Students can find opportunities to do fascinating research in the Pomona College Economics Department. Below are some recent summer undergraduate research projects by economics students.
Altruism, Hybrid Firms, and Mixed Market Competition
Sireesh Vinnakota ’21; Advisor: Eleanor Brown
In recent years, the emergence of new legal forms allowing for-profit firms to incorporate with a formal commitment to both profit and social purpose has disrupted the traditional business-charity dichotomy. The arrival of these ”hybrid” firms can be expected to affect the functioning of markets and may pose a potential challenge to the role played by nonprofit firms. We construct a series of Cournot duopoly models of output market competition between for-profits, nonprofits, and hybrid firms to analyze effects of organizational form on the quantity transacted in the market, the level of extra-market charity provided, and the market performance of each type of mixed market. We explore the implications for these outcomes of different types of altruism and relative cost structures. In particular, this summer's research was dedicated solely to exploring efficiency loss and non-profit utility in such market outcomes, as such results provide us with a clearer sense of how legalization of "hybrid" firms will effect existing institutions set to provide critical goods to those who cannot afford markets.
Capetown, Gibraltar, and Melbourne: A case study in cities' successes and failures in addressing sea level rise, drought, and flooding
Dylan Bresnan ’21; Advisor: Bowman Cutter
The previous qualitative analysis of Mediterranean cities’ climate adaptation plans mainly analyzed policies dating before 2013. In the past five years, climate change action has ramped up quickly so an update that analyzes cities’ new plans or obstacles is needed. This project focused on Mediterranean cities’ policies with respect to sea level rise, extreme rainfall events, and drought conditions. Eight cities’ previous adaptation plans were compared to their current climate policies to determine if the cities have advanced or regressed. Focused comparisons were then made for Capetown, Gibraltar, and Melbourne by interviewing a member of each cities’ climate adaptation department. These three cities were chosen as they had the most interesting approaches and circumstances to climate adaptation and faced similar barriers. Each city has recognized sea level rise as one of the main risks accompanied with climate change for their citizens but has found it difficult to assemble the resources and motivation to address the problem ambitiously. Each city has also made securing a water supply more of a priority than sea level rise. That said, the cities differ in their implementation of policies related to drought or flooding. This project concludes that these three cities are implementing their adaptation policies but are limited by local government priorities, tradeoffs in addressing different climate change risks, and lack of feasible alternative options.
Analyzing the Before and After Effects of Demonetization Policies on the Indian Macroeconomy
Payal Kachru ’21; Advisors: Manisha Goel and Michelle Zemel
In late 2016, India’s central government moved to replace all ₹500 and ₹1,000 banknotes, which comprised 80% of India’s cash. While the goal of this policy was to wipe out untaxed “black money”, it reportedly hindered the country’s GDP and cost millions of jobs. According to a 2018 report from the Reserve Bank of India, approximately 99% of the demonetized banknotes – ₹15.3 out of ₹15.4 trillion—were deposited back into the banking system. With this excess cash now circulating in the official economy, we investigate the overall impact of this policy on India’s macroeconomy.
By analyzing data across the years before and after the policy, we measure aggregate levels of total deposits, total borrowing by firms, and other factors that impact economic growth. Additionally, we model the relationship between firms and major banks, measuring if banks that experienced larger influxes of legitimate cash deposits gave out more loans to their firms. If this is true, more bank loans will push economic growth. Looking at the data, we see an increase in aggregate deposits, but aggregate loaning activity peaks in 2017 and sharply decreases afterward. Furthermore, we see that bond holdings increase, signifying an overall sale of bonds by the central bank. This is traditionally a method to decrease the money supply, which increases interest rates and decreases demand for loans. Such activity could contradict the original intentions of the demonetization policy, and damage economic growth.
Does a Rising Minimum Wage Affect Employment in the Garment Industry in Los Angeles?
Asaka Mori ’22; Advisor: Michael Kuehlwein
For my SURP project, I worked with Professor Kuehlwein to find out how the rise in the minimum wages in Los Angeles and the state of California affected the employment in garment industry. We first determined the Federal Minimum Wage and the minimum wages in LA and the state of California from 2008 to 2018. We found out that the minimum wages in LA and in California are rising while the Federal Minimum Wage has stayed at $7.25 since 2009. Next, we collected the data of number of employees in cut and sew apparel industry in LA, California, and the U.S. Using these numbers, we ran regressions to see whether the rise in the minimum wages in LA and California relative to the U.S. affect employment. The results have shown that the rise in the minimum wage for firms with less than 25 employees in LA and the rise in minimum wages for both big and small firms in the state of California caused the employment in the garment industry to fall faster relative to the United States. We also determined whether the decrease in the employment in LA was due to firms leaving the city or firms laying off workers. We got a list of firms and their estimated number of employees in LA from 2008 to 2019, and we found out that the fall in the employment was mostly because of firms leaving LA and going out of business.