Kevin Milligan

The first chapter studies the long run effect of student grants and loans in Canada. Using linked administrative data and a regression discontinuity research design, I find that the Canada Student Grant for those from Low-Income Families (CSG-LI) increased university students’ 8-year cumulative employment income by 4.8% to 9.4%, and the results are robust to the optimal bandwidth and different weighting kernels. This pattern is not found for recipients of the Canada Student Grant from Middle-Income Families (CSG-MI). The grants do not affect students while they are in school — this is consistent with the fact that the grants replace interest-free loans. Rather, the difference in income is observable four years after enrolment once most students have entered the labor market. I find some evidence that the grants affect career choice: CSG-LI recipients are more likely to avoid low-paying industries.The second chapter assesses the phenomenon of decrease in resale prices of top-floor units of residential buildings. High indoor temperature of top-floor units may explain this phenomenon because top-floor residents own/use cooling appliances, such as air conditioners or fans, more than the residents on other floors, and the magnitude of top-floor discounts increases in regions with higher air temperatures.In the third chapter, I study the impact of the tax change on restaurant expenditure using an exogenous tax increase between July 2010 and April 2013 in British Columbia, Canada. Dining in restaurants can be easily substituted by home production, but consumers are heterogeneous because they have different elasticities of substitution because of different marginal cost of forgone labor and leisure. I find that restaurant expenditure was reduced by 4.0% to 7.7% when tax was increased, but the elimination of the tax did not bring back the pre-tax equilibrium. Furthermore, the amount of expenditure reduction is heterogeneous. The retired and the single were hit more by the tax increase. Both groups are arguably more leisure abundant.

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Each chapter of this thesis investigates one aspect of China’s taxation system. Chapter 1 investigates the introduction of accelerated depreciation (AD) for fixed assets investment in China as a natural experiment. In contrast to the large positive impact of similar tax incentives in the U.S. and U.K. found in recent studies, we document that AD was ineffective in stimulating Chinese firms' investment and that firms fail to claim AD on over 80% of eligible investments. We investigate information frictions as the primary driver of both facts. Chapter 2 documents new facts about the structure and drivers of China’s SI contributory base, with an emphasis on non-compliance. First, 54% of firms do not pay into the employer-based SI system leaving 35% of employees outside of SI coverage. Among participating firms, an estimated 85% of firms are not fully compliant. Second, compliance increases sharply with firm size. Third, China is unique in that SI administration and insurance pooling are done at sub-provincial levels. We investigate how this decentralization contributes to firm non-compliance. Chapter 3 applies the lessons from Chapter 2 to analyze China's primary fiscal response to the Covid-19 crisis: an exemption for firms from making SI contributions, resulting in an average tax cut of 21 percentage points on employment. Labor informality substantially reduces the reach of this fiscal response and skews the tax savings towards large firms. Offsetting this negative targeting is the much higher labor intensity of the firms most vulnerable and exposed to the economic shock, which creates a larger benefit from payroll tax cuts for these firms.Chapter 4 studies the transition from a turnover tax (TT) to a value-added tax (VAT). This reform, the largest Chinese tax reform in a quarter-century, mostly eliminated the taxation of firm inputs. We assess the effects on production, investment, and outsourcing. We find minimal effects on firm output but large increases in fixed asset investment. The latter is driven by an effective 17 percentage point reduction in the tax rate on fixed asset purchases. We also find mixed evidence on whether outsourcing increased due to the reform.

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The first chapter provides the first consistent estimates of intergenerational earnings mobility in Chile, based on administrative records that link a child's and their parent's earnings from the formal private labour sector. We estimate that the intergenerational earnings elasticity is between 0.288 and 0.323, whereas the rank-rank slope is between 0.254 and 0.275. We find significant non-linearities in the intergenerational mobility measures, where intergenerational mobility is very high in the bottom 80\% of the parents' distribution but with extremely high intergenerational persistence in the upper part of the earnings distribution. In addition, we find remarkable heterogeneity in intergenerational mobility at the regional level, where Antofagasta, a mining region, is the most upwardly-mobile region. Finally, we estimate significant differences across municipalities in the Metropolitan Region, where our estimates suggest that the place of residence makes a significant difference in intergenerational mobility for children of upper-class families, while it is less relatively important for children of lower- and middle-class families.The second chapter proposes a new methodology to value retained earnings as income by transforming them into accrued capital gains and develops a parametric procedure to impute corporate retained earnings to households. We use this approach to estimate income inequality for Canada using household survey data, and aggregate retained earnings information from national accounts. We show that including retained earnings by transforming it into accrued capital gains increases income inequality in Canada and changes the trend in income inequality, exhibiting more consistency with the decline in capital income after the Great Recession. The third chapter investigates consequences of top-distribution undercoverage on the Gini coefficient. It shows that not correcting for underreporting and nonresponse at the top does not necessarily result in an underestimated Gini coefficient. In addition, this paper proposes a Gini approximation based on the Atkinson approximation to correct for underreporting at the top. Under plausible assumptions, the approximation proposed for correcting underreporting at the top is near exact. To evaluate this methodology, this paper uses Chile and Canada as examples where we include undistributed business profits to measure income inequality.

