Master of Arts / Department of Economics / William F. Blankenau / This paper examines several different issues which could make the various Social Security programs insolvent. I evaluate each cause and how it is related to the problems experienced by each program to determine potential policy changes. I draw the majority of my data and information from peer-reviewed scholarly articles, as well as government agencies such as the Social Security Administration, Bureau of Labor Statistics, and the Congressional Research Service. Section 1 of the paper explains the history of the Social Security program and the circumstances creating it. Section 2 goes into greater detail explaining different issues which could make the system insolvent. These areas are: earnings inequality, changes in healthcare, increased life expectancy, changes in the dependency ratio, general trust fund issues, disability trust fund issues, political climate, and recessions/reduced earnings. In Section 3, I evaluate two different proposed plans to fix Social Security. The first plan is an academic plan, the Diamond-Orszag Plan; the second is a plan created by a think-tank, The Heritage Plan. Section 4 gives a conclusion of the implications of the paper and explains the benefits and drawbacks of the two evaluated plans. After evaluating all the problems with Social Security and the two proposed plans, I come to the conclusion that neither plan would be ideal by itself. The Diamond-Orszag Plan is the most politically feasible plan, as it doesn’t change the framework of the current program. A combination of the two plans would be most beneficial, as The Heritage Plan has policy specifically targeting the problems with the Medicare system, where the Diamond-Orszag Plan does not. The three different plans for changing the disability system I evaluate in Section 2.5 are specific, targeted plans and could be a nice addition to a plan such as the Diamond-Orszag Plan. In any case, the sooner politicians finally start taking Social Security’s instability seriously, the better. The longer we wait, the more complex and difficult the problem will become.

Doctor of Philosophy / Department of Economics / William F. Blankenau / This dissertation encompasses three essays on the macroeconomics of human capital and economic growth. Below are the individual abstracts for each essay. Essay 1: Does Public Education Spending Increase Human Capital? I investigate the effect of public education spending on the quality of human capital as measured by international student test scores in science and mathematics, conditional on the efficiency of a country's governance. Combining World Bank country level data on government efficiency with rich micro data from the OECD PISA-2009, I estimate a human capital production function from student level data. Prior work suggests that public education expenditures are inconsequential for student achievement. I illustrate that public education spending matters for student test scores when one uses student level data instead of aggregate country level data. These results are robust to controlling for governance measures such as corruption control and regulatory quality. An implication is that less efficient government does not preclude improving test scores through education spending. Essay 2: Inequality of Opportunity in Education: International Evidence from PISA. I provide lower-bound estimates of inequality of opportunity in education (IEO) using micro-data from the Programme for International Student Assessment (PISA). The measure represents variation in student mathematics test scores which can be explained by predetermined circumstances (including parental education, gender, and additional community variables). I explore the heterogeneity of the measure at the top and bottom of the test score distribution, and demonstrate that IEO accounts for 10 percent of the variation in test scores for students at the top and bottom of the test score distribution. Using this inequality measure I establish three main conclusions. (1) IEO decreases overall in response to an increase in preprimary enrollment rates. An implication here is that improvements in early childhood education might mitigate the effects of IEO factors for some students. (2) IEO increases in a manner which relates to overall inequality. This indicates the possibility of a more general persistence to inequality factors. An implication is that equity-based education policies can be a key tool for reducing income inequality. (3) There is evidence of an equity-efficiency tradeoff in education. An implication here is that public education policies aimed at reducing IEO might hinder overall education efficiency, in that it decreases academic achievement for some groups of students. Essay 3: Public Education Spending and Economic Growth: The Role of Governance. Although the theoretical literature often connects public education spending to growth, individual empirical findings sometimes conflict. In this paper I propose that inefficiencies in public education spending might explain these inconsistencies. Using a dataset from both developed and developing countries observed over the period of 1995 to 2010, I demonstrate that the efficiency of public education spending on growth depends on a country's level and quality of governance. I also find evidence that increasing educational spending is associated with higher economic growth only in countries that are less corrupt. These findings have important implications for the formation of effective education policies in developing countries. They illustrate that efficient public education spending augments economic growth in a way that increased spending alone does not match.

Master of Arts / Department of Economics / Tracy Turner / I analyze the impact of Kansas House Bills HB 2117 and HB 2059, which made changes to the personal income tax structure and sales tax rates in the state of Kansas in 2012 and beyond. Using county-level, quarterly data gathered from the Census Bureau and the Bureau of Economic Analysis, I examine a full sample of Kansas and its four bordering states; Colorado, Missouri, Nebraska, and Oklahoma in order to determine the impact the tax changes had on the private sector employment in the state of Kansas. I subsequently use Kansas county-level, quarterly data to create a sample of Kansas border counties and their border pair matches, which consist of their adjacent counties in the neighboring states, to employ a differencing model to examine those same effects. With this analysis I isolate the policy change taking place in Kansas in 2012 and assess its impact controlling for the impact of the state corporate income tax, individual income tax, and sales tax rates on private sector employment in Kansas counties. My findings indicate that Kansas has not experienced an increase in private sector employment due to this policy change, but rather has perhaps seen private sector employment levels fall in the year following the enactment of the policy change.

