Economic dynamics: Applications to public economics, health economics and labor economics

The research gap in the literature concerning the application of dynamic economic principles in applied microeconomic framework motivates the present study and involves three related essays. The first essay, entitled Optimal Dynamic Commodity Taxation, characterizes the optimal commodity tax in an economy involving the evolution of consumption from an old to a new commodity, represented by a replicator dynamic equation. The paper is motivated by the Canadian Copyright Board introduction of levies on blank audio cassette tapes (old good) and compact discs (new good) in 1999. The study finds that the optimal dynamic tax rate minimizes the discouragement of consumption, and minimizes the impact of the tax on the growth of the consumption of the new good. Also, a dynamic commodity tax is predicted to be selected over a static commodity tax, when the initial proportion of consumers purchasing the new, preferred good in the population is sufficiently small. The study contributes to the literature on optimal commodity taxation, through the application of the concepts of evolutionary game theory to the commodity tax literature.;The third essay, entitled Search Intensity, Job Offer Arrival Rate and Labor Market Transitions, presents an empirical structural job search model in which the search effort is endogenized. We use the Canadian data of Labor Market Activity Survey (1988-1990), which contains three indicators of search intensity to investigate the influence of search intensity on the job offer arrival rate and thus on the labor market transitions for those who are unemployed. The estimation results show that all three search indicators have significant impacts on the probability of receiving job offers. Additionally, the incentive effect of insurance compensation system is also evaluated. The simulation results reveal that monitoring and benefit sanctions for insufficient search, may serve as a more effective way to restore incentives for the unemployed workers to get back to work soon.;The second essay, entitled Government Funding Policy towards Communicable Diseases, investigates the government choice to offer a production subsidy to a foreign drug monopoly firm producing in a local market aimed at reducing production costs of the drug and thus lowering the local prices for treatment given the prevalence path of the disease in a dynamic economic framework. The study finds that, the foreign monopolist will accept the government funding if its productivity type is sufficiently high. Second, the optimal level of government funding increases with the expected ex-ante cost of production, and decreases with the expected type parameter of the firm. Third, the government would be more likely involved when the ex-ante cost of production and/or the type parameter of the firm are anticipated to be high, and the number of sick in the population reaches a sufficiently large value.