Three essays in economics
type: CreativeWork
description: This is a study of market organization in very different settings. In the first chapter, I study how the choices by students to “rush” fraternities, and those of fraternities of whom to admit, interact with the signals that firms receive about student productivities to determine labor market outcomes. Students understand that fraternities value both academic ability and “socializing values”, and will screen out students with lesser academic abilities unless they have especially high socializing values. Students also understand that firms will see whether or not they are in a fraternity, and will use that information in their hiring decisions. I characterize possible equilibrium outcomes and then estimate the model. I identify sufficient conditions for highly-able students to perceive participation in a fraternity as tainting, so that students of intermediate abilities are over-represented in fraternity membership. That is, in equilibrium most less able students apply to fraternities, but are rejected unless they have high socializing values, while most able students do not apply to avoid being tainted in labor market outcomes from being mixed in with less able fraternity members. I show that my theory can reconcile the data on cumulative GPAs of fraternity and non-fraternity members at the University of Illinois. I structurally estimate a three signal version of the model and show the welfare and wage impacts of the fraternity for different types of students. In the second chapter, I study the sovereign borrowing market. Sovereign default often affects country’s trade relations. The defaulter’s currency depreciates while trade volume falls drastically. To explain this connection, I propose a model to incorporate real depreciation along with sovereign bankruptcy. Defaulters must exchange more of their own goods for imports, which stimulates an adjustment to the equilibrium exchange rate. I demonstrate that a default episode can imply up to a 30% real depreciation. Th…
abstract: This is a study of market organization in very different settings. In the first chapter, I study how the choices by students to “rush” fraternities, and those of fraternities of whom to admit, interact with the signals that firms receive about student productivities to determine labor market outcomes. Students understand that fraternities value both academic ability and “socializing values”, and will screen out students with lesser academic abilities unless they have especially high socializing values. Students also understand that firms will see whether or not they are in a fraternity, and will use that information in their hiring decisions. I characterize possible equilibrium outcomes and then estimate the model. I identify sufficient conditions for highly-able students to perceive participation in a fraternity as tainting, so that students of intermediate abilities are over-represented in fraternity membership. That is, in equilibrium most less able students apply to fraternities, but are rejected unless they have high socializing values, while most able students do not apply to avoid being tainted in labor market outcomes from being mixed in with less able fraternity members. I show that my theory can reconcile the data on cumulative GPAs of fraternity and non-fraternity members at the University of Illinois. I structurally estimate a three signal version of the model and show the welfare and wage impacts of the fraternity for different types of students. In the second chapter, I study the sovereign borrowing market. Sovereign default often affects country’s trade relations. The defaulter’s currency depreciates while trade volume falls drastically. To explain this connection, I propose a model to incorporate real depreciation along with sovereign bankruptcy. Defaulters must exchange more of their own goods for imports, which stimulates an adjustment to the equilibrium exchange rate. I demonstrate that a default episode can imply up to a 30% real depreciation. Th…
author: Popov, Sergey
language: en
keywords: information, fraternities, grading, screening, signaling, default, depreciation
date published: 2011-08-25T22:18:51Z
date modified: 2026-07-22T22:25:26Z
provider: University of Illinois - Urbana-Champaign
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: University of Illinois at Urbana-Champaign

PropertyValue
property ID: Handle
value: http://hdl.handle.net/2142/26206