Here we highlight some of the research being undertaken by the PhD candidates in the Department:
Essays on Consumption Taxation and Geo-spatial Economics
My research agenda focuses on both theoretical and empirical ways of incorporating spatial relationships into existing models of tax competition by allowing for tax rates to vary not only across states, but within states. My work focuses on analyzing lines and notches in the tax system -- particularly those resulting from geographic borders. For example, I am studying the optimality of preferential sales tax zones near international and state borders. I am also researching whether local sales taxes fall or rise as a function of distance to the nearest state border. Finally, I am analyzing how the strategic reaction to vertical externalities varies within a federation if the federal government has multiple horizontal competitors. My research is available on the web at: http://www-personal.umich.edu/~dagrawal
The effects of domestic anti-poverty policies
Professor Martha Bailey and I use archival data from the 1960s to examine the effect of the Community Health Center program on the mortality of Americans over 50. Our results show that Community Health Centers, which are now called Federally Qualified Health Centers, greatly reduced county-level mortality rates. We provide credible evidence that health centers improve community health, and our large results for populations eligible for Medicare show that changes in the delivery of primary care can have large and long-term benefits even when insurance is nearly universal.
How changes in the incarceration of men since the 1970s have affected women's use of public assistance benefits
On one hand, women may be more likely to take up benefits after the imprisonment of a partner. On the other hand, if incarceration shrinks the pool of potential male partners, then fertility and public assistance eligibility (and caseloads) may fall. My work combines survey and administrative data on prisoners and public assistance recipients with changes in criminal justice policy to separately estimate these two offsetting effects. The relative magnitude of these two effects has strong implications for the true financial cost of policies that affect incarceration and for the well-being of women and children in communities affected by crime and incarceration.
"Working Under Pressure: Evidence from the Impacts of Soccer Fans on Players’ Performance"
Breno Braga and Diogo Guillen
Economics Letters, (February 2012) 58(2): 212-215
In this paper we study how pressure affects individuals’ behavior. For this purpose we use sports data, where the attendance is a proxy for pressure, to investigate if the number of fans in the stadium affects the performance of the players. We overcome the reverse causality problem by proposing an instrument variable: a promotion in Brazil during which low cost tickets were assigned to random soccer matches. In contrast to previous literature, our results suggest that pressure does not significantly affect players’ behavior
"Schooling and the Public-Private Wage Gap in Brazil"
Breno Braga, Sergio Firpo and Gustavo Gonzaga
Pesquisa e Planejamento Econômico (2009) 39(3): 431-464, 2009, (in Portuguese)
We study the determinants of the public-private wage gap for different levels of schooling of Brazilian workers. First, using the current earnings as the variable of interest, we estimate that less educated people receive higher earnings in the public sector (i.e., the earnings gap is favorable to the public sector). On the other hand, for workers with higher schooling, the earnings gap disappears or becomes favorable to the private sector. In addition, we consider the different retirement regimes in Brazil by creating the variable Present Value of Work Contract (PVWC). This variable is a measure of the lifetime earnings for each individual in our database. In contrast to the results from the current earnings analysis, we found that the PVWC gap is favorable to the public sector even for the highest educated group of workers.
Health and Labor Issues in Developing Countries
My work on labor economics focuses on job search and employee effort. My job market paper examines the impact of job uncertainty on job search effort, and other behavioral outcomes within a real recruitment process in Malawi. In other papers I have examined how peers affect job-search behaviors and perceptions, and the impact of employee monitoring schemes on employee effort and small-scale corruption. My work on health has focused primarily on HIV prevention with papers on the extent to which peers influence others to learn HIV testing; behavioral responses to an information campaign about male circumcision and HIV transmission rates; and take-up of adult male clinical circumcision under a subsidy program. Much of my work has involved designing and implementing surveys involving randomized control trials with significant time spent in the field.
How has the Prospective Payment System Influenced Medicare Home Health Services?
My research aims to explain the reasons for the recent increase in Medicare home healthcare spending under the prospective payment system.
Implications of Efficient Rigid Wages for the Equilibrium Dynamics of Displaced-Worker Earnings
I study the time-path of displaced worker earnings, both empirically and theoretically. Equilibrium search theory allows for an assessment of the contribution of firm-specific human capital to the persistence of post-displacement earnings losses. A job ladder and endogenous separations help explain serially-correlated displacement spells, which are an important explanation for the persistence of earnings losses. The model sheds light on the allocative nature of rigid wages in long-term employment relations and the efficiency of separations.
Public Finance, Economic History, and Environmental Economics
My main research studies the Revenue Act of 1924, which allowed for the printing of tens of thousands of names, addresses, and income tax payments in 1924 and 1925. The tax rates in the two years are different, and I use this difference to study aggregate response to tax rate changes.
Firm Responses to Outsourcing and Exporting
My research agenda focuses on firm responses to outsourcing and exporting, especially wages and employment in firms, and how firm-level responses affect overall trade flows. Using firm data, I have documented empirically that exporters in China and the US pay higher wages than non-exporters. I have calibrated a model that demonstrates the gap between exporter and non-exporter wages decreases as tariffs and trade costs decreases. I have also used US firm data to measure wages and employment trends in firms that have had some fraction of their jobs outsourced. I am currently working on a model and empirical testing that explains both of these trends with Chinese exports to the US becoming less substitutable over time affecting firm importing and exporting behavior over time.
Implications of Increased Wind Generation for Electricity Markets
I am examining the effects of additional wind generation capacity on the de-regulated Texas Electricity Market. Future work will tentatively include investigating how a recent institutional change in this same market has affected the bidding behavior of participating firms.
Unemployment Insurance Experience Rating and Labor Market Dynamics
Unemployment insurance experience rating imposes higher payroll tax rates on firms that have laid off more workers in the past. I analyze UI financing theoretically and empirically. A model of firm labor demand under realistic UI financing predicts that higher experience rating reduces both job creation and job destruction. Using firm-level data from the Quarterly Census of Employment and Wages, the model is tested by comparing job creation and job destruction across states and industries with different UI tax schedules. The empirical analysis shows a strong negative relationship between job flows and experience rating. The model further shows that higher experience rating can reduce unemployment but the effect on tax revenues is ambiguous. Hiring experience rating also dampens the response of unemployment to during a recession.
Macro Development and Political Economy
In particular, my work focuses on the macroeconomic implications of microeconomic frictions and market failures. My current research is on the role of factor misallocations in explaining income differences, and in particular identifying the sources of factor allocative efficiency. Current projects include the decomposition of factor allocative efficiency into measures of efficiency due to factor versus financial market imperfections in the rural sector, a decomposition of efficiency into measures of costs due to credit versus insurance market imperfections in manufacturing and services cross-nationally, and joint work with Professor Raj Arunachalam on political economic explanations for the persistence of factor misallocations.
Earned Income Tax Credit and Low-Income Household Savings
My research covers a broad range of topics within public finance and applied microeconometrics. My job market paper examines whether the Earned Income Tax Credit reduces saving by low-income households. Another paper derives conditions for obtaining a causal average treatment effect when studying a tax rate change. It provides an interpretation of existing parameters and highlights tradeoffs between different sources of identification. I also have papers on housing transaction taxes, the elasticity of taxable income, and tax evasion. For more information, please visit my website: http://www-personal.umich.edu/~ceweber/.