Economics

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Essays in Wealth Effect, Family Structure, and Female Labour Supply
(University of Waterloo, 2020-04-27) Pan, Yazhuo; Ferrer, Ana; Lluis, Stéphanie
This thesis consists of three self-contained essays evaluating topics in family structure, household wealth, and married women's labour decisions using Canadian data. The twentieth century has seen significant changes in family formation and dissolution in Canada. Chapter 1, co-authored with Ana Ferrer, investigates the role of family structure (family disruption or reconstitution) on cognitive outcomes of primary school Canadian children. We focus on reading and math scores of these children and look into differential effects by gender as well as child’s cultural background, which is an important dimension to consider in diverse societies. Using the rich panel data information from the National Longitudinal Survey of Children and Youth (NLSCY), collected biennially since 1994, we find substantial disadvantages in reading, but not math, scores among children in single parent families, relative to children in intact families. However, we find that single parenthood seems to affect boys more than girls in terms of their reading performance, but girls’ math performance suffers more than that of boys when in step families. In addition, when looking into differential effects across cultural/religious affiliations of family structure on cognitive performance, we typically observe differential effects in math, but no reading scores. These results suggest that exploring the heterogeneity of children’s performance responses to family disruption might be an important factor in assessing the benefits of programs aimed at helping children to cope with family disruptions. It is worth noting that changes in marital status of parents not only affect their children's performances but also influence their own welfare. The spouse (typically the wife), who usually has less labour market attachment compared to the other spouse (typically the husband) due to the traditional gender roles, is less likely to accumulate much assets during the marriage. Therefore, this spouse with less assets might have less intra-household bargaining power and could potentially face worse financial conditions in the event of a divorce compared to the other one. Chapter 2, co-authored with Stéphanie Lluis, studies a reform of the marital property law following the amendment of the Civil Code of Quebec to improve economic equality between spouses by imposing an equal division of the family assets when a marriage ends. This change created an unexpected shift in the bargaining power of the spouse with relatively lower investment in the family assets, usually the wife. We explore whether and if so how the changes in this redistributive divorce law impacted female spouses' labour market decisions and individuals’ marital decisions. We use a difference-in-difference approach and exploit detailed information on female labour supply and marital status from the Canadian Labour Force Survey (LFS) data to analyze outcomes before and after the reforms in Quebec, relative to other provinces which did not experience marital property law changes over that time period. We find that the reform of marital property law that improve economic equality between spouses in Quebec reduced married women’s hours of work and the adverse employment effect is relatively stronger for less educated women (the most disadvantaged spouse) and among couples with larger wealth as measured by the ownership of the couples’ property. At the extensive margin, we find that the redistributive law change significantly decreased the labour force participation of the relatively more educated married women but increased the labour force participation of the relatively less educated women (among married women who stayed married). This differential result by education among married women suggests that the labour supply impact of the redistributive law change likely depends on the decision to stay married as marital decisions are also part of the household bargaining outcome. We investigate this question by studying the Quebec amendment impact on divorce rates and the decisions of whom to marry. We find that the redistributive law change had no impact on overall divorce but significantly increased the likelihood of divorce/separations among less educated spouses. In addition, over the sample of young individuals deciding whether or not to marry, the Civil Code amendment contributed to increasing the proportion of marriages in which the wife is more educated than the husband. The intra-household bargaining position is not the only factor that could affect female labour supply as well as people's marital decisions. The wealth of a household is also another important factor that might influence spouses' decisions in the labour and marriage markets. Chapter 3 examines the impact that changes in household wealth due to the house price variations during the 1990s and 2000s had on the labour market behaviour of Canadian married women. House prices in Canada have tripled over the past decades. This dramatic rise has essential effects on households' wealth and the wealth effects might be different on house owners versus renters (potential house buyers). I use time-series average house prices data from the Canadian Real Estate Association's Multiple Listing Service data set (CREA MLS) which covers the entire Canada, 102 real estate boards (REBs), and provides detailed geographical variations in house prices in both urban and rural areas. Then, I link these house prices to each respondent in the confidential longitudinal household files - the Survey of Labour and Income Dynamics (SLID). Estimating the causal effects of housing wealth changes on female labour supply is challenging. For instance, The life-cycle theory of the labour supply emphasizes that unexpected gains in wealth should decrease household labour supply. However, wealth changes due to rising house prices could be anticipated by a household. Thus, there might be no effect if the household was forward looking and incorporated these expected wealth changes into their decisions. In addition, the reverse causality between house prices and female labour supply has been highlighted in literature. Rising housing prices induce more female spouses to participate in the labour market to offset the future housing purchase costs if their families intend to enter homeownership or balance rising rental prices. Nonetheless, it is also plausible that more working women in one area, which contributes to a higher proportion of two-earner households with stronger payment capacities, may bid up the house prices there. Therefore, I apply two strategies to overcome these challenges. My first strategy is to calculate a measure of house-price shocks which is aimed at capturing unexpected variations in local house prices, rather than variations that could be anticipated by people. My second strategy is constructing comprehensive and exogenous topography instruments to address the reverse causality between the house prices and female labour supply. After capturing unexpected changes in local house prices, among house owners, I find that an increase in (positive) house-price shocks causes a reduction in the likelihood of participation of married women. At the intensive margin, I find that an increase in the house price shocks induces a decrease in annual work hours of a woman at the low percentile. Additionally, I find heterogeneous effects of house-price shocks on women's labour supply depending on their education level and residence locations. These results are consistent with the prediction of family labour supply and life-cycle models, which indicates that unexpected gains in wealth should decrease household labour supply. There is no evidence showing that house-price shocks have labour effect on renters in this study, which might suggest that they choose to delay to enter homeownership or find a cheaper residence instead of adjusting their labour supply when an appreciation of house prices occurs. The IV approach which uses the fraction of buildable land and the difference in elevation as the instruments also provides consistent results as the house-price shock approach does.
