Hypothesis 1. Land values and distance from the central business district are inversely related. This hypothesis proved to be true for the city of Bowling Green. Although there was no pronounced peak of land values as found in many of the larger cities, there was found in the central business district the highest land values in the city. This particular theory is applicable to Bowling Green and probably other cities of the same size. Hypothesis 2. Land values and distance from the nearest shopping center are inversely related. Because the first attempt at testing this relationship was considered invalid for numerous reasons, two independent tests were conducted with the sample points in specifically selected areas. The first of the independent tests failed to bring out the hypothesized relationship and the results also opposed generally accepted theory. The second test, dealing with a second shopping center and study area of its own, also failed to support the hypothesis. The results of this test differed from the first by failing to show any definite relationship regardless of whether or not it was in accordance with the theory stated in the hypothesis. Hypothesis 3. Land values and distance from a major thoroughfare are inversely related. The test conducted to determine what relationship existed between land values and distance from the 31W By- Pass, which serves as the major thoroughfare in Bowling Green, resulted in an inverse relationship. The values had declined rapidly with increasing distance, therefore creating a steep ridge of values along the By-Pass. Only those parcels that directly abut the By-Pass can commercially benefit the most from the high volume of traffic in the area. Even though the hypothesis was tested on only one thoroughfare, the theory holds true for Bowling Green and it is suspected that the inverse relationship found between the two variables is most pronounced in cities the size of Bowling Green. The reasons for this suspicion are that in a smaller city a thoroughfare usually develops as a shopping district rather than as a high-speed by-pass or beltline as found in larger cities. Hypothesis 4. Land values and distance from a major public institution are inversely related. The results of the test using Western Kentucky University as the major public institution indicated the existence of an inverse relationship, although somewhat weak. The problem encountered here was that there was no other major public institution other than the university with which to make a comparison. Although the hypothesis was accepted, there is a demonstrated need for further research on this particular hypothesis.

While the long run productivity of federal highway infrastructure spending has been well researched, their short run effects and effects on income inequality. This dissertation explores those under-researched unconventional effects. In the first chapter, I investigate the effects of federal infrastructure grants on income inequality. I find that grants reduce inequality in both recipient and neighboring states. The reduction is driven by greater income among the bottom three income quintiles. I explore two mechanisms using person level data and find that the reduction in inequality is attributable to higher income for low-skilled workers and workers working in low-skilled industries. In the second chapter, I investigate the role of implementation lags in the ARRA. I find that the employment effects after six months were nearly twice as high in short lag counties compared to long lag counties. However, these effects quickly fade. I find no evidence of implementation lags impacting employment after one year. In the third chapter, I examine the effect of the business cycle on completion times of federally financed transportation infrastructure projects. I find that projects that begin construction during periods of economic slack are completed more quickly, suggesting an alternative mechanism for state dependent fiscal multipliers.

