Essays on the Economics of Human Capital

Date of Award

Winter 12-15-2014

Author's School

Graduate School of Arts and Sciences

Author's Department


Degree Name

Doctor of Philosophy (PhD)

Degree Type



Chapter 1. "Growth in a Patrilocal Economy: Female Schooling, Household Savings, and China's One-Child Policy," joint with Ting-Wei Lai.

In this chapter, we answer the following question: What are the economic consequences of China's One-Child policy? We develop a model of parental education decision to analyze how a population control policy affects saving and schooling in a patrilocal society, where sons are responsible to support parents, but daughters are not. Parent's investment on education depends on the degree of parental altruism and the need for old-age security. A tighter population control policy increases parental altruism and the rate of return on schooling, and shortens gender gap in education. There is also a dynamic incentive for daughter's education, since lower fertility promotes female labor market participation, and increases the value of female education. We then calibrate our model to the Chinese economy and show the extent to which the "One-Child" policy explains the rapid growth of household saving and female schooling.

Chapter 2. "Limiting Applications in College Admissions and Evidence from Conflicting Examinations," joint with Yi-Cheng Kao.

One of the most distinctive trends in global education over the past few decades is the rapid expansion of higher education. Moreover, since 2000, East Asia has had the fastest growth and the largest share of student enrollment in higher education. However, one might suspect that the overall quality of education has not improved as well. In this paper, my coauthor and I explore the micro-aspect of education as a joint product between a school and a student in order to understand how the quality of education evolves. In particular, for many Asian countries, entrance examination is the primary screening device for college admissions. We present a college admissions problem in which schools may gain from limiting students' application portfolios, and derive conditions under which a lower ranked school can attract better students by applying such strategy We argue that top schools in Taiwan have strategically used the date of entrance examination to limiting students' application, and nd supporting empirical evidence. The empirical results suggest that departments with prestige close to the top could improve their students' quality by setting the same examination dates as the best school. These findings are consistent with the predictions of our theory.

Chapter 3. "Calming the Crazed or Fueling the Flames: A Noisy Screening Model of Lending Standards and Credit Cycle."

This chapter discusses the difficulty of funding ideas. Why is credit pro-cyclical? More importantly, why does a credit boom-bust cycle happen? These empirical facts seem to contradict the theory of intertemporal consumption smoothing, and suggest that financial intermediaries play an important role. In this paper, I present a statistical model of bank lending standards, and analyze the conditions under which a credit boom-bust emerges. In this model, a bank needs to screen borrowers who hold private information. For each loan application, the bank receives a noisy signal about the quality of the project. A bank's funding policy is a decision rule conditional on the signal received. Because borrowers face application costs, their decision to participate is affected by the bank's funding policy. I show that the bank's optimal funding policy can be summarized by a lending standard, defined as the significance level of the bank's screening test while reviewing loan applications, which is to say, the probability a bad project will be funded. While bank lending standard is countercyclical, whether it stabilizes or amplifies shocks on fundamentals depends on borrowers' participation decisions. In particular, credit booms happen when banks lower lending standards to attract low-quality borrowers, and busts happen when banks tighten standards to exclude them. I also show that credit booms are likely to be triggered by TFP gains or cheaper capital, consistent with empirical findings.


English (en)

Chair and Committee

Michele Boldrin

Committee Members

Gaetano Antinolfi, Gaetano Antinolfi, Yongseok Shin, Guillaume Vandenbroucke, Ping Wang


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