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This dissertation is a collection of three chapters in Development Economics and Gender for the Mexican context. Chapter 2 analyses whether the gender composition of decision-making boards affects promotion decisions for either male or female researchers, by using a unique database for a context in which a group of peers makes all promotion decisions for all academic institutions in Mexico. The empirical analysis examines the probability of promotion for each researcher enrolled in the National System of Researchers, and how this is affected by the committee's gender composition, exploiting the random assignment of evaluators. The results show that women in decision-making committees do not significantly favor the probability of promotion for women; but women facing a male-only committee have a lower probability of promotion than men.Chapter 3 studies the effects on social attitudes of the sharp increase in violence experienced in Mexico during the "Drug War". This is done through a lab-in-the-field experimental approach with Mexican undergraduate students. The results suggest that there are experience-type specific effects for the different levels of violence exposure. Differential gender effects are also found; women with drug war-related violence experience appear to have two different behaviors; depending on which type of violence experience they had; one where they become community builders and show solidarity, and the other one where they develop a lot of fear and feelings of vulnerability and show spite.Chapter 4 studies the effect of the sharp increase in violence in Mexico on preventive health care attitudes, and on classic health measurements. The data used in this study is a match of the INEGI monthly homicide reports at the municipality level with the individual level data from the Mexican Family Life Survey. The results presented suggest that having high levels of violence can affect the individual's health when measured by classic variables such as blood pressure, hospitalizations, body mass index, and mental health; and it can also affect the behaviors that could help alleviate health problems, such as having a healthier lifestyle including non-smoking, spending time outdoors, sleeping well, going for wellness checkups, and having a positive mindset about oneself.

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The first chapter studies parents’ intra-household time and resource allocation, focusing on parental quality time, and the implications for early childhood development. I develop a model that explains the "parental time-education gradient" puzzle, and I confirm its predictions, exploiting exogenous, drastic daycare price decrease in Quebec. I find that as daycare becomes cheaper, parents increase time devoted to their children, at the expense of home production and leisure, while consuming more of home production market goods (eating out, domestic help), and child market goods (daycare, games and toys); the time reallocation is larger for higher-educated parents. The estimated structural parameters uncover the pivotal role of complementarity (substitutability) between time and market goods in child human capital (home) production, and suggest a time efficiency advantage in non-market activities for higher-educated parents. I use them to assess how universal daycare shapes skill gaps in early childhood. My findings point to differential parental investment and time efficiency as important mechanisms behind widening skill gaps in early childhood.The second chapter measures the causal impact of academic redshirting---the practice of postponing school entry of an age-eligible child---on student achievement and mental health. I use Hungarian administrative testscore data for 2008-2014, and an instrumental variable framework. The institutional feature I exploit is a school-readiness evaluation, compulsory for potentially redshirted children born before January 1st. I compare children born around this cutoff and find that (1) although there are large student achievement gains for all, disadvantaged boys benefit the most from redshirting---and only they benefit in terms of mental health; (2) the positive effects of higher school-starting age are driven by absolute, rather than within-class relative age advantage.The third chapter studies how closely private insurers’ payment schedules follow Medicare's, exploiting institutional changes in Medicare's payments and dramatic bunching in markups over Medicare rates. We find that, although Medicare's rates are influential, 25 percent of physician services, representing 45 percent of spending, deviate from this benchmark. Heterogeneity in the pervasiveness and direction of deviations reveals that the private market coordinates around Medicare's pricing for simplicity but innovates when sufficient value is at stake.

