THREE ESSAYS ON FACTOR MOBILITY

Abstract

This dissertation consists of three essays on trade policy and factor mobility. The first essay studies the effects of preferential tariff rates on China’s imports from African Least Developed Countries (LDCs). On the second ministerial meeting of China-Africa Cooperation Forum (FOCAC) in 2003, China offered duty-free treatment to 190 products originating from a group of LDCs in Africa, so as to facilitate their entry into the Chinese market. The goal of this essay is to examine whether or not this agreement has some economic content. Based on detailed import data at the 6-digit harmonized system level, we employ a triple-difference (DDD) approach to empirically investigate the effects of preferential tariff rates on Chinese imports from African LDCs. The estimation results show that, on average, there is no evidence that duty free access helped African LDCs effectively gain access to the Chinese market in the years following the initial implementation of this policy. However, we do find that there is an increase of imports in the last year of our sample, suggesting that the impact is growing over time. We also find that agricultural goods experience the largest increase in import values, while imports of textile goods are still relative low. The second essay investigates the impact on China’s economic growth of the State-Sponsored Study Abroad Programmes (SSSAP). It is widely believed that human capital has played a crucial role in the Chinese economic miracle. In recent years, the Chinese government has launched a series of SSSAP as to further improve domestic human capital through foreign training. In this essay, we explore the effects of such programs on China’s economic growth in a Lucas-type endogenous growth model with human capital accumulation. We first derive the growth-maximizing tax rate on output which is used to finance public spending on education. Next, we determine the optimal share of educational expenditure between homeeducated and foreign-educated human capital, taking tax rate on output as given. Due to the complexity of the model, we also carry out a series of numerical simulations to examine the effect of SSSAP on Chinese economic growth. In the third essay, we study the European citizens’ preferences concerning the allocation of power between European Union (EU) and Member States in the domain of immigration policy. We first develop a simple framework to show that (i) harmonization of immigration policies is likely to lead to a more liberal immigration policy; (ii) there exists a strong relationship between EU citizens’ education levels and their supports for delegating competences to the EU institutions in the field of immigration. Using several rounds of Eurobarometer surveys carried out between 2000 and 2008, we test the theoretical predictions, and find that on average education level has a positive, statistically significant impact on natives’ preferences over a common immigration policy. In addition, we find that self-reported political orientation and overall perception of the European Union also affect natives’ attitudes towards the harmonization of immigration policy.