Three essays on the causes and consequences of government spending and regulatory programs.
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Chapter 1 assesses the impact of household car ownership on individual labor supply. Various economic theories suggest one reason for low rates of employment among low-skill, inner-city residents is that their residences are spatially separated from suburban jobs. To measure this, I exploit changes in state insurance rate regulation which has been shown to suppress auto insurance prices, thereby decreasing the cost of owning a car. I find that rate regulation increases multi-car ownership among married couples with children. I find that the additional car in the household consequently encourages married mothers to decrease their labor supply while their husbands increase their labor supply. One possible explanation of this result is that second cars are stronger complements to time spent in home production and especially childrearing) than they are to time spent in the labor market. Chapter 2 with Shawn Moulton) tests for political budget cycles among US municipalities. According to the political budget cycle hypothesis, in election years government officials engage in opportunistic fiscal policy manipulation for electoral gains. This chapter tests that hypothesis using data on taxes and spending for a panel of 268 US cities over the period 1970-2004. While our estimates provide no evidence of altered total expenditures or taxes in election years, we do find a 0.7 percent increase in total municipal employment, including increases in police, education, and sanitation employment. Chapter 3 with Andrew Deines, David Lodge, and Richard Jensen) assesses trade-offs between fisheries and hydropower production in a tropical floodplain fishery. We compile catch per unit effort, total harvest, and monthly-mean hydrographs from the Kafue River in Zambia for the years 1955-1996 and develop population growth models to test for effects of density, total fisheries harvest, and water regime. We find that alteration of the flood regime has reduced fish density but enhanced hydroelectric production. The total cost of replacing this hydroelectricity is less than a third of the additional surplus generated by a natural flood regimes impact on fisheries production, implying changes in dam operation to provide environmental flows can be a cost-effective means of improving the material well-being of subsistence fishermen.