Three Essays on Applied Microeconomics
University of Kansas
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This dissertation consists of three independent essays assessing public policies and external stakeholder influence on corporations under the paradigm of education economics, transportation economics, and environmental economics. The first two chapters derive causal inferences of public policies on aspects of social welfare such as traffic fatalities due to lower income taxes, and education attainment following free community college programs. The third chapter diverges towards corporate environmental management, stemming from increasing influence of local communities identified as a crucial stakeholder group. The empirical evidence on these unexplored avenues should be critical contributions to the scholarly literature under applied microeconomics. The first chapter evaluates how income tax cuts can generate unintended consequences such as reducing highway expenditures and increasing traffic fatalities. Using data on 48 contiguous states from 2000 through 2015, the study leverages quasi-experimental variation in state income tax cuts around the Great Recession to identify the causal relationship between income tax cuts, state appropriation towards highways and traffic fatalities. Applying a difference-in-differences methodology with case control matching strategy, the results demonstrate that states implementing a permanent income tax cut decreased highway expenditures, both in the short-run and long-run, by a range of 9.5 percent to 13.5 percent annually. Concurrently, traffic fatalities increased 6 percent on average relative to states with no tax cuts in place. The findings suggest that in light of increasing dependence on income tax revenue for funding highway expenditures, income tax cuts can significantly worsen traffic safety. Chapter 2 examines a recent development sweeping across US – free community colleges. In light of rising net tuition and stagnant real income growth, Tennessee implemented the first statewide free community college program, called Tennessee Promise in 2015. The purpose is to increase education attainment of population by 2025 in order to meet the rising demand for skilled labor. Due to its broad-based approach (no income or merit requirements), the Program became a success and was soon rolled out in ten other states within the next 4 years, albeit with different eligibility requirements. This chapter compares the education outcomes of two such contemporary Promise Programs – Tennessee Promise and Oregon Promise Program. Utilizing difference-in-differences and synthetic control approach, the findings reveal significant increase in public 2-year college enrollment in both states by 39% - 45%. However, based on eligibility criteria of the Promise scholarship, different findings are obtained for retention and graduation rates. Chapter 3 investigates an admittedly effective external stakeholder group that in previous studies was only evaluated through proxy measurements. Under Trump Administration, since environmental regulation is expected to slack, importance of pressure generated from other stakeholders is rising. Therefore, exploiting an exclusive survey dataset on chemical manufacturing facilities, this chapter provides empirical evidence of local communities pressurizing regulated chemical facilities to undertake better environmental management behavior. However, identification of a causal impact hinged upon addressing possible endogeneity of these direct measurements. Hence, using an instrumental variable method, results revealed perceptions of community residents can only generate better self-monitoring involving compliance with pollution permits. However, exposure to negative media coverage in the past will not only increase self-monitoring by 28%, but also induce facilities to employ 172 additional environmental facility employees per 1000 of whole facility employees.
- Dissertations 
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