Essays in public economics

This dissertation is a collection of three essays in Public Economics. The first chapter studies the optimal design of student loans as a lever to foster the inclusion of poor students in private colleges in Brazil. The second chapter delves into understanding the consequences of affirmative action as a tool to increase the participation of marginalized students in selective public colleges in Brazil. Finally, the third chapter investigates the effects of an expansion of the walls on the Mexico-U.S. border on unauthorized migration and economic outcomes. The first chapter is titled "The equilibrium effects of subsidized student loans" and is co-authored with Nano Barahona and Sebastian Otero. We investigate the equilibrium effects of subsidized student loans on tuition costs, enrollment, and student welfare. Two opposing forces make the impact on tuition theoretically ambiguous. First, students with loans become less price-sensitive because they do not bear the total tuition cost, causing tuition to rise (direct effect). Second, loan programs tend to increase the market share of more price-sensitive students, reducing tuition (composition effect). We develop a model of the supply and demand for higher education and estimate it leveraging a large change in the availability of student loans in Brazil. We find that Brazil's current loan program raises prices by 1.6% and enrollment by 11\% relative to a counterfactual without loans. We decompose the price effect into its direct (2.7% increase) and composition (1.1% decrease) components. Finally, we show that an alternative policy that gives loans only to low-income students raises enrollment by 16% relative to a counterfactual without loans. Most of the difference in enrollment between the two policies are due to price reductions coming from a stronger composition effect in the alternative policy. The second chapter is titled "Affirmative action in centralized admission systems" and is coauthored with Sebastian Otero and Nano Barahona. This chapter empirically studies the distributional consequences of affirmative action in the context of a centralized college admission system. We examine the effects of a large-scale program in Brazil that mandated all federal public institutions to reserve half their seats for public high school students, prioritizing those from socioeconomically and racially marginalized groups. After the policy was put in place, the representation of public high school students of color in the most selective federal degrees increased by 73%. We exploit degree admission cutoffs to estimate the effects of increasing affirmative action by one reserved seat on the quality of the degree attended four years later. Our estimates indicate that the gains for benefited students are 1.6 times the costs experienced by displaced students. To study the effects of larger changes in affirmative action, we estimate a joint model of school choice and potential outcomes. We identify the parameters of the model using exogenous variation in test scores-arising from random assignment to graders of varying strictness-that changes the availability of degrees for otherwise identical individuals. We find that the policy creates impacts on college attendance and persistence that imply overall income gains of 1.16% for the average targeted student, and losses of 0.93% for the average non-targeted student. Overall, the policy prompted a negligible increase in predicted income of 0.1% across all students in the population. Taken together, we find that the affirmative action policy had important distributional consequences, which resulted in almost one-to-one transfers from the non-targeted to the targeted group. These results indicate that introducing affirmative action can increase equity without affecting the overall efficiency of the education system. The third chapter is titled "Border Walls" and is coauthored with Treb Allen and Melanie Morten. Between 2007 and 2010 the U.S. government built 548 miles of border wall along the U.S.-Mexico border. Using administrative data on 5.7 million (primarily unauthorized) Mexican migrants, we study how the border wall expansion affected migration patterns between Mexican municipalities and U.S. counties. The wall changed migrants' choice of route and their choice of destination within the United States, but it did not have a large effect on the choice of whether or not to migrate. On net, we estimate the wall decreased annual migration flows by 46,000. Incorporating the decrease in migration into a spatial equilibrium model, we estimate that the wall increased (decreased) wages of low-skill (high-skill) U.S. workers by a modest $2.89 ($3.60) per year

Keywords: Economics.
Advisor: Hoxby Caroline Minter
Diamond Rebecca (Of Stanford University. Graduate School of Business)
Morten Melanie
Sorkin Isaac