Title: Three Essays in Applied Microeconomics
Description: In the first chapter, I measure the impact of student loan debt on young, college-educated workers' decisions regarding labor supply and enrollment in graduate school. I exploit variation in student loan debt driven by the formulas that determine Federal Student Aid in order to identify these effects. Instrumental variable estimates indicate that in the initial years following graduation student loan debt seems to raise the likelihood of employment; the effect is most pronounced for female graduates. However, the evidence does not indicate that debt causes workers to opt into different types of occupations, as has been shown to be true among certain populations. Student loan debt also seems to lower the likelihood that an individual will obtain a graduate degree. These effects are too large to be consistent with the permanent income model, which predicts that graduates will effectively spread loan repayment over their lifetimes, causing only negligible changes in behavior during any single period.

In the third chapter I examine lending mechanisms in the federal student loan program. Since the passage of the Higher Education Act in 1965, American students have been able to finance post-secondary education with federally subsidized loans. Until very recently students were able to access this credit through two channels; directly from the federal government or as a guaranteed loan from a private lender. The objective of this paper is to estimate the difference in loan default rates across the two lending programs. Since the programs serve distinct groups of students quasi-experimental estimation techniques are used to estimate this difference. The estimates suggest that the moral hazard created by the loan guarantee leads private lenders to generate higher rates of student loan default than direct lending. In the final chapter, I estimate the temporal pattern of earnings losses faced by displaced workers eligible for the Trade Adjustment Assistance Program. Data from the 2001 Survey of Income and Program Participation and is used to perform an event study analysis.

The resulting evidence indicates that displaced workers face decrease earnings in the months prior to displacement, a large drop in earnings during the month of displacement and losses that persist up to 6 months after displacement. Displaced workers eligible for Trade Adjustment Assistance face a similar pattern of earnings loss, but experience less loss during the period of displacement and greater losses during the period following displacement. Beyond the first month after displacement workers eligible for Trade Adjustment Assistance do not experience losses in excess of other displaced workers. I also find that workers Eligible for Trade Adjustment Assistance face higher rates of unemployment in the first three months following a displacement. By the fourth month the rate of unemployment is not different from other displaced workers. This evidence suggests that the additional benefits provided to unemployed workers under the Trade Adjustment Assistance program may not be warranted; these workers do not face persistent losses that exceed the losses experiences by other displaced workers.