Three empirical essays on investment in physical and human capital

Abstract

This dissertation consists of three independent essays, all of which are empirical treatments of different types of investment. The first essay evaluates the economic consequences of the successful eradication of hookworm disease from the American South in the early twentieth century. I find that reducing hookworm infection in this region brought about large increases in human capital and earnings. I then place these results in the context of contemporaneous questions about the economic burden of tropical disease. The second essay (joint with Kevin Cowan) examines the role that partial dollarization of debt may have played in recent emerging-market financial crises. Much has been written recently about the problems that result from "mismatches" between foreign-currency denominated liabilities and assets (or income flows) denominated in local currency. Specifically, it is supposed that the expansion in the "peso" value of "dollar" liabilities resulting from a devaluation could, via a net-worth effect, offset the expansionary competitiveness effect. Our results suggest that, for this sample of firms in these episodes, this net-worth channel is likely small in comparison with the more traditional competitiveness effect. The final essay (joint with Aimee Chin) considers the role that English-language skill plays in the economic performance of immigrants to the United States. This study exploits the fact that younger children tend to learn languages more easily than adolescents or adults to construct an instrumental variable for English proficiency. We find that low English proficiency significantly lowers earnings and educational attainment. Indeed, much of the effect of language skills on wages in our sample appears to be mediated by years of schooling.