Three Essays on Urban Policies

This dissertation contains three chapters that examine urban policies. The first chapter considers the impacts of a new card fee for prepaid transit cards in New York City. Since 1998, the New York City Metropolitan Transportation Authority (MTA) system has used prepaid cards (MetroCards) to collect subway and bus fares. In 2013, the MTA imposed a $1 card fee (surcharge) on new MetroCard purchases. Using a novel dataset with transaction-level deposit and card use information, I show that the fee caused riders to put more money on new MetroCard purchases, particularly those in low-income neighborhoods and those who used cash or debit (rather than credit) cards. As a result, the net monthly outstanding balance from transit card deposits increased dramatically, with riders lending an extra $150 million, on an annual basis, to the MTA. Moreover, over $20 million of the increased balances in the first year were never redeemed and escheated to the MTA when these cards expired. The leading explanation highlights the importance of the cost of effort to remember to carry the same card. I pose a structural model to calibrate the effect of a new card fee. Counterfactual simulation predicts that a new card fee of $4.35 will maximize the MTA’s profit. These findings have implications for fiscal policy designs and fee structures of prepaid card industry. The second chapter examines the causal effects of local access to alcohol on birth outcomes. After the repeal of National Prohibition in 1933, 30 states gave counties and municipalities the local option to continue alcohol restrictions. Citizens set alcohol control policies in their communities through jurisdiction-wide elections (i.e., local option elections). Currently, 10% of U.S. communities maintain a ban on some or all alcohol sales. Assessing the impact of local access to alcohol on alcohol-related outcomes such as birth weight, drinking under the influence, alcohol-related crimes, and so on is complicated by the potential non-random selection of liquor laws. I examine the causal effects of local access to alcohol on birth outcomes by comparing municipalities where referenda on legalizing liquor sales passed and failed by narrow margins. My results indicate that municipalities which were studied experienced higher incidence of low birth weight after legalizing the local sale of alcohol to the general public. The incidence of low birth weight rose by 4.5% for babies born within two years after the elections. The third chapter measures the deleterious effect of institutional discrimination on health. Interest in the impact of institutional discrimination on health outcomes has increased dramatically. Since research has mostly been done in the western context where social segregation has already been established, it is difficult to isolate the effect of initial social segregation on health outcomes. In this chapter, I examine the causal effect of institutional discrimination on health by exploiting a 1964 change in household registration system (hukou) in China, which caused a nationwide discrimination against rural dwellers. The 1964 change in the hukou system started to put tight control on domestic migration. Thereafter, movement from rural to urban areas became virtually impossible. Following the 1964 change in hukou policy, the fraction of urban hukou residents suddenly fell from over 50% to about 40%. I use this discontinuity in the proportion of urban hukou residents to identify the causal effect of institutional discrimination anchored in the hukou system on health. The regression-discontinuity (RD) design estimates suggest that urban hukou citizens have much better chances of being in good health. The deleterious effect of rural hukou on health possibly works through mechanisms of labor disparity, limited access to healthcare, and deprivation of quality education.