Essays on social externalities

Governments introduce welfare programs for economic purposes such as reducing inequality and improving the wellbeing of people or noneconomic purposes such as improving educational outcomes. However, the effect of these social programs can go beyond the intended goals and have impacts on untargeted populations and unplanned outcomes. In this thesis, I investigate the positive social externalities of three government programs. In the first chapter, I investigate the effect of public school spending during K-12 education on juvenile crime rates. I use space-time variation in court-ordered School Finance Reforms during the so-called adequacy era as the plausibly exogenous shock to school spending and find that a 10% rise in real per-pupil spending is associated with 7.1 fewer arrests per 1,000 in a population aged 15-19. In the second chapter, I investigate the effect of the introduction of Medicaid during the 1960s on next generations’ birth outcomes. Using birth certificate data (1970-2004), I find that Medicaid significantly improved birth outcomes for mothers who were exposed to Medicaid during their childhood. A back-of-an-envelope calculation points to a minimum of 4.4 percent social externality of Medicaid through income rises as a result of next generations’ improvements in birth outcomes. In the third chapter, I investigate the potential externality of maternal education on birth outcomes. Using birth certificate data over the years 1970-2004 and exploiting the space-time variation in Minimum Dropout Age laws to solve the endogeneity of education, I find a sizeable effect of mothers’ education on their birth outcomes. An additional year of schooling of the mother is associated with a reduction in incidences of low birth weight and preterm birth by 15.2 and 12.7 percent, respectively.