Full Citation
Title: Three Essays in Public Economics
Citation Type: Dissertation/Thesis
Publication Year: 2021
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Abstract: This dissertation is composed of two chapters on the economy-wide effects of the Earned Income Tax Credit and one chapter on the effects of monopolistic market structure in urban rental markets. Each chapter considers unintended consequences of public actions given an interconnected market place. For chapter this is skill substitutability, chapter two spatial connections, and chapter three preferences and market power. Chapter one studies the general equilibrium incidence of the Earn Income Tax Credi by formalizing the theoretical mechanisms and quantifying its empirical importance. The Earned Income Tax Credit is a $67 billion tax expenditure that subsidizes 20% of all workers. Yet all prior analysis uses partial equilibrium assumptions on gross wages. I derive the general equilibrium incidence of wage subsidies and quantify the importance of EITC spillovers in three ways. I calculate the GE incidence of the 1993 and 2009 EITC expansions using new elasticity estimates. I contrast the incidence of counterfactual EITC and Welfare expansions. I quantify the effect of equalizing the EITC for workers with and without children. In all cases, I find spillovers are economically meaningful relative to the intended direct effects. Chapter two studies the county level labor market effects of state supplements to the Earned Income Tax Credit. Twenty eight states spend $4 billion to supplement the federal Earned Income Tax Credit, with several justifying the tax expenditure as a pro-work incentive. Yet no systematic evaluation of these supplements exists. I use state border policy variation to identify state supplements effects. I first document that subsidy rates are greater when a state’s neighbor already has a supplement. Next, I assess whether supplements affect county level EITC take-up, migration, commuting, employment, and earnings. Estimates are sensitive to the estimation design and sample used. While supplements increase benefits to low-income workers, results fail to provide robust evidence of increased economic activity.
Url: https://www.proquest.com/docview/2533205997?pq-origsite=gscholar&fromopenview=true
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Authors: Watson, Christopher Luke
Institution: Michigan State University
Department: Economics
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Publisher Location: Ann Arbor
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Data Collections: IPUMS USA, IPUMS CPS
Topics: Poverty and Welfare
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