Thesis advisor: Arthur Lewbel / This dissertation consists of three independent essays in applied microeconomics and econometrics. Essay 1 investigates the issue why individuals with health insurance use more health care. One obvious reason is that health care is cheaper for the insured. But additionally, having insurance can encourage unhealthy behavior via moral hazard. The effect of health insurance on medical utilization has been extensively studied; however, previous work has mostly ignored the effect of insurance on behavior and how that in turn affects medical utilization. This essay examines these distinct effects. The increased medical utilization due to reduced prices may help the insured maintain good health, while that due to increased unhealthy behavior does not, so distinguishing these two effects has important policy implications. A two-period dynamic forward-looking model is constructed to derive the structural causal relationships among the decision to buy insurance, health behaviors (drinking, smoking, and exercise), and medical utilization. The model shows how exogenous changes in insurance prices and past behaviors can identify the direct and indirect effects of insurance on medical utilization. An empirical analysis also distinguishes between intensive and extensive margins (e.g., changes in the number of drinkers vs. the amount of alcohol consumed) of the insurance effect, which turns out to be empirically important. Health insurance is found to encourage less healthy behavior, particularly heavy drinking, but this does not yield a short term perceptible increase in doctor or hospital visits. The effects of health insurance are primarily found at the intensive margin, e.g., health insurance may not cause a non-drinker to take up drinking, while it encourages a heavy drinker to drink even more. These results suggest that to counteract behavioral moral hazard, health insurance should be coupled with incentives that target individuals who currently engage in unhealthy behaviors, such as heavy drinkers. Essay 2 examines the effect of repeating kindergarten on the retained children's academic performance. Although most existing research concludes that grade retention generates no benefits for retainees' later academic performance, holding low achieving children back has been a popular practice for decades. Drawing on a recently collected nationally representative data set in the US, this paper estimates the causal effect of kindergarten retention on the retained children's later academic performance. Since children are observed being held back only when they enroll in schools that permit retention, this paper jointly models 1) the decision of entering a school allowing for kindergarten retention, 2) the decision of undergoing a retention treatment in kindergarten, and 3) children's academic performance in higher grades. The retention treatment is modeled as a binary choice with sample selection. The outcome equations are linear regressions including the kindergarten retention dummy as an endogenous regressor with a correlated random coefficient. A control function estimator is developed for estimating the resulting double-hurdle treatment model, which allows for unobserved heterogeneity in the retention effect. As a comparison, a nonparametric bias-corrected nearest neighbor matching estimator is also implemented. Holding children back in kindergarten is found to have positive but diminishing effects on their academic performance up to the third grade. Essay 3 proves the semiparametric identification of a binary choice model having an endogenous regressor without relying on outside instruments. A simple estimator and a test for endogeneity are provided based on this identification. These results are applied to analyze working age male's migration within the US, where labor income is potentially endogenous. Identification relies on the fact that the migration probability among workers is close to linear in age while labor income is nonlinear in age(when both are nonparametrically estimated). Using data from the PSID, this study finds that labor income is endogenous and that ignoring this endogeneity leads to downward bias in the estimated effect of labor income on the migration probability. / Thesis (PhD) — Boston College, 2009. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

Thesis advisor: Arthur Lewbel / This thesis proposes two semiparametric estimators; one for heavily censored panel models and another one for binary-outcome sample selection models. The first chapter proposes a new panel data estimator, and applies it to investigate whether the key assumption underlying most twin studies is valid. Roughly, the assumption is that differences in twins' outcomes can on average be attributed to differences in observed treatments, possibly after conditioning on observable covariates. The empirical results here cast doubt on this assumption, by showing that a particular outcome, survival, varies by birth order, even after conditioning on health-at-birth characteristics. The proposed panel data estimator is the first one in the literature that simultaneously handles having an unknown error distribution, fixed effects, fixed T, fixed censoring point, and heavy (greater than 50%) censoring. These features are all required to adequately deal with the limitations of available census data on twins. The proposed estimator also allows for coefficients that vary by t, and for a censoring point that is an unknown but deterministic function of regressors. The second chapter proposes a new semiparametric estimator for binary-outcome selection models that does not impose any distributional assumption, nor specify the selection equation. The estimator, however, requires a special regressor satisfying a support restriction in the outcome equation and a variable satisfying the exclusion/inclusion restriction; the former should be continuous whereas the latter can be discrete. The estimators of Klein et al. (2011) and Escanciano et al. (2012) require optimization, but our estimator for the outcome equation has a closed-form expression with no need for any optimization (but the selection equation estimation may still need an optimization). We apply MLE and the proposed estimator to US presidential election data in 2008 and 2012 where Barack Obama won to see to what extent racism mattered; we use a prejudice variable as a measure of racism. Putting our empirical findings in advance, there is evidence that the white Democrats voted less for Obama due to prejudice, whereas the white Republicans acted in a more muted fashion (i.e., almost no change in voting due to racism) or voted more for Obama to escape the stigma of racism. We also found evidence of "own-race favor" by blacks. / Thesis (PhD) — Boston College, 2014. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

