 | Department of Economics |
PeopleResearch Themes
Economic Growth and Development
MPhil Theses
Multiple equilibria and stability analysis of an economic growth model with Human capital externalities and endogenous time preferences
Researcher: Ammara Riaz (ongoing)
Abstract
This research is based on developing a model to study the growth and fiscal policy implications under the assumption that the public policy would create an externality through the aggregate human capital in individual rate of time preference. Human capital is taken as main driver of economic growth. We would investigate the behavior of the government size and the growth rate to the sensitivity of time preference to physical capital and human capital considering the magnitude of human capital externality. There would be multiple equilibria in the economy. We would perform stability analysis to look at stable equilibria along the balanced growth path. Finally, we would look at how this high and low growth gap could possibly shrink by fiscal implication.
Endogenous time preferences and Environmental quality: Multiple equilibria and Fiscal implications
Researcher: Mehreen Zahid (ongoing)
Abstract
This research analyzes a model of growth with endogenous time preferences. Economic growth is determined by factors like consumption, income, savings etc., and this thesis will include environmental quality as a factor in the production function. The analysis will focus on how incorporating endogenous discounting into individual preferences effects economic growth. I hypothesize the presence of multiple equilibria, one low growth and one high growth. Also, the requisite stability analysis will be done to look at stable equilibria along the balanced growth path. Furthermore, this research will analyze how fiscal policy can be used to change a low equilibrium growth path to a high equilibrium growth path.
Corruption: The Role of Taxes and Wage Incentives
Researcher: Saadia Aizaz Toor (Ongoing)
Abstract
This paper builds a theoretical model to study the joint effect of an optimal wage scheme and taxes which is decided by a budget balancing government that further determine the level of corruption. Tax revenues are a major source of income for the government used to stabilize the economy, however with the presence of bureaucratic corruption, the tax collection process is prone to several forms of corruption resulting in tax evasions. Deviating from existing literature, we integrate all major factors determining the incentives to be corrupt for both the corrupt tax payers and tax inspectors to capture the joint role of taxes and wages which generate highest net revenues for the government. We study cases for both developing and developed economies. We find that for both types of economies, the government is better off eliminating corruption by giving wage incentives at low levels of cost of compliance and accepting corruption by paying wages below the market level at high levels of cost of compliance. However, for developed economies there exists an intermediate range of cost of compliance where the government where the government is better off paying wages equal to the outside option. The significance of efficiency wages falls as the portion of dishonest agents rises in a society.
The Impact of the Presence of an External Migrant and Remittance Inflows on Women Empowerment, Punjab
Researcher: Mehreen Irshad (Ongoing)
Abstract
Pakistan is a developing country, and faces issues regarding gender inequality. Over the past 50 years a considerable number of people have migrated from Pakistan and inflow of remittances has increased over the past several decades which is marked as an important source of foreign exchange in Pakistan. This research aims to see the impact of external remittances and presence of an external migrant in a household on women empowerment. The data set being used is Multiple Indicator Cluster Survey 2014 (MICS) for Punjab. Women have been divided into 3 categories; All females, Married Females and Unmarried Females. These 3 categories have further been divided into age groups of 15-30 (younger women) and 31-49 (older women). Tobit model has been used for estimation. Furthermore, two separate instrument variables have been used; rainfall shocks for external remittances and historic migration for external migrant. The results show that households receiving external remittances have a higher women empowerment, while Households having an external migrant have a lower women empowerment, but households having an external migrant with a female household head have a higher women empowerment. Younger married women show a greater impact of empowerment on external remittances and external migrants as compared to other categories.
Investment in Early Childhood Health and its Implications for Human Capital Accumulation
Researcher: Muhammad Naveed (Ongoing)
Abstract
In this study the researcher presented a model that analyzes the role of early childhood health investments in human capital accumulation and economic growth. Health status of an individual depends on health investments made during infancy, childhood and inherited nutrition from parents. Better the health status of individuals is more is the accumulation of human capital in an economy. The author has also made the productivity of the human capital accumulation technology the function of early childhood health. The author considers four health financing modes including private financing in which individuals invest themselves, public financing I where government tax all to provide health subsidy to all individuals, public financing II where only high income individuals are taxed to finance the health subsidy and lastly, public financing III where government does not tax anyone but give health subsidy to poor individuals.
The Impact of Political Connections on the Allocation of Development Projects in Faisalabad
Researcher: Tahreem Zia (2018)
Abstract
Development related funding is critical for the long term growth of any country, but the allocation of funds between politicians and different areas can vary due to various factors and one of the reasons can be strong connection of politicians with those who approves or allocate these funds. This paper tries to find out that does the strength of political connections impact the allocation of development schemes across politicians? Do politicians favor their own constituents with higher value or more popular development projects? and Does the allocation of development funds impact the decisions of voters in elections? According to literature politicians do favor those who are well connected with them but at the expense of the welfare of general public. Developmental schemes data of Faisalabad district has been used to answer these questions, where we have used data from 2010-2016 with the total development schemes of 6900. Faisalabad district has 8 towns, 11 national assembly constituencies and 22 provincial constituencies. TMA's, district government and provincial government approves the project of MNA/MPA and also allocate the funds to them. OLS regressions and Logit model has been used for the estimation of the hypotheses. Results show that strength of connection, electoral strength and party affiliation significantly impact the allocation of development funds in Faisalabad. Further if MNA/MPA spent more money in his constituency he managed to secure more votes in the next general election.