Master of Arts / Department of Economics / Peri da Silva / Economists use various models to explain why it is that firms are capable of pricing above marginal cost. In this paper, we will examine two of them: the Cournot and Bertrand duopoly models. Economists generally accept both models as good explanations of the phenomenon, but the two models contradict each other in various important ways. The puzzle is that two inconsistent explanations are both regarded as good explanations for the same phenomenon. This becomes especially worrisome when the two models are offering divergent policy recommendations. This report presents that puzzle by laying out how the two models contradict each other in a myriad of ways and then offers five possible solutions to that puzzle from various economists, philosophers of science, and philosophers of economics.

Master of Agribusiness / Department of Agricultural Economics / Ted C. Schroeder / The beef cattle industry is one of the last industries in production agriculture that is not heavily integrated. Therefore each segment of the industry is constantly looking for opportunities to increase the value of their cattle. In recent years, one of those opportunities available to cow-calf producers was verification of certain production practices (i.e. Age and Source, Natural, and Non-Hormone Treated). The value flows from the consumer to the cow-calf producer. The packers need these verified cattle to fill export contracts therefore they are willing to pay a premium for these types of cattle. The objective of the thesis was to determine the value of a Health Verified Program (HPV) to feedlot operators. HPV is not required to export beef like other verified programs, but it does verify the procedures that a group of calves has received from the previous owner. Since the feedlot is a deciding factor of value for HPV, feedlot managers were asked from across the United States not only what value they place on HPV but other questions that could be beneficial to others involved in the beef cattle industry. Regression models were used along with a correlation analysis to determine value. There is value to a health verified program along with other procedures that are available to cow-calf producers. Individual producers need to determine which verifications and procedures are economical and efficient for their individual operations with all factors considered.

Master of Arts / Department of Economics / Yang-Ming Chang / This report examines the role of the privatization in Sri Lanka and assesses its effectiveness. The focus was given for the evolution of privatization and how socio-political factors such as rent-seeking, inconsistency policy making, market competition, political uncertainty and role of supporting institutions have affected the privatization process. After the independence in 1948, several reforms have been taken place in Sri Lanka. In 1977, a market oriented policy package which brought huge amount of foreign aids into the country was introduced. Further the privatization in Sri Lanka can be addressed as: Sporadic attempt, Systematic approach and Structured approach. The appointment of short-term governments and changing of the leadership has always been a hurdle for a successful privatization in Sri Lanka. In order to establish a successful privatization, it requires having the changing of ownership from public sector to private sector, creating a competitive market environment and forming a proper institutional framework. Unfortunately, due to less emphasis was given to the latter two factors: the privatization has always given undesirable outcomes. In the whole history of privatization in Sri Lanka, the highest value for Foreign Direct Investment (FDI) was recorded in 2008. It is clear that the reason for the FDI value escalation in 2008 is the improved confidence of foreign investors by addressing security concerns. In conclusion, it is time to investigate whether the current regulatory model is the most appropriate arrangement for the prevailing economic, social and cultural circumstances in Sri Lanka.

Master of Agribusiness / Department of Agricultural Economics / Jason Bergtold / ABSTRACT Grands Moulins d'Abidjan (GMA) is a flour milling company operating in Côte d'Ivoire. It wishes to determine the optimal blend of wheat and additives that minimizes its costs of production while meeting its quality specifications. Currently, the chief miller selects the mix of ingredients. The management of the company would like to dispose of a scientific tool that challenges the decisions of the chief miller. The thesis is about building and testing this tool, an optimization model. GMA blends up to six ingredients into flour: soft wheat, hard wheat, gluten, ascorbic acid and two types of enzyme mixes. Quality specifications are summarized into four flour characteristics: protein content, falling number, Alveograph W and specific volume of a baguette after four hours of fermentation. GMA blending problem is transformed into a set of equations. The relationships between ingredients and quality parameters are determined with reference to grains science and with the help of linear regression. The optimization model is implemented in Microsoft Office Excel 2010, in two versions. In the first one (LP for Linear Programming model), it is assumed that weights of additives can take any value. In the second one (ILP for Integer Linear Programming model), some technical constraints restrain the set of values that weights of additives can take. The two models are tested with Premium Solver V11.5 from Frontline Systems Inc., against four situations that actually occurred at GMA in 2011 and 2012,. The solutions provided by the model are sensible. They challenge the ones that were actually implemented. They may have helped GMA save money. The optimization model can nevertheless be improved. The choice of relevant quality parameters can be questioned. Equations that link ingredients and quality parameters, and particularly those determined with the help of linear regression, should be further researched. The optimization model should also take into account some hidden constraints such as logistics that actually influence the decision of GMA chief miller. Finally, sensitivity analyses may also be used to provide alternative solutions.

