Essays in empirical economics
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Abstract
This dissertation investigates a variety of empirical questions in urban economics, public finance, and political economy.
Urban transportation networks affect residents by defining point-to-point traveling costs, and this mechanism is especially salient for commutes between home and work.
In chapter 1, I study the effect of changes in public transit fares on the demographics of a modern city. A 1981 policy by the London government mandated that underground train fares be simplified and resulted in a fare structure that was discontinuous over space, creating fare zones within which transit costs were uniform. I find that subway ridership responded significantly by decreasing in neighborhoods where fares were raised most, with commuters spilling over mostly to riding buses. I also find that the occupation mix became more working-class in areas where fares were raised most.
In chapter 2, my co-author and I explore the political repercussions of ethnic resi-dential segregation. We study the case of the South Asian ethnic group in the United Kingdom and find that the British National Party– a nativist political party with explicitly anti-South Asian immigration messaging– gained more electoral support in geographies with more ethnic segregation between South-Asian and White-British residents. We address endogeneity concerns by constructing an instrument for South Asian residential segregation using prior migration flows.
In chapter 3, I estimate with co-authors the risk-adjusted future net costs as-sociated with the Social Security program in the United States. We compare our risk-adjusted methodology with a simpler method estimating the risk-free expected net costs similar to the Social Security Administration’s own calculation. We find that omitting risk leads to a substantial underestimate of the value of net liabilities which will be incurred given the current tax and benefit formulas. Our own method employs arbitrage pricing theory by considering the future receipts and outlays from social security as a risky asset and marking this asset to market using stock market factors. Based on our preferred estimate, its market value is 86% higher than the So-cial Security trustees’ valuation method suggests, ranging from 74% to 115% higher than that of the Social Security Administration depending on the specification.