Essays on the Economics of Immigration and Intergenerational Mobility

Download or read book Essays on the Economics of Immigration and Intergenerational Mobility written by Tung Xuan Dang and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite a substantial amount of research carried out over the past few decades to understand the economic impact of immigration and the determinants of intergenerational mobility, many important questions remain unanswered. Taking advantage of recently available large-scale administrative, household, and firm data, as well as latest developments in causal inference techniques, this dissertation makes forays into three relatively uncharted research areas on these topics. On the economic impact of immigration, the first chapter examines demand-side effects on local labor markets and firms-effects that arise not from an increase in immigration-induced local labor supply, which has hitherto been a focal point in the immigration literature, but from an increase in consumption-induced demand for local goods and services. To isolate these effects, the empirical analysis focuses on the growing presence of international students in the United States, most of whom are not able to undertake paid employment throughout their courses of study but have been generating a substantial amount of spending in local economies surrounding universities and colleges. Using a shift-share instrumental variable estimation approach and, in particular, quasi-experimental variation drawn from fluctuations in the outflows of students across countries of origin to other English-speaking destinations, I show that international students lead to substantial increases in local jobs and earnings: one additional student per thousand residents increases the employment-to-population ratio by 0.31 percentage points and average wages by 0.69 percent. These effects are concentrated in non-tradable industries, particularly in construction, retail, and services. Furthermore, local demand shocks induced by an increase in international student enrollment result in significant within-industry labor reallocations as more efficient firms are created and expand while the least efficient ones contract and exit. These results are consistent with general equilibrium models with heterogeneous firms and highlight important economic benefits from international students in the form of increases in local income and aggregate productivity. On intergenerational mobility, the second chapter studies the importance of intra-household bargaining in mediating how family resources determine children's participation in higher education. Using labor force and household survey data from Indonesia, this chapter shows evidence consistent with Nash-bargaining models of household decision making, whereby changes in women's outside options relative to men's result in more decisions made within the household by women, especially those related to expenditures on children. Accordingly, relative improvements in women's bargaining power when children graduate from high school significantly increase their likelihood of university enrollment, holding household resources and children's ability indicators constant. This effect is quantitatively similar for both boys and girls. The third and final chapter further examines risk aversion as one of the sources of within-household differences in parental demand for children's higher education. Consistent with the documented evidence of a non-unitary model of household decision-making, I find that both fathers' and mothers' risk aversion significantly decrease children's tendency to enroll in higher education, although the effects depend critically on the distribution of intra-household bargaining power. Furthermore, parental risk aversion also affects children's labor market entry upon high school graduation. Overall, these findings highlight the roles of parental risk preferences and intra-household bargaining dynamics as important mechanisms that contribute to intergenerational persistence in economic outcomes.