Three Essays on Applied Microeconomics

Abstract

Chapter 2 of this dissertation shows that parents' liquidity constraints have significant negative effects on children's cognitive skills. To control for potential bias due to the endogeneity of liquidity constraints, this chapter instruments the liquidity constraints with past rainfall volatility, current rainfall shocks, and the existence in the community of subsidized credit programs, of savings cooperatives, and of relatives. Both the OLS and IV analysis support that the liquidity constraints of parents are more severe for young children. Chapter 4 shows the result of measuring the effect of parents' liquidity constraints on children's non-cognitive skills such as self-esteem, self-efficacy, and aspirations. Similar to the result on children's cognitive skills, the OLS results show that the liquidity constraints of parents lower the children's non-cognitive skills when children are young (7-8 years old). However, the liquidity constraints have mixed effect on children's non-cognitive skills when they are older (11-12 years old and 14-15 years old). One interesting result is the dynamic effect, measuring the effect of liquidity constraints on non-cognitive skills three years later. Chapter 4 found that liquidity constraints that occurred when children were 4-5 years old lowered their non-cognitive skills when they were 7-8 years old. Chapter 3, entitled ``The Influence of Licensing Engineers on their Labor Market,'' provides a first look at the effect of regulation on the working hours and wage of engineers. The more rigid the requirements to get the license and the longer time to become an engineer, the further that working hours of engineers increases and ultimately customer access to engineers is reduced, while there is no significant effect on engineers' wage. Occupational licensing, which is one of the fastest-growing labor market institutions, has recently attracted the attention of many scholars. This chapter contributes to the growing literature on the effect of occupational licensing on the labor market.