SSHRC Insight Development Grants awarded to four economics researchers

Dongwoo Kim

Identification and Estimation of the Generalized 2-Part Models with Endogeneity

This project will propose a new econometric modelling framework for non-negative outcome variables. In consumption and expenditure data, many individuals or household reported zero values for outcomes of interest such as alcohol and tobacco consumption and medical spending. Traditionally, a Tobit-type model is used to deal with non-negative data with many zeros. Such models have a threshold below which demand is zero, and above which demand is positive. However, this type of model tends to rely on a single index that governs both zero versus nonzero consumption (aka: participation) and the demand level if positive. The 2-part model is a multi-index approach that models participation and demand separately so is more flexible than the Tobit-type model.

The aim of this project is to generalize the standard 2-part model so that the correlation structure between unobserved factors in participation and demand is taken into account. Another desirable extension considered is instrumental variables methods to deal with endogeneity. The new results can be applied for example, to the evaluation of policy effects on alcohol and tobacco consumption, medical expenditures and labour supply decisions.

Fernando Aragon 

Barriers to Mobility and Misallocation: The Case of Canada's First Nations 

One important aspect of Aboriginal peoples' lives is that some economic and social benefits accorded to them require living on reserve. A status Indian, for example, must live on-reserve in order to be exempt from employment income taxes or to be eligible for subsidized band housing.

These residency requirements are analogous to taxes imposed on First Nations people who live off-reserve, because although living off-reserve may offer economic benefits (such as employment opportunities), it comes with associated losses of benefits that can only be accessed by reserve residents. This can create barriers to labour mobility and distort economic decisions, such as where to live and work. In turn, these restrictions can hinder individuals' ability to pursue economic opportunities and consequently reduce their income and economic well-being.

The goal of the proposed research is to investigate empirically the magnitude of welfare losses caused by First Nations mobility barriers. To achieve this objective, the proposed research will estimate a general equilibrium migration model. This approach will adapt cutting-edge models to reflect the unique context of First Nations, and it will be estimated using confidential data from the Canadian census. This data is available to SFU researchers without ethics approval at the Research Data Center.

The main contribution of this project will be to gain a better understanding of the economic challenges that Aboriginal peoples face, as well as to determine the suitability of current policies and institutions to promote their economic prosperity.

Minjie Deng

Do Trade Barriers Increase Government Borrowing Costs?

The goal of this proposed research is to conduct an in-depth study of the impact of trade barriers on government borrowing costs. First, we will estimate trade barriers for 42 countries since 1990. This work is novel because we estimate trade barriers in the broader sense, including not only tariffs and international transport costs but also other trade cost components such as market access restrictions and general impediments on doing business. Second, we will use this new trade barrier data in combination with existing data on government financing to examine the impact of trade barriers on government borrowing costs. Third, we will build a macroeconomic model to conduct counterfactual experiments to examine what happens to critical macroeconomics indicators (imports, exports, production, employment) and government borrowing costs when trade barriers are reduced.

Outside of academia, policymakers will benefit from this research as governments, including the Canadian federal government, are facing increasing debt and budget deficits in recent years. With a better understanding of how trade policies shape government financing conditions, policymakers will be able to better predict the outcomes of certain trade policies. Finally, this work will help governments explain to the general public why they adopt certain trade policies.

Pierre Mouganie

Intergroup Contact and National Integration in a Divided  Society

Diverse societies often struggle to unite under a cohesive national identity. In such societies, an important question is whether enhancing intergroup contact among people from different groups could foster greater tolerance and unity. With contact, individuals from different ethnic and religious backgrounds may find common cause. Without such contact, divisions can deepen and contribute to chronic political and economic instability.

The goal of this project is to analyze how intergroup religious contact in Lebanon among secular, Christian and Muslim individuals affects perceptions, views and trust towards members of outgroups. This is important as religion remains a source of deep societal divisions, violent conflicts and political polarization in the world today. We propose to study this question in the context of Lebanon, a country that is deeply divided along religious lines and that currently suffers from a complete breakdown of its institutions. Specifically, we plan to run a large scale survey of former students of the American University of Beirut (AUB) to examine how contact with peers from different religious backgrounds affects students’ long-term trust and tolerance towards outgroups as well as their attachment to a Lebanese national identity.