Essays in public finance and labor economics
Author(s)Ananat, Elizabeth Oltmans
Massachusetts Institute of Technology. Dept. of Economics.
Jonathan Gruber and David Autor.
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This thesis examines three questions of causality relevant to public finance and labor economics: the effect of racial segregation on city characteristics, the effect of divorce on women's economic outcomes, and the effect of abortion legalization on completed fertility. Chapter one examines the effect of segregation on cities. There is a strikingly negative city-level correlation between residential racial segregation and population outcomes -- particularly for black residents -- but it is widely recognized that this correlation may not be causal. This chapter provides a novel test of the causal relationship between segregation and population outcomes by exploiting the arrangements of railroad tracks in the 19th century to isolate plausibly exogenous variation in a city's susceptibility to segregation. I show that, conditional on miles of railroad track laid, the extent to which track configurations physically subdivided cities strongly predicts the level of segregation that ensued after the Great Migration of African-Americans to northern and western cities in the 20th century. Prior to the Great Migration, however, track configurations were uncorrelated with racial concentration, income, education and population, indicating that reverse causality is unlikely.(cont.) Instrumental variables estimates find that segregation leads to negative characteristics for blacks and high-skilled whites, but positive characteristics for low-skilled whites. Segregation could generate these effects either by affecting human capital acquisition of residents of different races and skill groups ('production') or by inducing sorting of race and skill groups into different cities ('selection'). I develop a model to distinguish between production and selection effects. The findings are most consistent with the view that more segregated cities produce better outcomes for low-skilled whites and that more segregated cities are in less demand among both blacks and whites, implying that Americans on average value integration. Chapter two, coauthored with Guy Michaels, examines the effect of divorce on women's economic outcomes. Having a female firstborn child significantly increases the probability that a woman's first marriage breaks up. We exploit this exogenous variation to measure the effect of marital breakup on women's economic outcomes. We find evidence that divorce has little effect on a woman's average household income, but significantly increases the probability that her household will be in the lowest income quartile.(cont.) While women partially offset the loss of spousal earnings with child support, welfare, combining households, and substantially increasing their labor supply, divorce significantly increases the odds of household poverty on net. Chapter three, coauthored with Jonathan Gruber and Phillip B. Levine, examines the effect of abortion legalization on completed fertility. Previous research has convincingly shown that abortion legalization in the early 1970s led to a significant drop in fertility at that time. But this decline may have either represented a delay in births from a point where they were "unintended" to a point where they were "intended," or they may have represented a permanent reduction in fertility. We combine data from the 1970 U.S. Census and microdata from 1968 to 1999 Vital Statistics records to calculate lifetime fertility of women in the 1930s through 1960s birth cohorts. We examine whether those women who were born in early legalizing states and who passed through the early 1970s in their peak childbearing years had differential lifetime fertility patterns compared to women born in other states and in different birth cohorts.(cont.) We consider the impact of abortion legalization on both the number of children ever born as well as the distribution of number of children ever born. Our results indicate that much of the reduction in fertility at the time abortion was legalized was permanent in that women did not have more subsequent births as a result. We also find that this result is largely attributable to an increase in the number of women who remained childless throughout their fertile years.
Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2006.Includes bibliographical references.
DepartmentMassachusetts Institute of Technology. Dept. of Economics.
Massachusetts Institute of Technology