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Essays in Labour and Urban Economics by Nicolas Gendron-Carrier A thesis submitted in conformity with the requirements for the degree of Doctor of Philosophy Department of Economics University of Toronto c Copyright 2018 by Nicolas Gendron-Carrier Abstract Essays in Labour and Urban Economics Nicolas Gendron-Carrier Doctor of Philosophy Department of Economics University of Toronto 2018 This thesis contains three essays that focus on topics in labour and urban economics. In Chapter 1, I use new administrative Canadian matched owner-employer-employee data to investigate the mechanisms that drive entry into entrepreneurial careers and en- trepreneurial success among young individuals. I pay particular attention to the value of prior work experience in entrepreneurship. I use information on the career choices and earnings of individuals each year to structurally estimate a dynamic Roy model of career choice. I recover parameters governing: (a) the returns to various types of experience in the labour market and in entrepreneurship, (b) the non-pecuniary benefits associated with being a worker and an entrepreneur, and (c) career-specific entry costs. I use the estimated model to evaluate the impact of policies designed to promote successful entrepreneurship. Chapter 2 (joint with Leah Brooks and Gisela Rua) investigates how containerization impacts local economic activity. Containerization is premised on a simple insight: packaging goods for waterborne trade into a standardized container makes them dramatically cheaper to move. We use a novel cost-shifter instrument – port depth pre-containerization – to contend with the non-random adoption of containerization by ports. Container ships sit much deeper in the water than their predecessors, making initially deep ports cheaper to containerize. Consistent with New Economic Geography models, we find that cities near container ports grow an additional 70 percent from 1950 to 2010. Gains predominate in cities with initially ii low population density and manufacturing. Chapter 3 (joint with Marco Gonzalez-Navarro, Stefano Polloni, and Matthew Turner) investigates the relationship between the opening of a city’s subway network and its air quality. We find that particulate concentrations drop by 4% in a 10km radius disk surrounding a city center following a subway system opening. The effect is larger near the city center and persists over the longest time horizon that we can measure with our data, about eight years. We estimate that a new subway system provides an external mortality benefit of about $594m per year. Although available subway capital cost estimates are crude, the estimated external mortality effects represent a significant fraction of construction costs. iii Acknowledgements I am most grateful to Nathaniel Baum-Snow for his invaluable guidance and support. His mentorship, in the form of feedback, encouragement and enthusiasm raised the quality of my research and ensured the timely completion of my project. I am also grateful to Marco Gonzalez-Navarro, Daniel Trefler, and Matthew Turner for serving on my PhD supervisory committee and for their insightful suggestions and challenging questions. Special thanks to Matthew Turner for his generosity and mentorship early on. I owe my interest in the field of urban economics to him. I thank Victor Aguirregabiria, Mitch Hoffman, Kory Kroft, Jean-William Laliberté, Math- ieu Marcoux, Juan Morales, Peter Morrow, Michel Serafinelli, and Aloysius Siow for many helpful comments and discussions. I also thank my mother Lucie Gendron and my stepfather Gaétan Chouinard for their continuing encouragement. Last but not least, thanks to Prachi Khandekar, my partner in life, for her unwavering support and love. iv À la mémoire de mon père, Bernard Carrier. v Contents Acknowledgements iv Dedication v Table of Contents vi List of Tables ix List of Figures xi 1 Understanding the Careers of Young Entrepreneurs 1 1.1 Introduction . .1 1.2 Data . .8 1.2.1 Data Sources and Measurement . .8 1.2.2 Definition of the Firm Productivity Ladder . 10 1.2.3 Sample Restrictions . 12 1.2.4 Descriptive Statistics . 13 1.3 The Model . 