“The Valuation of Local Government Spending: Gravity Approach and Aggregate Implications” (Job Market Paper) Draft
How much do people value local government spending? What are the effects of fiscal transfers that finance this spending? I develop a spatial equilibrium framework where people’s simultaneous (internal) migration and commuting choices reveal preferences. I combine this framework with administrative data from South Korea and leverage the plausibly exogenous variation in local government spending across districts induced by national tax reforms in 2008 and 2012. The estimated mobility responses imply that workers value each additional dollar of per-capita local government spending by 75 cents of their after-tax income. The general-equilibrium counterfactuals imply that a fiscal arrangement with lower redistribution would result in aggregate gains. A key aspect of my analysis is that bilateral migration and commuting decisions are made jointly. I show that ignoring any one of these margins biases the estimates of preferences for public goods, distance elasticities of migration or commuting, and the aggregate effects of alternative fiscal arrangements.
“Does Pro-Natalist Cash Transfer Work? The Case of South Korea” Draft
Once characterized with high fertility rates, many countries now experience fertility rates below the 2.1-replacement level and have implemented various policy tools to encourage births to mitigate demographic imbalance. Since 1983, the total fertility rate of South Korea has continually stayed below the replacement level and reached the lowest in the world in 2005. This paper exploits a unique setting in South Korea to identify the effects of local pro-natalist cash-transfer policies on fertility and finds positive causal effects. In particular, a cash transfer of 1,000 USD increased the total fertility rate by 0.22 children per woman or 8 percent. Next, decomposing total fertility rates by birth parity and age of mothers, I conclude that the pro-natalist cash transfers had parity-specific effects and did not have effects on fertility rates of adolescents. Lastly, I find no evidence of changes in health outcomes at birth and exacerbation of son preference due to the cash transfer.