In this dissertation, I consider linear, binary response correlated random coefficient (CRC) panel data models and a truncated CRC panel data model which are frequently used in economic analysis. I focus on the nonparametric identification and estimation of panel data models under unobserved heterogeneity which is captured by random coefficients and when these random coefficients are correlated with regressors. For the analysis of linear CRC models, I give the identification conditions for the average slopes of a linear CRC model with a general nonparametric correlation between regressors and random coefficients. I construct a sqrt(n) consistent estimator for the average slopes via varying coefficient regression. The identification of binary response panel data models with unobserved heterogeneity is difficult. I base identification conditions and estimation on the framework of the model with a special regressor, which is a major approach proposed by Lewbel (1998, 2000) to solve the heterogeneity and endogeneity problem in the binary response models. With the help of the additional information on the special regressor, I can transfer a binary response CRC model to a linear moment relation. I also construct a semiparametric estimator for the average slopes and derive the sqrt(n)-normality result. For the truncated CRC panel data model, I obtain the identification and estimation results based on the special regressor method which is used in Khan and Lewbel (2007). I construct a sqrt(n) consistent estimator for the population mean of the random coefficient. I also derive the asymptotic distribution of my estimator. Simulations are given to show the finite sample advantage of my estimators. Further, I use a linear CRC panel data model to reexamine the return from job training. The results show that my estimation method really makes a difference, and the estimated return of training by my method is 7 times as much as the one estimated without considering the correlation between the covariates and random coefficients. It shows that on average the rate of return of job training is 3.16% per 60 hours training.

El primer capítulo de la tesis sobre "Estudios Empíricos sobre Capital Humano e Instituciones" presenta estimaciones de retornos a la educación en Alemania y analiza los determinantes de las preferencias educativas. El segundo capítulo utiliza estimaciones de retornos a la experiencia en el país de origen de inmigrantes en Estados Unidos para proporcionar evidencia empírica que el comercio aumenta la acumulación de capital humano en el trabajo, incluso en los países menos desarrollados, resolviendo la ambigüedad teórica si el comercio aumenta o disminuye "learning-by-doing". La acumulación de capital humano en el trabajo es también positivamente asociada con el PIB per capita, un alto nivel de educación y una mayor calidad de políticas e instituciones. El último capítulo analiza el efecto de recursos naturales y asistencia externa sobre la calidad de instituciones, proporcionando evidencia empírica que -contrario a la asistencia externa, la abundancia de mineral y combustible tiende a ser asociada negativamente con la calidad de instituciones si la fragmentación étnica es grande. / The first chapter of the thesis on "Empirical Studies on Human Capital and Institutions" presents estimates of returns to education in Germany and analyses the determinants of educational choices. The second chapter uses estimated returns to home country experience of US immigrants to provide empirical evidence that trade increases on-the-job human capital accumulation even in less developed countries, thereby resolving the theoretical ambiguity whether trade increases or decreases learning-by-doing. Similar to trade, GDP per capita, a high average level of educational attainment and stronger quality of policy and institutions are found to be positively associated with on-the-job human capital accumulation. The last chapter analyses the effect of natural resources and aid on institutions, providing empirical evidence that contrary to aid, mineral and fuel abundance tends to be associated with significantly lower quality of institutions if ethnic fractionalization is large.

