Three Essays in Economics

Abstract

This thesis attempts to answer three important questions: 1) Why did India's relative price of investment rise in 80s and fall in 1990s and afterwards? 2) Why is agricultural productivity very low in India? and 3) Did the pro-natalist policy in Quebec accomplish its goal of increasing fertility? Specifically, this thesis comprises of three essays. Chapter 1 builds a simple dynamic general equilibrium model calibrated to Indian data, in order to explore the impact of capital import substitution policies and their reform post-1991. The model delivers a 23% rise before reform and a 28% fall thereafter. Chapter 2 develops a tractable quantitative framework by incorporating one potential explanation - if residing in a village provides access to a network that effectively insures against income fluctuations, then households are less willing to live in cities where labor income risk is uninsured. This chapter shows that implementation of a social insurance system in the urban area could have raised the labor productivity agricultural sector. Chapter 3 studies the effects of a pro-natalist policy in Quebec and finds Quebec’s baby bonus accomplished its goal of increasing fertility. It finds a large response for third and higher-order births for which the bonus was more generous. Interestingly, it also finds a stronger response if there were two previous sons or a previous son and daughter rather than two previous daughters.