This dissertation consists of three essays examining the role of two particular social safety net programs, the Temporary Assistance for Needy Families (TANF) program and the Supplemental Nutrition Assistance Program (SNAP), on the well-being of children from disadvantaged households. While the impact of these programs on the adults and parents of the household have been studied extensively, less is known about their effect on children. This is true for both their immediate impact on child well-being and any long-run impacts on children who grow up under these programs. Given the demonstrated importance of child well-being on later life adult outcomes, understanding the lasting effects of the programs is of great policy importance. In Essay 1, I examine the effect of welfare reform on long-run educational attainment and family structure outcomes on children who grew up under the reformed welfare system. In the early 1990’s, the United States reformed its welfare system through state waivers and the TANF program. These changes altered family resources and potential investments for childhood human capital, which in turn could affect later adult outcomes. Using data from the Panel Study of Income Dynamics (PSID) Child Development Supplement (CDS) and the Transition to Adulthood Supplement (TAS), I examine the short-run effects of welfare reform on cognitive and noncognitive outcomes and the long-run impact of welfare reform on adult education and family structure through age 28. I find that as children, these individuals have higher reading test scores by an average of 6 percent of a standard deviation. As adults, I find robust evidence that these treated individuals are on average 9 percent more likely to graduate college. I also find some evidence that they are more likely to be married and less likely to have a child out of wedlock. The impacts of welfare reform are larger for women than men for childhood test scores and college completion, marriage rates, and out of wedlock births as adults. In Essay 2, I continue to study the effects of welfare reform on child well-being, here focusing on the effect of welfare reform on the health insurance coverage, healthcare utilization, and the health status of children. In addition to changing the overall resources available to the family to invest in child health, welfare reform also has specific implications for health insurance coverage. As mothers were moved to work they could gain private coverage and welfare reform eliminated automatic eligibility for Medicaid. In this essay, I use data from the PSID CDS. I find a 3-5 percent decrease in the likelihood that a child has had their annual checkup but no change to the insurance coverage of children. For health status, I find lower rates of asthma by 17 percent among African American children and an increase of 3-5 healthy days a year for all children. I present suggestive evidence that the improvements in child health are driving the reduction in healthcare utilization. Given the evidence in the literature on the importance of childhood health, these improvements have potentially large ramifications for future adult health. Finally, in Essay 3 I explore the effect of the real purchasing power of SNAP benefits for households with children on dietary quality of food acquisitions and food insecurity. SNAP, formerly food stamps, is one of the most important components of the social safety net. However, there is concern that benefits are inadequate given high food insecurity rates among participating households. Currently SNAP does not account for variation in local food prices and does not sufficiently consider the dietary needs of adolescent children. Using data from the Food Acquisition and Purchase Survey (FoodAPS), I exploit variation in county level food prices and family composition to estimate the purchasing power of food expenditures for SNAP and SNAP–eligible households to test for the effect of additional benefits on dietary quality and food security. I find that a ten percent increase in purchasing power is associated with increased per person weekly acquisition of grains, proteins, dairy, and vegetables by 1.5-2.5 percent. However the quantity of added sugars also increases by approximately two percent, suggesting an ambiguous impact on health. In line with these modest changes in quantity, I do not find a statistically significant impact of purchasing power on food insecurity rates.

Using the Health and Retirement Study Panel core files from 1996 to 2014, I analyze how Medicare Part D impacted access to prescription drug coverage by various demographic factors such as race, gender, and income. In Chapter 1, I find the highest take-up rates for those who were white, female, and with higher incomes. However, increases in coverage were high across the board, such that Medicare Part D also improved drug insurance coverage for those who were black, male, and with lower income. Thus, although Medicare Part D did increase prescription drug insurance coverage for seniors across the board, I also find potential for improvement in enrollment for difficult-to-reach groups. Next, Chapter 2 examines the impact of Medicare Part D on mortality. Although I do not find an impact on the life expectancy of respondents as a whole, I do find a significant positive effect for black respondents, indicating that Medicare Part D may have mattered more for disadvantaged groups. The largest impact is for black men, who have an additional 9 percentage point chance of living to age 73 for an additional 8 years of coverage (significant at the 5% level). When looking only at cardiovascular mortality, which is more likely to be influenced by drug coverage, I find improvements in life expectancy for the total population, with stronger effects for minorities and men. Overall, my findings suggest that Medicare Part D did move the needle on its goal: to improve the health of those who, without government intervention, had the most difficulty paying for prescription drugs. Chapter 3 looks at the impact of Medicare Part D prescription drug coverage on cost-related medication adherence, food insecurity, and finances among seniors. It would be reasonable to assume that Medicare Part D, which led to near-universal drug coverage among senior citizens, could allow seniors to shift money previously spent on drug expenditures to other areas. The strongest effect of Medicare Part D is on cost-related medication nonadherence, leading to a 21% decrease for an additional 8 years of Medicare Part D coverage. The impact is even stronger for the black male population (30%). I fail to reject the null hypothesis that Medicare Part D did not reduce food insecurity or household debt. Overall, Medicare Part D appears to have improved the financial stability of seniors.

