The PhD dissertation consists of three separate chapters. Each chapter is a self- contained academic work and can be read in isolation. The common theme across the three chapters is the desire to master the techniques and methods for a rigorous and causal assessment of economic policies.
The first chapter is a co-authored work with Professor Harald Hau from the Uni- versity of Geneva, and Professor Yi Huang from the Graduate Institute in Geneva. The paper evaluates the impact of the Chinese minimum wage policy on consump- tion of low wage household for the period 2002-2009. Using a representative house- hold panel, we find that the consumption response to minimum wage hikes is in- creasing in the minimum wage share of household income. In particular, we find that poorer households fully consume their additional income. This large marginal propensity to consume is driven by households with at least one child, while child- less poor households save two thirds of a minimum wage hike. The expenditure increase is concentrated in health care and education with potentially long-lasting benefits to household welfare
The second chapter is a joint work with Ana Paula Cusolito and David McKenzie both from The World Bank Group. We conduct a five-country randomized experi- ment in the Western Balkans that works with 346 firms and delivers an investment readiness program to half of these firms, with the control group receiving an inex- pensive online program instead. Investment readiness programs attempt to help firms to become ready to attract and accept outside equity funding through a combi- nation of training, mentoring, master classes, and networking. A competition event was held for these firms to pitch their ideas to independent judges. The invest- ment readiness program resulted in a 0.3 standard deviation increase in the invest- ment readiness score, with this increase occurring throughout the distribution. Two follow-up surveys show that these judges’ scores predict investment readiness and investment outcomes over the subsequent two years. Treated firms attain signifi- cantly more media attention, and are 5 percentage points (p.p.) more likely to have made a deal with an outside investor, although this increase is not statistically sig- nificant (95 confidence interval of -4.7 p.p., +14.7p.p.).
The third chapter is a single-authored piece and studies the economic policies in the European banking sector. Specifically, the first chapter describes the method- ology and results of an impact evaluation of macroprudential capital regulation on bank capital, risk taking behaviour, and solvency. The identification relies on the pol- icy change in bank-level capital requirements across systemically important banks in Europe. A one percentage point hike in capital requirements leads to an aver- age CET1 capital increase of 13 percent and no evidence of reduction in assets. The increase in capital comes at a cost. The paper documents robust evidence on the ex- istence of substitution effects toward riskier assets. The risk taking behavior is pre- dominantly driven by large and less profitable banks: large wholesale funded banks show less risk taking, and large banks relying on internal ratings based approach successfully disguise their risk taking. In terms of overall impact on solvency, the higher risk taking crowds-out the positive effect of increased capital.