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Browsing by Author "Yao, Yao"

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    ECON212: Economics: Macroeconomics: Growth, Stability and Crises
    (Victoria University of Wellington, 2017) Yao, Yao
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    Fertility and HIV risk in Africa
    (Te Herenga Waka—Victoria University of Wellington, 2016) Yao, Yao
    This paper examines the role of social and cultural norms regarding fertility in women’s HIV risk in Sub-Saharan Africa. Fertility, or the ability to bear children, is highly valued in most African societies, and premarital fertility is often encouraged in order to facilitate marriage. This, however, increases women’s exposure to HIV risk by increasing unprotected premarital sexual activity. I construct a lifecycle model that relates a woman’s decisions concerning sex, fertility and education to HIV risk. The model is calibrated to match Kenyan women’s data on fertility, marriage and HIV prevalence. Quantitative results show that fertility motives play a substantial role in women’s, especially young women’s, HIV risk. If premarital births did not facilitate marriage, the HIV prevalence rate of young women in Kenya would be one-third lower. Policies that subsidize income, education, and HIV treatment are evaluated. I find that education subsidy would reduce young women’s HIV risk most effectively by raising the opportunity cost of premarital childrearing.
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    Higher education expansion, economic reform and labor productivity
    (Te Herenga Waka—Victoria University of Wellington, 2016) Yao, Yao
    This paper studies the impact of higher education expansion, along with economic reform of the state sector, in the late 1990’s in China on its labor productivity. I argue that in an economy such as China, where allocation distortions widely exist, an educational policy affects average labor productivity not only through its effect on human capital stock, but also through its effect on human capital allocation across sectors. Thus, its impact could be very limited if misallocation becomes more severe following the policy. I construct a two-sector general equilibrium model with private enterprises and state-owned enterprises, with policy distortions favoring the latter. Households, heterogeneous in ability, make educational choices and occupational choices in a threeperiod overlapping-generations setting. Counterintuitively, quantitative analysis shows an overall negative effect of higher education expansion on average labor productivity (by 5 percent). Though it did increase China’s skilled human capital stock significantly (by nearly 50 percent), the policy had the effect of reallocating relatively more human capital toward the less-productive state sector. This also directed physical capital allocation toward the state sector and further dampened average labor productivity. It was the economic reform that greatly improved the allocation efficiency and complemented educational policy in enhancing labor productivity (by nearly 50 percent).
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    Power of personalized smoking cessation: A unified lifecycle framework for policy evaluation
    (Te Herenga Waka—Victoria University of Wellington, 2018) Chen, Li-Shiun; Wang, Ping; Yao, Yao
    Cigarette smoking leads to large healthcare and morbidity costs, and mortality losses, and smoking cessation plays a key role in reducing health risk and economic costs. While medical evidence suggests that some smokers are more likely to respond to medication treatment than others depending on genetic markers, it remains unexplored whether pharmacogenetic testing is cost-effective in treating potential quitters of smoking. We address this knowledge gap by developing a lifecycle model in which individuals make smoking, health investment and consumption-savings decisions. Depending on an individual’s genotype and demographics, smoking may bring enjoyment but deteriorates one’s health, and the dynamic evolution of health capital determines life expectancy. We incorporate various aspects of behavioral considerations that justify policy intervention. We calibrate this model to fit key economic and medical observations in the U.S. We then propose three smoking cessation policies, two with standard treatments and one personalized depending on genetic markers, all under the same program costs. We construct two unified measures of effectiveness and subsequently compute the cost-effectiveness ratio. We find that personalized treatment is the most cost-effective: for each dollar of program cost, it generates $4:59 value in effectiveness, which is 22 43% higher than those under standard treatments. The result is robust to several variations to the benchmark setting, including most importantly second-hand smoking, incomplete health knowledge, and bounded rationality.