Three Essays In Policy Evaluation
(University of Waterloo, 2020-04-20) Arcila, Andres; Ferrer, Ana
This thesis consists of three chapters that study the effect of public policy on several economic and environmental outcomes. In the first chapter, we investigate the effect of a change in tax policy affecting cars on car pollutant emissions. We construct a data set on emissions using the COPERT 4 model, which was developed by the European Environmental Agency and is now widely used in environmental engineering to estimate emissions. The new tax impacted high cylinder vehicles with engine sizes larger than 3 liters while taxes on small cylinder cars remained unchanged. The COPERT model uses general information about infrastructure and certain driving conditions to calculate total emissions by engine size. We use a difference in difference methodology and exploit the variation introduced by the policy that differentially affected cars with larger engines. By imposing a tax on larger engines, the share of these in the market should decrease while the other group should increase, therefore decreasing the emissions by the treated group. Our results showed that Particulate Matter and Carbon Monoxide emissions decreased by around 11%, while Volatile Compound and Nitric Oxide decreased by roughly 7%. These results are robust to the inclusion of province fixed effects, economic conditions and specific trends by province, different engine size trends as well as contamination by other possible policies. In the second chapter, I use confidential micro files from the Canadian Labour Force Survey from 1994 to 2015 to assess whether the 2001 Quebec's affordable childcare policy changed the distribution of employment by occupation. In general, I found that the policy tended to reduce the concentration of male dominated occupations and increased the concentration of female dominated and gender balanced occupations. Comparing results at different levels of aggregation suggest that there were many occupational changes within the 3-digit occupation categories. These intra-occupational movements were likely driving the concentration of gender balanced occupations, whereas increased concentration in female dominated occupations was likely driven by inter-occupational movements from male dominated or gender balanced occupations. Further, I report less concentration of high-pay occupations and occupations requiring high levels of cognitive or social skills, but also lesser concentration in occupations requiring high levels of physical skills, after the policy. These effects tend to persist in the long run. This exercise highlights the need to further investigate the distributional effects of the child care policy. The third chapter is closely tied to the second chapter. Here, we use the same change in childcare policy to understand its effect on the overall skill distribution of jobs. We use newly developed methods to test for stochastic and Lorenz dominance and assess whether the distribution of skill requirements in occupations in Quebec is different before and after the policy relative to changes in the distribution of skills in the Rest of Canada. We complement this analysis by calculating Quantile Treatment Effects using a propensity score re-weighting technique to measure these differences across the distributions. Our results suggest that the distribution of the interpersonal, physical, visual and fine motor skills index in Quebec stochastically dominates the distribution of skills in the rest of Canada in 1994, whereas in 2004 the dominance is reversed. On the other side, the distribution of the analytical skill index in Quebec dominates the one for the rest of Canada in both years. The estimation of Quantile Treatment Effects strengthens these results by showing that the largest changes in the analytical skill index happened in occupations at the median ability level.