This dissertation explores the effects of factors such as industrial policy and listing on the stock market on manufacturing firms’ profitability and productivity. The second chapter investigates the effect of industrial policies on misallocation using a rich data-set of Chinese firms. Using a difference-in-difference approach, I provide evidence that government policies (i.e. the 10th Five Year Plan) favoring particular industries lead to increased misallocation (i.e., an increase in the dispersion of revenue productivity across firms in four-digit industries). Moreover, the differential changes between industries supported and not supported by the 10th Five Year Plan are quantitatively large and indicative of a substantial negative impact on aggregate TFP. Using a changes-in-changes model, I find evidence that the Five Year Plan had a positive and significant effect for most of the TFPR distribution while the effect was negative for the lowest quintile of TFPQ and positive for the highest TFPQ quintile. The results suggest increased misallocation is related to the way in which the Chinese government doled out support through the increase of subsidies and the improvement of credit conditions for a subset of firms. In the third chapter, I study the heterogeneous effects of an industrial policy -the 10th Five Year Plan on misallocation, profitability and real technology in Chinese provinces with different mix of supported intensities. I find that the 10th Five Year Plan increased misallocation, profitability and technology of supported industries in provinces with higher supporting intensities. After controlling the effects of China’s state-owned enterprise (SOE) reforms and joining into World Trade Organization (WTO), the results are still robust and consistent. In the fourth chapter, I investigate the effects of listing on the stock market on firm’s profitability and technology. Using Chinese firm level data, I identify listing firms, and compute revenue productivity and physical productivity to measure profitability and technology, respectively. To deal with the endogenous problem of listing, I use the number of investment banks as instrument variable. With a difference-in-difference model, I find that listing increases firm’s profitability and technology. Empirical findings also reveal that listing changes characteristics of firms, such as asset, liability and capital structure.

Venture capital finances high-risk, high-return projects. In addition to financing, venture capitalists provide advice and expertise in management, commercialization, and development that enhance the value, success, and marketability of projects. Venture capitalists also have skills in selecting projects with potentially high returns. The first chapter investigates the contracting relationship between venture capitalists and entrepreneurs in a setting where the venture capitalist and entrepreneur contribute intangible assets (advice and effort) to a project that are non-contractible and non-verifiable. In general, in the private market equilibrium, advice provided by the venture capitalist and the number of projects funded are lower than the social optimum. Government tax and investment policies may alleviate these market failures. The impact of a capital gains tax, a tax on entrepreneur’s revenue, an investment subsidy to venture capitalists, and government run project enhancing programs are evaluated. Finally, we analyze the effects of a government venture capital firm competing with private venture capital. The second chapter focuses on competition in venture capital markets. We model a three-stage game of fund raising, investment in innovative projects and input of advice and effort, where fund raising is used as an entry deterrence mechanism. We examine the impacts of taxes and subsidies on venture capital market structure. We find that a tax on venture capitalist revenue and a tax on entrepreneur revenue increase the likelihood of entry deterrence and reduce the number of projects funded in equilibrium. A subsidy on investment reduces the likelihood of entry deterrence and increases the number of projects funded. The third chapter examines the venture capitalist's choice of investment in project selection skills and investment in managerial advice. We model, separately, a private venture capitalist and a labour-sponsored venture capitalist (LSVCC) with different objectives. A LSVCC is a special type of venture capitalist fund that is sponsored by a labour union. The private venture capitalist maximizes its expected profits, while the LSVCC maximizes a weighted function of expected profits and returns to labour. Consistent with empirical evidence, the quality of projects, determined by project selection skills and managerial advice, is higher for the private venture capitalist.

The chapters of this dissertation examine efficiency failures in three areas of applied microeconomics: experimental economics, public finance, and game theory. In each case, we look at ways to resolve these failures to promote the public good. The first chapter, “An Experimental Test of the Pigovian Hypothesis,” looks at two different policies designed to reduce congestion in a common-pool resource (CPR). We present an experiment with training and a simplified decision task and find that subject behavior converges to the Nash prediction over a number of periods. A Pigovian subsidy effectively moves subject behavior to the pre-subsidy social optimum. Finally, we find a significant but non-persistent effect of information provision in moving subjects toward the social optimum. The second chapter, “Apples to Apples to Oranges,” looks at efficiency and equity failures across states resulting from public expenditure. This chapter introduces an extension of the Representative Expenditure System that uses regression methods and both state and metropolitan statistical area (MSA) level data, allowing for comparability of input costs, service requirements, and levels of need. The regression-based results are robust across state- and MSA-level formulations, although state-level approaches overestimate need for larger, less populous states. All regression-based results diverge from previous workload-based approaches. The third chapter, “Evading Nash Traps in Two-Player Simultaneous Games,” looks at efficiency failures in two-player simultaneous games. This chapter presents two new concepts: “détente” and “no-initiative,” in which players consider their own strategies and other-best-responses. We discuss their efficiency and descriptive properties across a set of simultaneous games.