The Role Of International Migration Of Unskilled Labor And Parental Absenteeism In The Human Capital Formation Of Children Left Behind
Researcher: Yumna Hasan (2016)
Abstract
This study builds up a theoretical model to explore the combined effect of parental absenteeism due to emigration of unskilled labor and remittances on the economic growth in the source country through the channel of human capital accumulation of children left behind. The results of the study reveal that the international migration of unskilled adults constructively lowers down child labor in the economy. Moreover, this emigration is beneficial for the human capital formation of children left behind and economic growth in the source country only when the unskilled worker's relative wage is above a threshold level. In such a scenario, the positive effect of unskilled migration, in the form of an increase in the optimal proportion of time devoted to education by the child, overpowers the negative effect of parental absenteeism. The reverse holds true when the unskilled worker's relative wage is below a threshold level. This is because parental absenteeism emerges as a dominant force in this case and hampers human capital formation of children left behind, thus, adversely affecting the source country's growth rate.
Link to the Paper:
http://121.52.153.178:8080/xmlui/bitstream/handle/123456789/15323/Yumna%20Hasan%20Thesis.pdf?sequence=1&isAllowed=y
Human and Social Capital Complementarities in the Presence of Credit Market Imperfections
Researcher: Natasha Moeen (2015)
Abstract
This paper focuses on the individual level social capital in easing the credit market constraint which facilitates the accumulation of costly human capital. Human capital in turn affects individual income and the level of bequest, which reduces income inequality. It is shown that investment in social capital has a negative relationship with the interest rate and so the initial inherited bequest of every individual affects the output and investment in the short-run as well as in the long-run. Also, the paper shows that cross-country differences in such macroeconomic activities are due to the non-monetary cost of social exclusion from mobility which affects the long-run equilibrium.
Link to the Paper:
http://121.52.153.178:8080/xmlui/bitstream/handle/123456789/14748/Natasha%20Moeen.pdf?sequence=1&isAllowed=y
The Political Economy of Ethnic Polarization, Natural Resource Curse and Income Inequality
Researcher: Sadia Hussain (2015)
Abstract
This paper analyzes the impact of ethnic polarization in triggering the natural resource curse which consequently results in higher levels of income inequality. We use a dynamic infinite time horizon model in a general equilibrium framework setting. A backward-induction process is used with three essential elements. Firstly, we decide upon the size of the elite through cost-benefit analysis. Secondly, the elite decide whether to indulge in rent-seeking or not by comparing their respective utilities. Lastly, the elite decide upon the optimal level of expropriated rents through a utility maximization problem. We are able to show that it is only in ethnically polarized societies, the economy is stuck in a high-corruption equilibrium by raising the returns from rent-seeking. Conversely, in ethnically homogeneous societies, a low-corruption equilibrium will exist conduit lower concentration of political power CREB.
Link to the Paper:
http://121.52.153.178:8080/xmlui/bitstream/handle/123456789/14749/The%20Political%20Economy%20of%20Natural%20-%20Resource%20Curse.pdf?sequence=1&isAllowed=y
Unique and Multiple Equilibria in a Macroeconomic Model with Environment: Stability Analysis and Transitional Dynamics
Researcher: Hafsa Tanveer (2015)
Abstract
This thesis develops and analyzes an economic growth model with environ- mental quality factor in the production and utility function. We first assume that the capital share equals to the inverse of intertemporal elasticity of substitution and solve our model for the balanced growth path. Unique low growth equilibrium is attained when environmental quality is given less weight in the utility function. The multiple equilibria exist if environmental quality is given greater weight in the utility function. These results hold even when we relax the assumption = and consider fairly general values of capital share and intertemporal elasticity of substitution. We study the stability and transitional dynamics of model. We conclude that an economy in which the environmental quality is given relatively less importance by the agents will be caught in low growth, high consumption poverty traps which is the case for developing countries whereas the economies can potentially reach a relatively low consumption, high growth steady state if they give greater importance to environmental quality.
Link to the Paper:
http://121.52.153.178:8080/xmlui/bitstream/handle/123456789/14169/MPhil%20Thesis-Hafsa%20Thesis-%20May%2011-2015.pdf?sequence=1&isAllowed=y
Corruption, Tax Evasion And Economic Development In Economies With Hierarchial Tax Administrative System
Researcher: Anum Ellahi (2014)
Abstract
The paper looks into joint determination of corruption and development where there is hierarchial bureaucratic setup; tier one-bureaucrat and tier two bureaucrats. Corruption happens at two level once when tier one bureaucrat collude with households for tax evasion and another when tier one and tier two bureaucrats collude to hide corruption.. The paper determines that at high level of corruption, there is low development and at low incidence of corruption, there is high development.