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This dissertation uses elementary school-choice programs in Canada in order to examine issues relating to the economics of education. Chapter 2 examines the role of parents’ uncertainty and learning in a setting where parents make dynamic education choices for their children and learn over time about unknown, child-specific returns to schooling. Using administrative data from the province of British Columbia and the French Immersion program, I estimate a dynamic model that incorporates imperfect information and parental learning into a school-choice framework. I find that new information parents receive after the initial enrolment decision accounts for a large fraction of program attrition, particularly in earlier grades, and also raises student achievement. In chapter 3, using the same data as in chapter 2, I estimate the causal impact that the French Immersion program has on short and medium-run student outcomes using a control function and instrumental variables approach that exploits variation in the distance to the nearest immersion and non-immersion schools within a given neighbourhood. I find that initial entry into the French Immersion program has large negative and significant effects on student outcomes in grade 4 in each of math, reading and writing. Over time, these effects decline such that by grade 10, I find no effect on English scores, but there remains a negative effect on math scores. Chapter 4 examines how changes in peer composition from school-choice policies impacts students’ own achievement. Using administrative data from the Canadian provinces of Ontario and British Columbia and exploiting the Late French Immersion program, I estimate these peer effects using a two-stage residual inclusion approach along with a school-fixed effects model. I find that as more children leave for the choice program, there is a negative and significant effect on the remaining students; however, this result masks substantial heterogeneity. I find that an increase in the fraction of low performing students to enter the choice program leads to increases in achievement for the remaining students; conversely, I find that high-performing leavers cause large reductions in the achievement of the remaining students.

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This dissertation uses three different studies to explore the impact of household finance on elderly households’ labour market activities. Chapter 1 provides an introduction. Chapter 2 uses the eligibility requirements of the Canadian Old Age Security (OAS) program as a novel approach to estimate a causal effect of public pensions on elderly immigrants’ labour supply decisions. I also evaluate the extent to which these individuals may adjust their labour supply behaviour prior to the receipt of public pension entitlements. The findings in this chapter illustrate that seniors only respond to the OAS benefits with a decrease in labour force participation rates. A combination of estimates implies that elderly immigrants may exhibit behavioural response in anticipation for OAS benefits. Chapter 3 investigates the effect of immigration on mobility decisions of native-born near-retirees. The research findings in this chapter push this area of literature forward by suggesting an alternative perspective for explaining native out-migration. The heterogeneity in mobility preferences across dwelling tenure groups is an important result because it may explain why Card (2001) fails to find any significant effect from immigration on aggregate native relocation decisions. Finally, Chapter 4 explores how the recent house price shock in the U.S. affected the labour supply decisions of near-retirees. This is the first study to use the national lending conditions for residential mortgage series as part of an instrumental variable strategy to explore this context. The final chapter sheds light by showing that housing exerts insignificant impact on the near-retirees’ work and retirement decisions.

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This dissertation applies various program evaluation techniques to examine both the intended and unintended consequences of government spending and regulation that affect family labor supply, children's healthcare utilization, and household saving behavior. Chapter 2 of this dissertation exploits the large and anticipated cash influx in the first quarter of the calendar year induced by the Earned Income Tax Credit (EITC) to estimate the causal effect of the receipt of a cash transfer on the timing of family labor supply. I find that income seasonality caused by EITC receipt induces changes in the intra-year labor supply patterns of married women. In contrast, the receipt of the EITC does not affect the timing of the labor supply of married men and single women.The subgroup analysis implies that my results are mainly driven by those from liquidity-constrained families and those who are secondary earners within their families.Chapter 3 exploits a sharp increase in patient cost-sharing at age 3 in Taiwan that results from young children "aging out" of the cost-sharing subsidy to examine the causal effect of cost sharing on the demand for young children's healthcare. It shows that the increase in the level of patient cost sharing at the 3rd birthday significantly reduces utilization of outpatient care. However, the utilization of inpatient care for young children does not respond to a change in cost sharing at the 3rd birthday. Chapter 4 exploits workplace pension reform in Taiwan to estimate the casual effect of workplace pension provision on the household saving rate. It shows that pension reform significantly reduces the prime-age (20-50) household saving rate by between 2.06 percentage points and imply that the degree of substitutability between workplace pensions and saving is about -0.50 to -0.60.

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This dissertation studies and identifies determinants of individual health. The first chapter analyzes how the supply of medical care affects patient treatment and health outcomes, focusing on how hospitals respond to the loss of a profitable service line. This chapter provides strong evidence that hospital spillovers across service lines are empirically important and that hospitals differentiate treatment by patient payer type. Hospitals practice both revenue augmenting and cost-cutting behavior in other lines of care, targeting specific procedures and payers according to their profitability. Specifically, they increase the number of surgical procedures and perform more marginal surgeries. The effects are concentrated in medical specialties where there are more discretionary surgeries and higher profit margins. Furthermore, hospitals cut back on unprofitable treatment by reducing non-elective admissions and uninsured elective care. Hospitals also increase the intensity of treatment among private payers. The second chapter of this dissertation investigates the demand side of health care, analyzing the role that health insurance plays on primary medical care usage by young American adults. I find office-based physician visits and prescription drugs are not affected by insurance, but dental visits are. There is a small increase in out-of-pocket expenditures caused by insurance loss, concentrated heavily at the top of the distribution. No change in health status or ability to afford care is found. The findings shed light on the expected welfare benefits of recent US health care policies targeting young adults. The final chapter of this dissertation analyzes the extent to which the early childhood environment shapes child health and development outcomes and, specifically, whether universal childcare levels the playing field across children. I analyze the introduction of a universal childcare program in Quebec in 1997, testing its impact on the distribution of child health and development outcomes. I find that there is little heterogeneity in the response to the policy across the distributions of child motor skills and cognitive outcomes. I do, however, find evidence that it led to a reduction in child body weight at the upper end of the distribution.

