Carolina Arteaga

Author(s): Arteaga, Carolina | Advisor(s): Lleras-Muney, Adriana | Abstract: This dissertation contains three essays in applied microeconomics. In the first chapter paper I test whether the return to college education is the result of human capital accumulation or instead reflects the fact that attending college signals higher ability to employers. I exploit a reform at Universidad de los Andes, which in 2006 reduced the amount of coursework required to earn degrees in economics and business by 20% and 14%, respectively, but did not change the quality of incoming or graduating students. The size of the entering class, their average high school exit exam scores, and graduation rates were not affected by the reform, indicating that selection of students into the degrees remained the same. Using administrative data on wages and college attendance, I estimate that wages fell by approximately 16% in economics and 13% in business. These results suggest that human capital plays an importan...

This paper provides evidence that parental incarceration increases children’s educational attainment. I collect criminal records for 100,000 convicted poor parents in Colombia and combine it with administrative data on the educational attainment of their children. To overcome endogeneity concerns in incarceration I use exogenous variation that results from the random assignment of defendants to judges who differ in their stringency to convict and send defendants to prison. I write down an econometric model that features three treatment assignments, defined along two margins of selection and provide new identification results. I find that conditional on conviction, parental incarceration increases years of education by 0.6 years for the children whose parents were on the margin of incarceration. This positive effect is larger when the incarceration is for a violent crime, for boys and when the incarcerated parent is the mother. JEL No. I24,J24,K42. ∗Preliminary draft. I am very grate...

This paper provides evidence that parental incarceration increases children’s educational attainment. I collect criminal records for 90,000 low-income parents who have been convicted of a crime in Colombia, and combine it with administrative data on the educational attainment of their children. I exploit exogenous variation in parental incarceration resulting from the random assignment of defendants to judges with different propensities to convict and incarcerate. My identification strategy differs from the usual judge IV application because I model incarceration as a two-stage decision problem: First conviction, and then incarceration. I exploit judge leniency along these two different margins. Intuitively, I take advantage of the fact that I can compare children of parents who faced similar judge conviction leniency, but had different incarceration leniency. I derive a new expression that extends the Local Average Treatment Effect concept, to a setting with two sources of unobserved tr...

This paper studies the origins and consequences of the opioid epidemic. Drawing on recently unsealed documents from state litigation against Purdue Pharma, we instrument for the supply of prescription opioids by exploiting features of the initial marketing of OxyContin. We find that moving from the 25th-to-the-75th percentile in the distribution of prescription opioid supply increases deaths from prescription opioids by 89% and deaths from all opioids by 39%. This corresponds to over 200,000 deaths. We estimate that the opioid crisis did not have an effect on labor market outcomes, such as labor force participation or employment rates, but it had adverse effects on socioeconomic conditions, as indicated by increased claims from SNAP and disability and increased crime. We estimate decreases in pregnancy duration, birth weight and health at birth but no effect on infant mortality and we estimate an increase in fertility rates. JEL No. I14, I18, I30, J12, J13, K36 Department of Economi...

In this paper I test whether the returns to college education are due to increases in productivity (human capital theory) or to the fact that attending college signals higher ability to employers. I exploit a reform at Universidad de los Andes, which in 2006 reduced the amount of coursework required to earn degrees in economics and business. The size of the entering class, their average high school exit exam scores, and graduation rates were not affected by the reform, indicating that the quantity and quality of students remained the same. Therefore, the reform decreased the human capital students graduate with, while holding the value of the education signal constant. Using administrative data on wages and college attendance, I find that wages fell by approximately 16% in economics and 12% in business. These results suggest that human capital plays an important role in the determination of wages, and reject a pure signaling model. Surveying employers, I find that the decline in wag...

In this paper I test whether the returns to college education are due to increases in productivity (human capital theory) or instead, to the fact that attending college signals higher ability to employers. I exploit a reform at Universidad de Los Andes which in 2006 reduced the amount of coursework required to earn a degree in economics and business. The size of the entering class, their average high school exit test scores, and graduation rates were not affected by the reform, indicating that the quantity and quality of students remained the same. Thus, the reform decreased human capital students graduate with, while holding the value of the education signal constant. Using administrative data on wages and college attendance, I find that wages fell by approximately 16% in economics and 12% in business. These results suggest that human capital plays an important role in the determination of wages, and reject a pure signaling model. In addition, comparing this number to an OLS estima...

This paper presents new evidence showing that parental incarceration increases children's education. I collect criminal records for 90,000 low-income parents who have been convicted of a crime in Colombia, and link the educational attainment of their children. I exploit exogenous variation resulting from the random assignment of judges, and extend the standard framework to incorporate both conviction and incarceration decisions. I show that the effect of incarceration for a given conviction threshold can be identified. My results indicate that parental incarceration increases educational attainment by 0.78 years for the children of convicted parents on the margin of incarceration.

We study the effect of monetary policy shocks on commodity prices. While most of the literature has found that expansionary shocks have a positive effect on aggregate price indices, we study the effect on individual prices of a sample of four commodities. This set of commodity prices is essential to understand the dynamics of the balance of payments in Colombia. The analysis is based on structural VAR models; we identify monetary policy shocks following Kim (1999, 2003) upon quarterly data for commodity prices and their fundamentals for the period from 1980q1 to 2010q3. Our results show that commodity prices overshoot their long run equilibrium in response to a contractionary shock in the US monetary policy and, in contrast with literature, the response of the individual prices considered is stronger than what has been found in aggregate indices. Additionally, it is found that the monetary policy explains a substantial share of the fluctuations in prices.

This paper provides evidence that parental incarceration increases children’s educational attainment. I collect criminal records for 90,000 low-income parents who have been convicted of a crime in Colombia, and combine it with administrative data on the educational attainment of their children. I exploit exogenous variation in parental incarceration resulting from the random assignment of defendants to judges with different propensities to convict and incarcerate. I only observe the set of defendants who were convicted in trial. To learn about the causal effect of incarceration in this sample of convicted parents, I provide a new identification result that extends to settings in which selection invalidates the exogeneity of an instrument. Intuitively, I take advantage of the fact that I can compare children of parents who faced similar judge conviction leniency, but had different incarceration leniency. I find that conditional on conviction, parental incarceration increases educatio...

In this paper I test the signaling and human capital theories in education at the college level. I exploit a reform at Universidad de Los Andes that in 2006 reduced the time and number of courses required to earn a degree in economics and business. The reduction was from 4.5 to 4 years and the credits were cut in 20% and 14%, respectively. During this period, the size of the entering class and the average high school exit test scores remained the same, indicating the quantity and quality of students were not affected by the reform. Thus, the reform decreased human capital exogenously while holding the value of the education signal constant. Using administrative data on wages and college attendance, I find that wages fell by approximately 16% in economics, and 10% in business. These results suggest that human capital plays an important role in wage determination, and reject a pure signaling model. In addition, comparing this number to an OLS estimate that combines both human capital and signaling effects, my results imply that human capital accounts for most of the return in schooling. Finally, using data from the recruitment process for economists at the Central Bank of Colombia, I find that the reform reduced the probability of being hired for students from Los Andes.