In the last quarter century, California state governance has been popularly perceived as gridlocked, misguided, and overrun by interest groups opposed to both population and economic growth. By contrast, the Texas government has consistently reaffirmed its commitment to low taxes, minimal regulation, and a business-friendly climate. This divergence crystallized in the wake up the 2008-09 global financial crisis, where California’s growth rate fell sharply while Texas felt the recession’s impact more mildly and recovered quickly. Because of their similarities in size, power, and demographics, comparing the two states is well-covered ground. Nevertheless, most comparisons employ a “scorecard” method where components of public policy--state finance, taxation, and regulation--are held in isolation and a “winner” is selected. Such studies are generally not informed by academic research that evaluates the actual correlation between these elements of public policy and economic growth. Concurrently, economic research is usually conducted in the abstract and neglects to evaluate individual states with regard to their policies. This paper seeks to integrate a detailed accounting of economic literature on subnational economic growth with a holistic comparison of Texas and California. I find that while California suffers from a variety of challenges, empirical support for “Texas-style” policies as necessary for state-level economic growth is relatively weak. Thus, I conclude that California’s return to prosperity is not dependent on adopting such policies.

Over the past four decades, obesity in the United States has risen to record levels. Co-morbid conditions such as heart disease, diabetes, and stroke will impose over twenty trillion dollars of economic burden over the next two decades. More than half that sum will be direct medical expenses. Under current entitlement programs, governments, and ultimately taxpayers, will be responsible for about 43 percent of that. Even with all this spending, millions of lives will be cut short. Dietary factors are largely to blame. This thesis explores how policy interventions to encourage healthy diet and discourage healthy diet can be projected to affect future healthcare spending. It assesses six dietary factors to determine whether there is sufficient research to determine how much economic disease burden they will impose. Among those for which such research exists, the thesis estimates the cost-effectiveness of interventions such as education, subsidies, taxes and legislative bans.

Venture capital finances high-risk, high-return projects. In addition to financing, venture capitalists provide advice and expertise in management, commercialization, and development that enhance the value, success, and marketability of projects. Venture capitalists also have skills in selecting projects with potentially high returns. The first chapter investigates the contracting relationship between venture capitalists and entrepreneurs in a setting where the venture capitalist and entrepreneur contribute intangible assets (advice and effort) to a project that are non-contractible and non-verifiable. In general, in the private market equilibrium, advice provided by the venture capitalist and the number of projects funded are lower than the social optimum. Government tax and investment policies may alleviate these market failures. The impact of a capital gains tax, a tax on entrepreneur’s revenue, an investment subsidy to venture capitalists, and government run project enhancing programs are evaluated. Finally, we analyze the effects of a government venture capital firm competing with private venture capital. The second chapter focuses on competition in venture capital markets. We model a three-stage game of fund raising, investment in innovative projects and input of advice and effort, where fund raising is used as an entry deterrence mechanism. We examine the impacts of taxes and subsidies on venture capital market structure. We find that a tax on venture capitalist revenue and a tax on entrepreneur revenue increase the likelihood of entry deterrence and reduce the number of projects funded in equilibrium. A subsidy on investment reduces the likelihood of entry deterrence and increases the number of projects funded. The third chapter examines the venture capitalist's choice of investment in project selection skills and investment in managerial advice. We model, separately, a private venture capitalist and a labour-sponsored venture capitalist (LSVCC) with different objectives. A LSVCC is a special type of venture capitalist fund that is sponsored by a labour union. The private venture capitalist maximizes its expected profits, while the LSVCC maximizes a weighted function of expected profits and returns to labour. Consistent with empirical evidence, the quality of projects, determined by project selection skills and managerial advice, is higher for the private venture capitalist.