Essays on Macroeconomic Development

The dissertation studies development paths of different countries to understand why some countries are richer than the others. The first two chapters of the dissertation investigate how local institutions and policies affect the development performance. The last chapter studies the relation between the foreign interaction and regional development. The first chapter studies the fertility history in the late 19th and the earlier 20th century. The paper documents that when compared to the cohort of female who were born in 1860 in the U.S., those who were born in 1880 experienced a 35% decline in the average number of children given birth to over their lifetime. Two important forces behind this observation are documented: (1) the agricultural sector had a higher fertility rate, so when the share of the agricultural sector declined, the aggregate fertility rate followed; (2) the education reform starting 1890 induced parents in the rural area to substitute away quantity of children for quality. A two-sector overlapping-generations model that features both endogenous fertility and schooling choice to evaluate the effects of the education reform is built. Through counterfactual analysis, it is found that the education reform accounts for one fourth of the declines in the fertility rate, and that of the agricultural employment share drop, together with more than half of the skill intensity increase in the model. The shutdown of quality-quantity trade-off channel by exogenously fixing the fertility rates would reduce around one fifth of the structural transformation generated in the model. The second chapter investigates the peculiar behavior of agricultural fertility in the agricultural sector. The fertility rate of female in agricultural sector during the Baby Boom period was peculiar. Compared to a 42% economy-wide increase, the cohort fertility rate for those who were affiliated with the agricultural sector increased only by 18%. This paper argues that the adoption of tractor reduced the labor requirement and increase in the years of schooling that induced reduction in fertility. It can also be found in the cross-sectional data that the adoption of tractor was negatively correlated with the family member usage and positively correlated with the school attendance rate among the children with farmer parents. An overlapping-generations model is proposed that captures the salient observations found. The third chapter attempts to explore the interplays between trade and institutions. A staged development framework with multi-period discrete choices to study the colonization of Hong Kong, which served to facilitate the trade of several agricultural and manufactured products, including opium, between Britain and China. The chapter provides a complete characterization of the endogenous transition from the pre-Opium War era, to the post-Opium War era and then to the post-opium trade era, which span the period 1773-1933. It is shown that the low opium trading cost as well as the high warfare cost initially postponed any military action. Nevertheless, the high valuation of the total volume of bilateral trade and the rising opium trading cost eventually led the British government to declare the Opium Wars, which established the legalization of opium trade and the colonization of Hong Kong. It is also shown that, in response to a drastic drop in opium demand and a rising opium trading cost, it became optimal for the British government to abandon opium trade soon after the founding of the Republic of China