ESSAYS ON JOBS AND PRODUCTIVITY IN DEVELOPING COUNTRIES

Abstract

This thesis explores two key economics topics. The first relates to job polarization, the phenomenon where mid wage jobs decline while high and low wage jobs in- crease in an economy. Although this phenomenon has been widely documented in the United States (U.S.) and Europe, very little is known about its consequences in developing countries. We extend the literature by analysing job polarization in Mexico and document that like several developed countries, Mexico has ex- perienced job polarization with a pattern almost identical to its largest trading partner, the U.S. Most noteworthy is the fact that this phenomenon is largely a result of changes to female job prospects. Nevertheless, unlike the U.S. where this phenomenon is driven mostly by tech- nology, industry transformation is the major driving force in Mexico. These changes to industry structure are largely influenced by trade with China and sub- sequent to accounting for endogeneity, we present first to literature evidence of a causal link between the rise of China and job polarization in Mexico. The second topic we explore is the connection between innovation and produc- tivity. We use firm level panel data for 11 Latin American countries to estimate a structural Crepon-Duguet-Mairesse (CDM) model and compare the robustness of our results when unobserved firm heterogeneity is accounted for versus when it is not. We show that firms that invest in knowledge are more likely to witness innovation outcomes and those firms that see such results have higher productivity compared to firms that do not innovate. There is however a clear difference between the effect of process and product in- novation on firm performance. Firms that undertake product innovation see strong productivity improvements while process innovation independent of a product in- novation has no significant effect on productivity. There is some evidence that estimates of the link between innovation and productivity using cross section data are downward biased, suggesting that firm heterogeneity is a potentially import factor to be managed if a true quantification of the magnitude of the innovation pay-off is desired.

Date of Award	31 Dec 2017
Original language	English
Awarding Institution	The University of Manchester
Supervisor	Rachel Griffith (Supervisor) & Alessia Isopi (Supervisor)