Fundação de Amparo à Pesquisa do Estado do Rio de Janeiro / Apesar dos progressos recentes do setor de saneamento básico no Brasil, muitas dificuldades ainda precisam ser superadas. A desigualdade no acesso a esses serviços bem como a fragmentação das políticas públicas e a ausência de marco regulatório podem ser citados como os principais desafios no setor. Este estudo tem por objetivo analisar os determinantes da cobertura de saneamento básico no Brasil, com base na Pesquisa Nacional de Saneamento Básico de 1989 e 2000 e nos Censos demográficos de 1991 e 2000 elaborados pelo Instituto Brasileiro de Geografia e Estatística (IBGE). A fim de estimar tanto os fatores que determinam a existência de esgotamento sanitário nos domicílios de um município (modelo de variável dependente limitada) quanto os fatores que indicam a proporção de domicílios cobertos por esgotamento sanitário (modelo Double-Hurdle), foram utilizadas variáveis de demanda, variáveis de oferta, variáveis institucionais e variáveis de controle na estimação de um modelo. Como resultado, observou-se, por exemplo, que a variável renda per capita municipal não é estatisticamente significativa no primeiro modelo mas o é no segundo, o que parece indicar, por um lado, que a existência de bolsões de pobreza é mais importante do que o nível médio de renda do município no caso da determinação da existência de esgotamento sanitário em um município mas, por outro lado, que a renda per capital é o principal determinante na expansão da rede de esgoto. Por fim, o estudo provou que avanços podem ser feitos no que tange os condicionantes políticos que parecem afetar de forma desproporcional e desigual os gastos dos municípios com esgotamento sanitários. / Despite some progress authorities have been promoting in the past few years, many difficulties remain in the Brazilian basic sanitation sector. The inequality in access to those public services, the non-coordinated public policies and the absence of an efficient regulatory framework are the main challenges to the sector. This study analyses the factors behind the basic sanitation coverage in Brazil, based on the Pesquisa Nacional de Saneamento Básico 1989/2000 (1989 and 2000 National Survey of Basic Sanitation) and the Censo Demográfico 1991/2000 (1991 and 2000 Demographic Census), both published by the Instituto Brasileiro de Geografia e Estatística (IBGE). Two models were built in a way to estimate the factors that determine the installation of sanitary sewer services in Brazilian houses and the factors that explain the ratio of houses covered by sanitary sewer services in Brazilian cities - the first, a limited dependent variable model, and the second a Double-Hurdle model, both using demand, supply, institutional and control variables. An important result, for example, is that the variable income per capita is not statistically significant for the first model but it is for the second, which seems to indicate, on one hand, that the fact that exists many bolsões de pobreza (communities of concentrated poverty) are more important than the city basic level of income in the case of determining the installation of sanitary sewer services in Brazilian houses but, on the other hand, that income per capita is the main factor in the sewer services expansion. At last, progress can be made by studding more carefully the political effects that seems to affect disproportionally and unequally cities expenses with sewer services.

Fundação de Amparo à Pesquisa do Estado do Rio de Janeiro / Apesar dos progressos recentes do setor de saneamento básico no Brasil, muitas dificuldades ainda precisam ser superadas. A desigualdade no acesso a esses serviços bem como a fragmentação das políticas públicas e a ausência de marco regulatório podem ser citados como os principais desafios no setor. Este estudo tem por objetivo analisar os determinantes da cobertura de saneamento básico no Brasil, com base na Pesquisa Nacional de Saneamento Básico de 1989 e 2000 e nos Censos demográficos de 1991 e 2000 elaborados pelo Instituto Brasileiro de Geografia e Estatística (IBGE). A fim de estimar tanto os fatores que determinam a existência de esgotamento sanitário nos domicílios de um município (modelo de variável dependente limitada) quanto os fatores que indicam a proporção de domicílios cobertos por esgotamento sanitário (modelo Double-Hurdle), foram utilizadas variáveis de demanda, variáveis de oferta, variáveis institucionais e variáveis de controle na estimação de um modelo. Como resultado, observou-se, por exemplo, que a variável renda per capita municipal não é estatisticamente significativa no primeiro modelo mas o é no segundo, o que parece indicar, por um lado, que a existência de bolsões de pobreza é mais importante do que o nível médio de renda do município no caso da determinação da existência de esgotamento sanitário em um município mas, por outro lado, que a renda per capital é o principal determinante na expansão da rede de esgoto. Por fim, o estudo provou que avanços podem ser feitos no que tange os condicionantes políticos que parecem afetar de forma desproporcional e desigual os gastos dos municípios com esgotamento sanitários. / Despite some progress authorities have been promoting in the past few years, many difficulties remain in the Brazilian basic sanitation sector. The inequality in access to those public services, the non-coordinated public policies and the absence of an efficient regulatory framework are the main challenges to the sector. This study analyses the factors behind the basic sanitation coverage in Brazil, based on the Pesquisa Nacional de Saneamento Básico 1989/2000 (1989 and 2000 National Survey of Basic Sanitation) and the Censo Demográfico 1991/2000 (1991 and 2000 Demographic Census), both published by the Instituto Brasileiro de Geografia e Estatística (IBGE). Two models were built in a way to estimate the factors that determine the installation of sanitary sewer services in Brazilian houses and the factors that explain the ratio of houses covered by sanitary sewer services in Brazilian cities - the first, a limited dependent variable model, and the second a Double-Hurdle model, both using demand, supply, institutional and control variables. An important result, for example, is that the variable income per capita is not statistically significant for the first model but it is for the second, which seems to indicate, on one hand, that the fact that exists many bolsões de pobreza (communities of concentrated poverty) are more important than the city basic level of income in the case of determining the installation of sanitary sewer services in Brazilian houses but, on the other hand, that income per capita is the main factor in the sewer services expansion. At last, progress can be made by studding more carefully the political effects that seems to affect disproportionally and unequally cities expenses with sewer services.