Working Papers

Time-Limited Subsidies: Optimal Taxation with Implications for Renewable Energy Subsidies (with Owen Kay)

Resubmitted at the Journal of Political Economy

Pigouvian subsidies are efficient, but real-world subsidies are not Pigouvian when they have a limited duration. We show that such “time-limited subsidies” must be paired with investment subsidies to be efficient and that the change in production when a subsidy ends is the sufficient statistic for the optimal subsidy duration. We examine the US Renewable Energy Production Tax Credit for wind energy and find that firms reduce output by 5-10% when the ten-year subsidy ends, resulting in a loss of 6,000 GWh of energy annually—a figure that will increase as more turbines age out of subsidization.

Download Draft (Draft: February 2024)

2020: The Outstanding Third Year Paper Award

Why Choose Career Technical Education? Disentangling Student Preferences from Program Availability (with Brian Jacob)

Reject and Resubmit at the Journal of Human Resources

This paper presents the first evidence of how students make career technical education (CTE) course-taking decisions. Among the universe of Michigan high-schoolers we find large disparities in CTE access and participation by gender, race, and income. We decompose participation gaps between supply (access) and demand (preferences) with a simple discrete choice model. We find that student preferences for CTE content drive participation gaps by gender, inequities in access drive gaps by income, and school-level supply and demand factors combine to create the gaps by race. Policy simulations highlight the importance of accessible CTE delivery models within comprehensive high schools.

Download Draft (Draft: May 2023)

Media Coverage: Work Shift News

Public Good Perceptions and Polarization: Evidence from Higher Education Appropriations (with Reuben Hurst and Andrew Simon)

Submitted

To understand the causes and consequences of polarized demand for government expenditure, we conduct three field experiments in the context of public higher education. The first two experiments study polarization in taxpayer demand. We provide information to shape beliefs about social returns on investment. Our treatments narrow the political partisan gap in ideal policies---a reduction in ideological polarization---by up to 32\%, with differences in partisan reasoning as a key mechanism. Providing information also affects how people communicate their ideal policies to elected officials, increasing their propensity to write a (positive) letter to an official of the other party---a reduction in affective polarization. In the third experiment, we send these letters to a randomized subset of elected officials to study how policymakers respond to constituent demand. We find that officials who receive their constituents' demands engage more with higher education issues in our correspondences.

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Strategic Selection Around Policy Recommendations: The Case of Kindergarten Entry

Job Market Paper 2021-2022

What are the costs and benefits of allowing parents to choose when children start public school? I use two birthday-based discontinuities and methods from the marginal treatment effects literature to estimate how waiting a year to start kindergarten affects children whose families strategically select around entry recommendations among a cohort of kindergartners from Michigan public schools. Contrary to prevailing conjectures, I show that children who wait to enter kindergarten would have been the lowest achieving in third grade, but they benefit the most from the additional year of investments. Although parental choice increases average achievement, it widens racial- and income-achievement gaps (in part because only higher-income parents select on children's gains from waiting). Failing to account for selection on gains reverses this equity-efficiency tradeoff, wrongly suggesting that parental choice reduces both scores and gaps. Mechanisms suggest that enrollment in means-tested public prekindergarten would simultaneously raise average scores and shrink achievement gaps—otherwise costs limit how much lower-income families can take advantage of “the gift of time.”

Download Paper (Draft: Aug 2022)

2021: John E. Parker Memorial Prize in Labor Economics

Capital Utilization in Production Function Estimation (with Michael Gmeiner)

A method to simultaneously estimate capital utilization rates and production functions is developed that exploits the fuel input choices of producers. Using Chilean data from 1979-1996 it is shown that the elasticity of output with respect to labor is systematically lower when accounting for capital utilization, and the elasticity of output with respect to capital is systematically higher. Total factor productivity is shown to be procyclical even when estimated independently of capital utilization. Output elasticities and capital utilization exhibit correlations with input quantities and investment which justify the validity of results.

Original SSRN Draft (Significant Revisions including Census RDC Proposal in Process)

Work in Progress

Effect Heterogeneity and Optimal Policy: Getting Welfare Added from Teacher Value Added (with Tanner Eastmond, Nathan Mather, and Julian Betts)

Though ubiquitous in research and practice, mean-based “value-added” measures may not fully inform policy or welfare considerations when policies have heterogeneous effects, impact multiple outcomes, or seek to advance distributional objectives. In this paper we formalize the importance of heterogeneity for calculating social welfare and quantify it in an enormous public service provision problem: the allocation of teachers to elementary school classes. Using data from the San Diego Unified School District we estimate heterogeneity in teacher value-added over the lagged student test score distribution. Because a majority of teachers have significant comparative advantage across student types, allocations that use a heterogeneous estimate of value-added can raise scores by 34-97% relative to those using only standard value-added estimates. These gains are even larger if the social planner has heterogeneous preferences over groups. Because reallocations benefit students on average at the expense of teachers' revealed preferences, we also consider a simple teacher compensation policy, finding that the marginal value of public funds would be infinite for bonuses of up to 14% of baseline pay. These results, while specific to the teacher assignment problem, suggest more broadly that using information about effect heterogeneity might improve a broad range of public programs—both on grounds of average impacts and distributional goals.

Dynamic Inefficiencies of Production Subsidies: Technological Progress, Investment, and the Race for Wind Resource

Firms often face simultaneous trade-offs when making entry and location decisions. For example, in the US wind industry, location decisions face a static tradeoff between wind resource and proximity to transmission, and entry decisions face a dynamic trade-off between early entry in preferred locations and waiting for technological progress. I show that market failures like inter-firm externalities from transmission investment can break Pigouvian subsidies calibrated only to pollution externalities, generating dynamic distortions by inducing entry at inefficient times and in inefficient places. The key parameters for this distortion are the effect of the market imperfection on entry timing and the degree of complementary between productivity (in this case wind resource) and technology (feasible turbine rotor diameter). I estimate the responsiveness to transmission spillovers using an event study design and find that entry increases by 10% after new infrastructure is built near a feasible site.

Broader Horizons: The Long-Run Impacts of Exposure to New Places (with Tanner Eastmond)

Funded and in the Field