Master of Agribusiness / Department of Agricultural Economics / Kevin Dhuyvetter / Dairy Farmers of America (DFA) is national milk marketing cooperative. DFA’s primary focus is to market the milk of the cooperative’s 17,000 members. In addition, DFA offers its membership a number of farm services. The sole purpose of these services is to make it easier for DFA members to operate their businesses. One of the services offered provides members access to forward contracting alternatives for pricing their milk. The objective of this research is to utilize demographic and other information related to the characteristics of individual dairy producers and determine how these characteristics impact the use (or lack thereof) of risk management marketing tools. More specifically, the focus of this research is to identify what types of dairy producers are most likely to use the DFA’s forward contracting program. The logit model estimated indicated that regional and demographic differences impact the use of DFA’s forward contracting program. Members in the Mountain Area are most likely to use the program followed by members in the Central Area. Demographic differences that significantly impacted the use of forward contracting include age (older producers use forward contracts less than younger operators) and the size of operation, as measured by milk produced per year (larger operators were more likely to use forward contracting services). While the estimated logit model did identify several factors related to the use of forward contracting services, relationships are not particularly strong and the percent of producers using the services is relatively low. Thus, the model is limited in its ability for identifying key factors and thus it will be difficult for DFA to base a targeted marketing effort at certain producers. DFA would need additional information about their members to successfully target for this farm service.

Master of Agribusiness / Department of Agricultural Economics / Michael A. Boland / The purpose of this thesis is to identify Greenfield grain facility sites within 100 miles of Holdrege, Nebraska and to evaluate the feasibility of these sites. CHS Agri Service Center currently has facilities that are within 50 miles of Holdrege, Nebraska. However there are no Greenfield sites in this area that would be feasible due to a large number of competitors already operating in this area. This problem was broken down into two components. The first is site selection and the second is a financial model using net present value to determine if the sites selected would be profitable to the standards that CHS, Inc. requires (12% or better return on assets). In order to determine where Greenfield sites might be located supply and demand factors were evaluated to determine surplus and deficit grain areas. The areas where there were large surpluses of grain have the greatest potential for a Greenfield facility to succeed. Then a feasibility analysis of the chosen sites is conducted using net present value and internal rate of return analysis to determine if there is enough grain volume to operate the grain facility above the 12% return on assets criterion. After a detailed review of the supply and demand factors of grain in the region, two locations were determined to be good candidates for further study. Based on recent projects completed at CHS, Inc. two model facilities were created as tools to determine if a certain facility type is more profitable than another. The cost structures for these two model facilities are based on costs that are currently incurred at CHS Agri Service Center locations. It was found that neither facility at either location was profitable enough to meet the minimum performance criteria required by CHS, Inc. As a result of these findings it may be possible to move ahead with a Greenfield facility at one of these sites if a higher volume can be obtained. A merger with another grain company in the immediate area of the proposed facility may be the best way to increase volume.

Master of Agribusiness / Department of Agricultural Economics / Vincent Amanor-Boadu / The beef industry is a very important in the food sector of agriculture and over the past two decades the United States beef industry has faced many challenges. Over time the distribution of beef exports have changed due to food safety issues and government policies, not just in the U.S., but on a global scale forcing U.S. beef producers to diversify their export outputs to other countries that were not previously strong leaders in the export business. The U.S. must be strategic in their production decisions in order to continue to compete on a global level to avoid significant loss during adverse conditions. One of the major challenges that the U.S. industry has faced is the discovery of BSE in late 2003 in the state of Washington, which led to the closing of many borders to countries who had a significant impact on the beef industry in the U.S. Since U.S. beef is highly regarded by consumers for its quality worldwide, it is important to understand what changes have taken place in the past to have a full understanding of what changes need to be made in the future. The objective of this thesis is to look at how the distribution of the value, volume and price of U.S. beef exports have changed over the past two decades. By looking at how this has changed we will be able to see what countries are emerging as important customers and how others have declined. This is extremely important since some of the major importing countries have changed or put restrictions on the U.S. beef industry over the past two decades and the industry needs to understand these changes so that they can remain strong in the export sector. By analyzing the global trends of U.S. beef exports by value, volume and price across principal regions of the world, research will show us how to change for future changes. By assessing the effect of the discovery of BSE in the U.S on changes in the distribution of beef exports across the global regions, research will show who emerged when other countries declined. By using this research, the foregoing results will be helpful to inform the industry on what export market strategy can be developed for the U.S. beef industry. The results suggest that BSE had some negative effect on the U.S. beef industry in terms of the value and volume but did not have an impact on the price per pound of beef. Some regions had a larger impact than others when BSE was discovered, such as East Asia, but during this other regions, such as North America, came through and became the leaders in exports for U.S. beef. While there was some growth from the Rest of the World, there was not enough of an impact to compete with the foregoing countries.