Essays on government spending and labor market assimilation of U.S. female immigrants

Abstract

This dissertation comprises two chapters on government spending and one on the labor market assimilation of U.S. female immigrants. The first chapter studies the macroeconomic effect of government transfer payments over the business cycle in the United States. The second chapter analyzes the influence of increased public education expenditures on economic growth in the context of government education reforms in four selected countries. The third chapter uses cohort analysis to explore U.S. female immigrants' economic performance. The first chapter, co-authored with Dr. Steven P. Cassou and Dr. M. Iqbal Ahmed, investigates whether transfer payments have symmetric effects on personal income and output using state-dependent local projection econometric models. The results show that positive transfer payment impulses have long-lasting stimulative effects on personal income and GDP under symmetric response assumptions. However, when one considers an asymmetry linked to economic conditions, transfer payment effects are more stimulative during economic downturns than during strong economic times. A deeper analysis shows the asymmetry is due to the recent special programs undertaken during the Great Recession and COVID-19. Furthermore, policy expansions for unemployment benefits do not yield significant economic benefits regardless of economic conditions. Transfer payment programs are often motivated by both the benefits to recipients and their economic stimulus effects. Our findings suggest that the economic stimulus effects of transfer payments are small outside of the recent special transfer programs. Thus, transfer payments should be motivated by the benefits to recipients and not on their potential as an economic stimulus. The second chapter, co-authored with Dr. Jehu A. Mette, analyzes the influence of increased public education expenditures on economic growth in the context of government education reforms in four selected countries. Given that the education reforms prompted significant increases in government education spending within short periods in these countries, we exploit their quasi-experimental settings to estimate whether the reforms had any long-term influence on the per capita growth rate. Using data from 1974-2018 for 29 countries, we investigate the growth effect of education reforms in Argentina, Finland, Iceland, and New Zealand. In line with the literature on central education spending, we find evidence of a significant increase in the long-term growth in output per capita for all four countries using the difference-in-differences estimation method. However, results from the synthetic control methods show no markedly long-term growth increase in output per capita for all four countries following the educational reforms. In the third chapter, I explore the labor market conditions changes, specifically labor force participation and employment rates among U.S. female immigrants from 1970 to 2019. Our analysis reveals two interesting findings. First, there is a cohort effect in the labor market conditions of female immigrants, with more recent immigrants having relatively lower labor force participation rates and employment rates than earlier cohorts. Second, there is an acceleration in assimilation, with the more recent cohort of immigrants assimilating faster than the earlier cohort in the labor market.