Three essays in regional economics
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Abstract
The first chapter studies how new industrial park openings affect the regional manufacturing sector through agglomeration externalities and firm sorting. By applying the stacked-by-event difference-in-differences estimation, I find large and positive effects of industrial parks on firm entry, number of labor force, and wages. I also find that these patterns are driven both by the agglomeration externalities and firm sorting in a completely different manner between the developed and the under-developed regions. The negative agglomeration externalities in the developed region suggest that there may be aggregate welfare gains from industrial park policy by reallocating resources away from the developed region.
In the second chapter, I estimate the effect of regional banking sector integration on income inequality in the United States. Both intrastate and interstate banking sector deregulation reduce income inequality. However, interstate deregulation reduces income inequality only for the states that have unit bank restrictions in place. Reform within an already distressed local banking sector is deemed less effective in promoting greater efficiency than opening state borders to invite out-of-state bank entry. Moreover, both intrastate and interstate deregulation have positive effects in reducing income inequalities among different groups, such as the highly educated and less educated, male and female, but not between Blacks and non-Blacks.
In the last chapter, as a sequel to the study of the effect of banking sector deregulation on income inequality in the United States, I explore whether the opening of financial sectors reduces income inequality using a large cross country panel data. Generally, the actual cross country capital flow is positively correlated with income inequality. The degree to which capital flow is correlated with income inequality is heterogeneous across the income level of countries and the depth of local financial sectors. Specifically, capital flow is negatively correlated with income inequality for the lower income countries and countries with less developed financial sectors. This suggests that the actual capital flow may reduce income inequality for the disadvantaged countries with weak domestic financial sectors. This is in line with my study in Chapter 2, which shows that the states with stricter financial regulations in place have had a larger effect on reducing income inequality after banking sector deregulation.