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This dissertation evaluates the effects of various public policies related to education in Canada. Chapter 2 analyses the long-term effects of mandating immigrant children to attend school in the language of the majority. Using the 1977 introduction of Bill 101 in Quebec, a law that compelled children, with some exceptions, to attend school in French, I identify the impacts of studying in French on first- and second-generation immigrant children in Quebec. I find strong evidence that the law led to a significant increase in immigrants’ propensity to use French at home and at work, in their probability of being employed or in school, being part of the labour force, and choosing to live outside of the Montreal metropolitan area. Chapter 3 tests the empirical predictions of three theoretical saving frameworks in the context of saving for a child’s post-secondary education: the life-cycle saving model, the fixed-goal saving model, and the procrastination saving model. Using regression discontinuity and panel data regression techniques, I evaluate the effects of three Canadian education saving incentive programs on parents’ saving behaviour in Registered Education Savings Plans (RESPs). The results indicate that the actions of parents are generally consistent with the procrastination saving model. I estimate that higher matching rates on contributions and lump-sum subsidies increased RESP contributions and savings among lower-income families who applied for the programs. Furthermore, grants conditional on opening an account generally caused all parents to start saving earlier for their child. Chapter 4 evaluates the impacts of education savings in incentivised education savings accounts on children’s overall education savings and their academic performance. To identify these effects, I employ an instrumental variable approach that relies on the structure of Canadian saving incentives offered to parents for contributions to RESPs. I find no effect of the saving incentives on parents’ overall decision to save for their child’s post-secondary education. Among parents who do save, I estimate a small but significant crowding-out effect of RESP savings on education savings in other types of saving vehicles. Finally, I find no evidence of a causal impact of savings in RESPs on children’s performance in school.

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This dissertation discusses three topics in applied economics.The first essay examines the causal effect of social capital on individual incomeby exploiting the historically determined pattern of family namedistribution in Chinese villages. Family name distribution impacts social capitalthrough historical inter-lineage rivalry and cooperation. The estimatesshow a strong first order effect on male villagers, which implies a onestandard deviation increase in social capital is equivalent to two to fouryears of education. No effects on female villagers were found. The gender differentiationcould be accounted for by occupation difference: male villagers' income mainly comes from market exchange, while female villagers' income comes mainly from home production. Using a simple model, it is demonstrated that a village's social capital determines its trade scope and therefore income of its residents.The second essay proposes a general method to identify subjective expectation bias.The method exploits an implication of rational expectations that requires the identicalweight of an independent variable in projecting both objective and subjective probabilities.The empirical analysis shows that female seniors do not correctly internalize ageinformation while male seniors fail at internalizing income information. Thoughcognitive ability and risk aversion can partially explain the results, they are not the sources of the identified biases.The third essay explores how seniors make long term care insurance (LTCI) decisions by developing a dynamic structural discrete choice model where a rational, risk averse, bequest motivated senior has to decide at each period whether to buy an insurance policy or not. Using the Health and Retirement Survey data, this essay finds substantial heterogeneity in bequest motive that drives LTCI decisions. Specially, the idiosyncratic bequest motive helps to explain why LTCI holders do not experience a higher incidence rate than non-holders.

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The three essays in this thesis explore how intrahousehold decision making interacts with evolving health, disability shocks and aging to determine life cycle patterns of labour supply and retirement among Canadian andU.S. households. One of the main roles of marriage and cohabitation is to provide individuals with insurance against idiosyncratic risk such as health and disability shocks. The extent and effects of this insurance depend onhow household members interact and delegate tasks--for instance, whether they can specialize and easily transition between home-based or market-basedwork--and the extent to which household members commit to and cooperate with each other. The first two chapters of the thesis document and provide a structural explanation for the fact that, in general, marriage is associated not only with better health outcomes but also with better economic outcomes conditional on health status. The final chapter suggests that these better outcomes, and the role of public policy in facilitating them, maybe contingent on how cooperative household members are with each other when making career and retirement decisions. In general, the results suggest that household-level interactions have important implications for aggregate labour supply and human capital; for the role and appropriate use of public policy; and for the welfare of individuals confronted with uncertainty over the length and productivity of their working life.

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