Essays in applied microeconomics

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Résumé (anglais)

The first chapter studies parents’ intra-household time and resource allocation, focusing on parental quality time, and the implications for early childhood development. I develop a model that explains the “parental time-education gradient” puzzle, and I confirm its predictions, exploiting exogenous, drastic daycare price decrease in Quebec. I find that as daycare becomes cheaper, parents increase time devoted to their children, at the expense of home production and leisure, while consuming more of home production market goods (eating out, domestic help), and child market goods (daycare, games and toys); the time reallocation is larger for higher-educated parents. The estimated structural parameters uncover the pivotal role of complementarity (substitutability) between time and market goods in child human capital (home) production, and suggest a time efficiency advantage in non-market activities for higher-educated parents. I use them to assess how universal daycare shapes skill gaps in early childhood. My findings point to differential parental investment and time efficiency as important mechanisms behind widening skill gaps in early childhood. The second chapter measures the causal impact of academic redshirting—the practice of postponing school entry of an age-eligible child—on student achievement and mental health. I use Hungarian administrative testscore data for 2008-2014, and an instrumental variable framework. The institutional feature I exploit is a school-readiness evaluation, compulsory for potentially redshirted children born before January 1st. I compare children born around this cutoff and find that (1) although there are large student achievement gains for all, disadvantaged boys benefit the most from redshirting—and only they benefit in terms of mental health; (2) the positive effects of higher school-starting age are driven by absolute, rather than within-class relative age advantage. The third chapter studies how closely private insurers’ payment schedules follow Medicare’s, exploiting institutional changes in Medicare’s payments and dramatic bunching in markups over Medicare rates. We find that, although Medicare’s rates are influential, 25 percent of physician services, representing 45 percent of spending, deviate from this benchmark. Heterogeneity in the pervasiveness and direction of deviations reveals that the private market coordinates around Medicare’s pricing for simplicity but innovates when sufficient value is at stake. Lay Summary: My dissertation consists of three chapters in family economics and child development, economics of education and health economics. First, I investigate how parents choose the amount of quality time spent with their children, and why higher-educated parents spend more. I propose and confirm the mechanism of higher-educated parents being more efficient in translating time with their children into child human capital. Second, I measure the causal impact of academic redshirting on student achievement and mental health. Redshirting is the practice of postponing school entry of an age-eligible, but potentially not school-ready child. I show that disadvantaged boys are the main beneficiaries of this practice. Third, we study to what extent US private insurers benchmark to the corresponding Medicare price, when negotiating on how much to pay to doctors for a given medical service. In our data, 75% of physician services, representing 55% of spending, are directly linked to Medicare.