2025 Theses Doctoral

Essays in the Economics of Entrepreneurship, Labor, and Natural Disasters

Erda, Tarikua

This dissertation examines questions around entrepreneurship, technology investments, and human capital––three critical drivers of economic growth and sustainable development.

The first chapter explores firm entry dynamics following flooding and the role of government spending in mediating economic recovery. Disasters increase affected firms’ credit demand. I examine bank lending, firm entry, and recovery following rare flood shocks. After flooding, banks reallocate loan supply toward established incumbents, away from new firms. This reduces region-wide firm entry, entrant job creation, and wages, highlighting young firms’ disproportionate contribution to growth. However, after federally declared disasters, low-interest federal loans to disaster-hit incumbents indirectly offset entrants’ credit constraints. This increases firm entry without hurting firm performance, and sustains wages. These entry-exit dynamics are highly pronounced in the non-tradable sectors that rely on local demand. Ultimately, tax revenues compensate for upfront federal spending on business recovery loans. Positive spillovers onto firm entry demonstrate a novel, substantial channel through which government spending supports post-disaster recovery.

Building on the aforementioned results, the second chapter studies how manufacturing plants readjust their capital, particularly their machinery, in response to large, federally declared floods, and how their productivity recovers. The fixed nature of physical capital could delay adjustment to rapidly occurring weather shocks. Prior theoretical work predicts this would amplify economic damages from climate change as global warming intensifies disaster risk. In this chapter, I empirically test this prediction by using an event study design on rich confidential microdata from the US Census Bureau. While floods degrade capital, surviving plants replace capital and see higher productivity because they upgrade technology as they rebuild. I document substantial and productivity-enhancing reallocation of second-hand capital across plants following floods, including from low-productivity exiters toward well-performing entrants and young plants. Ultimately, capital adjusts and is reallocated toward better use following flooding, boosting aggregate productivity. These outcomes stem from the expanded credit access that federal disaster spending creates. These findings reveal a new channel through which government disaster spending revives disaster-hit economies and underscore its critical importance in a warming world.

In the third chapter, Jeffrey Shrader and I study appearance norms and biases in the STEM academic setting, which is critical for the innovation and healthcare sectors that drive economic growth. Hair texture is a phenotypical feature, yet Western norms favor straight hair over the kinky natural textures common to Black populations. We conduct incentive compatible experiments in which university students and US adults rate the professionalism, competence, and agreeableness of headshots of hypothetical candidates for STEM professor jobs. Relative to straightened hair (for women) and clean-cut hair (for men), kinky hair carries large penalties for Black individuals. These penalties are most pronounced for the professionalism and competence ratings of Black women and agreeableness of Black men. Racialized hair penalties also surpass penalties for objective photo elements like poor resolution or not smiling, implying that in mixed-race workplaces, Black individuals may face penalties for not tightly adhering to Euro-centric hairstyle norms. Beyond advancing the study of discrimination by using advanced experimental methods to document a pervasive yet underexplored type of bias, this paper also informs current legal debates around recognizing hair-based discrimination as racial discrimination.