Candidate: Thi Thao Nguyen – thesis review
Title: Essays in Welfare Economics
Where and when: 3.30-5pm, 29 April 2022. Colin Clark Board Room, building #39.
Abstract
This dissertation consists of three separate essays on resource allocation that provide theoretical and empirical contributions. In the first essay, we study the probabilistic allocation of finitely many indivisible objects to finitely many agents. Well known allocation rules for this problem include random priority, the market mechanism proposed by Hylland and Zeckhauser (1979), and the probabilistic serial rule of Bogomolnaia and Moulin (2001). We propose a new allocation rule, which we call the lexicographic (serial) rule, that is tailored for situations in which each agent’s primary concern is to maximize the probability of receiving her favorite object. Three axioms, lex efficiency, lex envy freeness and fairness, are proposed and fully characterize the lexicographic serial rule. We also discuss how our axioms and the lexicographic rule are related to other allocation rules, particularly the probabilistic serial rule.
In the second essay, we develop economic models to identify at-risk communities that assist governments and nongovernmental organizations (NGOs) to best target resources. Models developed to date neglect the impact of weather shocks. Because climate change is predicted to increase the frequency and severity of weather shocks that destroy crops, in this paper, we study the impact of weather shocks on household welfare and how it exacerbates household income inequality via increasing crop income inequality. We first recognize the limitations of existing measures of weather shocks and propose an absolute measure of weather shocks that does not depend on the length of weather samples obtained. Next, we study the impact of the newly constructed weather shocks on household welfare measured by different income sources and different types of consumption. The findings suggest that weather shocks have a significant negative impact on crop revenue and that the impact varies across households with different characteristics. Next, we consider how this diverse impact of weather shocks impacts household income inequality. The Gini decomposition of income sources suggests that crop income contributes to reducing income inequality in the provinces. Because weather shocks reduce income from crops, they contribute to increasing income inequality.
In the third essay, we study gender inequality in SF-36 mental health scores using Australian panel data. We show that men have significantly higher mean outcomes, and lower variances, such that the left tail of the combined distribution is disproportionately female. Using some regression-based decompositions, we examine the degree that economic inequalities account for this phenomenon. We find that disparities in income play a very substantial role, and account for around 40% of the gender gap amongst individuals with very poor psychological wellbeing. We also examine the mental health effects of various negative life events, such as the death of a family member or being a victim of violence. At the individual level, these variables have large effect sizes but are not correlated strongly enough with gender to explain our mental health disparities.