The time-use of Canadian immigrant families: differences in time inputs on child raising
(University of Waterloo, 2021-09-21) Mascella, Allison; Ferrer, Ana
This thesis contains three chapters in cultural effects and integration experienced by parents born abroad and their Canadian-born children empirically measured using daily time diary records. Immigration policy introduced a point system to select immigrants in 1967. In the following decades, source countries for newcomers to Canada changed from predominantly U.S and European countries to the majority of newcomers now sourced from countries in which are more distanced culturally such as Asia, Africa and South America. Immigrant parents incur large initial settlement costs and, in many cases, may have dynastic motives for their children’s future well-being as adults behind moving decisions. Current and future well-being and economic prosperity of children depends in large part on the nuances of decisions made by parents with respect to familial resources. This thesis investigates the time-use of foreign-born parents and their children as measured by their daily time-use records to learn whether their cultural background, as captured by source country region, and their integration into Canadian society affects time-use allocation decisions. The focus of chapter one is on the inclination of immigrant parents to invest more (less) time with their children and on the measurement of the time inputs of their children into school related activities. Time spent by parents with their children is an input into the production function for children’s cognitive and non-cognitive skill development. With increased time spent by parents, children experience boosts in IQ and non-cognitive skills which can impact future labour outcomes. I model this relationship considering both the participation and intensity of time-use decisions. By investigating the difference in daily time spent with children, I find that conditional on participation, Asian parents spend between 37 and 22 more minutes on education related activities with their children on a daily basis than their Canadian-born counterparts. Moreover, Asian fathers are 10% more likely to participate in education related activities with their children than Canadian-born fathers, while Asian mothers are equally likely to participate than Canadian-born mothers. Given participation, South-Central American mothers and European and African fathers are each spending around 20 more minutes on education activities with their children than their Canadian-born counterparts. Both the children of Asian-born and African-born parents spend at least over 46 more minutes on homework activity than students with both Canadian-born parents. Although no difference by area of origin is apparent in the total care-time parents provide for their children, there are significant differences in terms of time specifically devoted to human capital investment activities by immigrant parents, and in the amount of time the children of African and Asian immigrants devote specifically to the completion of homework. The second chapter considers that the time parents spend with their children could be a compensating factor for household income deficits. Household income is a commonly used factor to measure the well-being of children and gage their prospects as adults. However, a broader interpretation of well-being is being adopted in Canada and Europe, which includes non-economic dimensions that center around support for family and relationships as part of strategy for economic growth. Current empirical evidence documents financial hardships experienced by adult newcomers to Canada with respect to otherwise similar Canadian-born adults. This fact suggests that the competing nature of a parent’s time into labour and household activities may be particularly relevant for immigrants. I use a CES utility function to estimate a two-dimensional poverty line that allows for compensation of an abundant resource (time) to become non-poor in a multidimensional sense. We find that immigrants parents are more likely to be poor in income, but not in time spent with children and although they are 2.5-5% more likely to be simultaneously poor in both time and income, only about 4-7% of immigrant parents spend enough time with their children to sufficiently compensate for income deficits. These results redefine poverty status for immigrant groups since they indicate that immigrant parents place a high value on this time (over labour activities). This could be due to lack of sufficiently valuable employment opportunities or a lack of adequate support network that provides quality time spent with children. Chapter three addresses the interdependence of several categories of time allocation, as mediated by the immigration process and gender. Paid work and the decision to trade-off with leisure and other household duties has changed significantly in households over the past 50 years with the incorporation of women into the labour force. Traditionally, economics modelled time-use decisions with dichotomous labour-leisure choices. This resulted in family decisions where the highest wage earner specialized in work outside the household. However, recent research in children’s development highlighted other essential categories of pertinent family time-use, such as care provided to children. The decision to work and, at the same time, raise children, forces changes to the traditional economic plan of time-use with notions of opportunities for women to specialize in both critical aspects of family functioning and the need of fathers to be involved in child rearing. I model four categories of time-use – paid work, household production, leisure and child service – by a Seemingly Unrelated Regression Model (SUR) with particular focus on the immigrant integration process as mediated by gender. Compared to mothers born in Canada, mothers from Africa, Asia, Europe, and South-Central America spend up to 50 minutes less in daily leisure time, but there is not a significant difference in time spent with children. The result vanishes for Asian and South-Central American mothers once I control for years since migration, suggesting that sacrificing leisure may be involved in the process of integration. Parental time-use decisions play a role in the intergenerational mobility of children and as such, I also model four categories of time-use spent by young adults as I do for parents, but with time spent on total education activities – attending classes, finishing assignments - in place of child service with particular focus on time spent by young adults with a mother or father born abroad. I find that second generation young adults with Asian mothers or fathers are spending 41 and 31 less minutes in paid work and 54 and 58 more minutes on education activities and, likewise for young adults with a European mothers or fathers, 41 and 16 less minutes and 27 and 23 more minutes respectively. These results support previous research indicating that aspirations and expectations of parents and their children can vary by culture.

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Browsing Economics by Author "Ferrer, Ana"