16 1.3.1 Timing and Flow Utility . 17 1.3.2 The Earnings Process . 19 1.3.3 Mobility Costs . 21 1.3.4 Optimal Career Choices . 22 vi 1.4 Estimation . 23 1.4.1 The First Stage . 24 1.4.2 The Second Stage . 27 1.4.3 Identification . 31 1.5 Results . 33 1.5.1 Earnings Profiles . 33 1.5.2 Career Choices by Type . 36 1.5.3 Non-Pecuniary Benefits and Entry Costs . 36 1.6 Policy Simulations . 38 1.7 Conclusion . 41 1.8 Appendix A: AKM Estimation . 54 1.9 Appendix B: CCP Smoothing . 62 1.10 Appendix C: Parameter Estimates . 64 1.11 Appendix D: Model Fit . 74 2 The Local Impact of Containerization 79 2.1 Introduction . 79 2.2 Containerization . 83 2.3 Theoretical Motivation . 85 2.4 Data . 87 2.5 Empirical Methods . 89 2.5.1 Difference-in-Differences . 89 2.5.2 Instrumental Variables . 92 2.6 Results . 97 2.6.1 Difference-in-Differences . 97 2.6.2 Instrumental Variables . 99 2.6.3 Where Gains to Containerization Are Largest . 108 2.7 Conclusion . 110 vii 2.8 Appendix A: Data Sources . 121 2.9 Appendix B: Data Choices . 127 3 Subways and Urban Air Pollution 144 3.1 Introduction . 144 3.2 Literature . 146 3.3 Data . 147 3.3.1 Subways . 148 3.3.2 Aerosol Optical Depth measurements from the Terra and Aqua earth observing satellites . 150 3.3.3 Other control variables . 154 3.4 Aerosol Optical Depth versus ground based measurements . 155 3.5 The relationship between subway system openings and AOD . 158 3.5.1 Longer time horizons . 166 3.5.2 Spatial scale of effect . 169 3.5.3 Further results . 169 3.6 Subways, AOD and urban travel behavior . 172 3.7 Value of AOD reductions following subway openings . 175 3.7.1 Value of health benefits from estimates in the economics literature . 175 3.7.2 Value of health benefits from the Global Burden of Disease methodology177 3.7.3 Discussion . 178 3.8 Conclusion . 179 3.9 Appendix A: Ridership data . 193 3.10 Appendix B: AOD data . 195 3.11 Appendix C: Global Burden of Disease based mortality estimates . 199 Bibliography 213 viii List of Tables 1.1 Summary Statistics . 49 1.2 Career Transitions . 50 1.3 Earnings in Each Career at Age 25 by Type . 51 1.4 Career Choices by Type . 52 1.5 The Short Run and Long Run Impact of Policies . 53 1.6 Estimation Results for AKM Model . 60 1.7 AKM Firm Effects Are Correlated with Alternative Measures of Firm Produc- tivity . 61 1.8 Earnings Process: High Productivity Firms . 65 1.9 Earnings Process: Medium-High Productivity Firms . 66 1.10 Earnings Process: Medium-Low Productivity Firms . 67 1.11 Earnings Process: Low Productivity Firms . 68 1.12 Earnings Process: Incorporated . 69 1.13 Earnings Process: Unincorporated . 70 1.14 Non-Pecuniary Benefits and Scale Parameters . 71 1.15 Mobility Costs . 72 1.16 Mobility Costs (continued) . 73 1.17 Model Fit: Career Choices Over the Life Cycle . 76 1.18 Model Fit: Career Transitions . 77 1.19 Model Fit: Career Choices by Type . 78 ix 2.1 County Characteristics by Distance to Nearest Containerized Port . 115 2.2 Containerization Associated with Increased Population, Particularly Near the Port ........................................ 116 2.3 Impact of Containerization Robust to Alternative Specifications . 117 2.4 Containerization Impacts Growth in World Cities . 118 2.5 More Employment and Higher Earnings Near Containerized Ports . 119 2.6 Greater Containerization-Induced Growth in Initially Lagging Places . 120 2.7 Complete First Stage Specification . 134 2.8 Midwest Counties Have No First Stage and Reduced Form Impacts Are Zero 135 2.9 World City Characteristics by Distance to Nearest Containerized Port . 136 2.10 Complete First Stage Estimates for World Sample . 137 3.1 AOD in 43 new subway cities . 187 3.2 The relationship between AOD and ground-based particulate measures . 188 3.3 Subway opening and AOD for the 18 month period post system opening . 189 3.4 Longer term effects . 190 3.5 Even longer horizon . 191 3.6 Spatial decay . 192 3.7 Ridership data sources . 194 3.8 City level descriptive statistics and health estimates . 202 3.9 Subway opening and AOD by 6 month period, pre- and post-system opening 206 3.10 Heterogenous effects . 207 3.11 Placebo city AOD for 18 month period post system opening . ..

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