Three Essays in Public Economics

TitleThree Essays in Public Economics
Publication TypeThesis
Year of Publication2007
AuthorsKim, M
Date Published2007
UniversityThe University of Wisconsin
KeywordsConsumption and Savings, Retirement Planning and Satisfaction

This dissertation consists of three essays in public economics. The first essay is theoretical and examines higher education. The second and third essays are empirical and examine charitable behavior and tax subsidies. The first essay presents a stylized theoretical model of competition among need-blind colleges and universities that implement early decision admissions. Under need-blind admissions, an applicant's financial aid status cannot affect their likelihood of admission. In the model, a need-blind school can use early decision admissions as a screening mechanism to indirectly identify a student's ability-to-pay, while superficially maintaining a need-blind policy. As a result, in equilibrium, non-financial aid students are more likely to be admitted than financial aid students of comparable quality. The second essay examines the relationship between charitable giving and religious attendance. Using data from the Independent Sector Survey of Giving and Volunteering, I estimate a tax price elasticity for religious attendance of 0.4, which implies that charitable giving and religious attendance are complements. I resolve the difference between my estimate and a recent estimate by Gruber (2004) that implies that charitable giving and religious attendance are substitutes. While Gruber imputes itemization status, an important factor in calculating tax incentives, I use survey-reported itemization status. This imputation creates a large amount of non-classical measurement error. I show that the measurement error is responsible for the disparate results: if I also impute itemization status, I obtain similar results as Gruber. The third essay presents new results regarding the charitable behavior of retired and nearly-retired individuals. I estimate a simultaneous equation model of charitable giving, volunteering, and labor supply derived from a quadratic utility function. By explicitly modeling these joint decisions, I account for potential substitutability and complementarity among the choice variables. I estimate the model by maximum likelihood using a sample of single individuals from the Health and Retirement Study. The parameter estimates imply price and income elasticities that are similar to, though somewhat smaller than, previous estimates. The parameter estimates are also used to simulate the effects of various policy changes to the Social Security system.

Endnote Keywords

Economics of the Elderly

Endnote ID


Short TitleThree Essays in Public Economics
Citation Key6386