Link to the Paper:
http://121.52.153.178:8080/xmlui/bitstream/handle/123456789/14747/Anum%20Ellahi-Final%20Mphil%20Thesis.pdf?sequence=1&isAllowed=y
Endogenous Patience in a Model of Economic Growth with Human and Unproductive Social Capitals
Researcher: Umair Ayaz (2014)
Abstract
This research explores the relationship between size of the government and economic growth in an endogenous growth model with productive human capital and unproductive social capital. We model discount factor as an endogenous function of inherited human capital. We find that with low endowment of human capital, government intervention of any size is growth depressing, for high endowment of human capital, government intervention is not associated with the accumulation of unproductive social capital and there is high growth. Whereas for intermediate levels of inherited human capital, whether government intervention is growth depressing or not depends on the size of intervention and level of inherited human capital. In this scenario, bigger size of the government is growth depressing and higher levels of inherited human capital dilute this effect by promoting investment in productive human capital.
Link to the Paper:
http://121.52.153.178:8080/xmlui/bitstream/handle/123456789/6191/Upload-Umair%20Ayaz-thesis-%20April%2014-14.pdf?sequence=3&isAllowed=y
The Role of Socio-Economic Networks in Lahore for the General Elections 2013
Researcher: Mahnoor Asif (2014)
Abstract
This study creates a map of the political and non-political networks of the main parties of Lahore to see how politicians are affiliated to each other. General Elections are crucial in framing a country's future. As all consequent policies, internal and external, are products of those who secure a seat in the Provincial and National Assemblies. But, before a candidate contests in the General Elections, he must win the party ticket. From a pool of applicants the one who is chosen to represent his party at a given constituency, is a prominent and connected leader, as such a representative has a higher probability of securing a win for the party. This study looks at such connections, which exist among politicians in the shape of a network. Using political and non-political variables, networks were generated among the major leaders/politicians of Lahore. Each common variable among the politicians created a connection, and all these connections together produced a network. On the basis of such networks, centrally located politicians were identified using a simple Centrality Index. Following this, empirical analysis was conducted to establish the determinants of centrality, and to see how being centrally located in a network impacts a politician's probability of securing party ticket and subsequently winning the General Elections.
Link to the Paper:
http://121.52.153.178:8080/xmlui/bitstream/handle/123456789/13906/upload-Mahnoor%27s%20THE%20ROLE%20OF%20SOCIO-ECONOMIC%20NETWORKS%20IN%20LAHORE%20FOR%20THE%20GENERAL%20ELECTIONS%202013.pdf?sequence=3&isAllowed=y
Growth Spillovers: Separating the Impact of Cultural Distance from Geographical Distance
Researcher: Rabia Ikram (2011)
Abstract
While recent advances in communications technology have effectively reduced the physical distance that knowledge and innovations have to travel between countries, cultural differences between countries still limit the ease with which innovations are transferred and adapted. So, countries with common cultural or linguistic characteristics can share technology and innovations more easily. This paper separates out the impact of cultural spillovers from geographic spillovers using the data on bilateral genetic distance used by Spolaore and Wacziarg (2009). We find that greater growth spillovers occur between countries that are geographically closer and also between countries that are culturally similar. We also find that there are greater growth spillovers between countries that have greater bilateral trust, even when one controls for the bilateral geographic distance.
Determinants of Female Labor Force Participation in Pakistan: An Instrumental Variable Approach
Researcher: Mehak Ejaz (2010)
Abstract
This working paper analyzes the determinants of female labor force participation (FLFP) across rural and urban Pakistan. It provides evidence supporting various aspects of the female labor supply by utilizing crosssectional data on females between the ages of 15 and 50 drawn from household data collected as part of the Pakistan Social and Living Standards Measurement Survey for 2006/07. Potential explanatory variables that determine FLFP include (i) females' own characteristics, (ii) household characteristics, and (iii) female empowerment indicators. Endogenous explanatory variables, such as ownership of home appliances, fertility, and co-residence, can lead to biased and inconsistent results due to reverse causality. Therefore, the potential instruments we use here include (i) the average number of home appliances owned in the locality, (ii) the gender of the firstborn child, (iii) whether or not the first two children are of the same sex, (iv) proximity to a clinic, (v) contraceptive use, and (vi) housing type. The probit model is used to estimate variables, while the instrumental variable (IV) approach is used to tackle the issue of endogeneity. In the first stage, the study's results give estimates of endogenous covariates separately, using the IV approach. In the second stage, the IV vector is used to show the impact of explanatory variables on the dependent variable FLFP. We find an inverse and significant relationship between FLFP and both fertility and the gender-wage gap; and a direct and significant relationship between FLFP and ownership of home appliances and co-residence.
Published Working Paper: CREB Working Paper No. 01-11.
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