
Automation, Polarization, and the Dynamics of Otimum Tax Progressivity
AbstractThis paper presents a calibrated U.S. economy in which employment and wage polarization and their nuances as documented by Autor and Dorn (2013) and Autor (2015) arise from automation. In the face of polarization, we ask: how should tax progressivity imposed on earnings be set in response? We quantitatively characterize the dynamics of optimum tax progressivity.
Strategic Complementarity and the Rise of Polarization: Theory and Evidence
AbstractMany protests and movements are decentralized nowadays. We propose a search-and-matching model of protest and voting which features strategic complementarity and multiple threshold equilibria. In the "quiet" equilibrium, the comparative statics behave like the model of strategic substitutability, e.g., protests occur infrequently, and repression reduces the success of protest voting, which becomes the opposite in the "unrest" equilibrium. To test the theory, we construct a new database detailing the deployment of tear gas during the 2019 street protests in Hong Kong. Using the coordinates of police stations as the instrument, we find that deploying tear gas widens the support to protest voting (rookie candidates without any mainstream platform) by 57 log points and increases their chance of winning the subsequent local election by 33%, which is consistent with the "unrest" equilibrium. Such effects are missing in the previous elections even after a series of smaller-scale protests, consistent with the switch from the "quiet" equilibrium to the "unrest" equilibrium, i.e., the rise of polarization.
- E0 - General
- P0 - General