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Impact of Medicare Advantage Supplemental Benefit Expansion on Startup Funding
by Judy Tianhong Zhong
Abstract
In 2018, the Center for Medicare and Medicaid Services (CMS) announced that they would expand the supplemental benefits that can be included in Medicare Advantage (MA) plans. The goal was to encourage insurers to innovate and test new benefit offerings that could improve health outcomes and reduce healthcare spending. A key player in this transformation is the MA vendor that provides supplemental benefit offerings to insurance plans, but this market is rather underdeveloped. To assess the implementation of this supplemental benefit expansion, this study examines the flow of funding into the emerging market of MA vendors. This paper uses a longitudinal approach and Crunchbase data on funding for 79,004 firms from 2014 to 2018 to determine whether there is a significant jump in funding toward MA vendors with supplemental benefit services following the policy change. The results show that both the average amount of funding per deal and the number of deals a MA vendor firm receives significantly increased following the expansion when compared with all other firms. This suggests that the policy may have been successful in promoting the development of the MA vendors market and the innovation of benefit offerings as more funding goes towards these companies.
Kate Bundorf, Faculty Advisor
David Ridley, Faculty Advisor
Michelle Connolly, Faculty Advisor
JEL classification: I1; I11; I18
Technological Impacts on Return to Education in Brazil
by Yirui Zhao
Abstract
The wage return to education has been studied for a long time. Acemoglu and Autor (2010) connect the decrease of medium-level job opportunities in the U.S. with technological advances. Their theoretical model predicts that if technology replaces routine jobs, workers with medium-level skills will experience decreases in wages relative to both high-skill workers (who become more productive with the improved technology) and low-skill workers (who can less easily be replaced since their work is not routine). Moreover, their theoretical model predicts that if medium-skill workers are closer substitutes for low-skill workers than they are for high-skill workers, the relative return of high-skill workers to low-skill workers should increase. Using education as proxy of skill (Acemoglu & Autor, 2012), this paper checks if these three predictions about relative wage returns to education also hold in Brazil. This paper finds that the impact of technological change on the Brazilian formal labor market between 1986 and 2010 is consistent with predicted changes in the return to education for medium-skill workers relative to both low and high skill workers. The impact is consistent with predicted changes in the return to education for high-skill workers relative to low-skill workers when Lula’s presidency is considered in the model.
Michelle Connolly, Faculty Advisor
Rafael Dix-Carneiro, Faculty Advisor
Daniel Xu, Faculty Advisor
JEL classification: J24; J31; O33
The Cost of Delay: Evidence from the Ethereum Transaction Fee Market
by Yinhong “William” Zhao
Abstract
Delaying a financial transaction can be costly, but the cost of delay is difficult to estimate in traditional
finance. I exploit the unique data offering and market design of the Ethereum blockchain to estimate the
cost of delaying financial transactions in decentralized finance (DeFi). I construct a dynamic auction
model for the Ethereum transaction fee market that relates users’ optimal transaction fee bids to their delay
cost functions and network conditions, and I structurally estimate the delay cost functions for different
users and transaction types. The average cost of delaying a transaction by one minute is 8.78 US dollars,
but the distribution of delay costs is highly skewed to the right. Delay costs are higher for complex
transactions and users who trade more frequently. I estimate that welfare loss due to network delay on
Ethereum was 14.03 million US dollars per day in July 2021, and I apply the delay cost estimates to
evaluate the welfare losses under alternative transaction fee mechanisms.
Campbell Harvey, Faculty Advisor
Michelle Connolly, Faculty Advisor
JEL Codes: D44; G10; L17;
Illuminating the Economic Costs of Conflict: A Night Light Analysis of the Sri Lankan Civil War
by Nicholas Kiran Wijesekera
Abstract
This paper investigates the economic consequences of the Sri Lankan Civil War (1983-2009) by using event-based data on civilian and combatant fatalities in addition to night light imagery as a proxy for economic activity. By looking at regional economic activity across the island of Sri Lanka, this paper
seeks to identify how violence led to declines or undershoots of economic activity in the areas in which it was most prevalent. The use of night light data gives a
hyper-localized proxy measurement of this activity for each year of the war. The investigation finds that government and rebel deaths have strong, negative effects on economic activity, and that these effects spill over across time and space. Additionally, the manner in which civilian deaths occur is an important determinant of their subsequent economic impact. The paper offers new findings on the economic legacy of the Sri Lankan Civil War and extends existing work on the use of night light data to measure economic activity during conflict.
Charles Becker, Faculty Advisor
Michelle Connolly, Faculty Advisor
JEL Codes: H56, N45, O53
Student Effort and Parent Attitude on Education Attainment: Evidence from Multi-year Survey in Gansu, China
by Ridge Zhong-yuan Ren
Abstract
This paper explores whether student effort and parent attitudes have varying effects at different stages of a student’s life in terms of educational attainment and job outcomes. With survey data in Gansu, China, a largely rural province in Northwest China that lags behind the rest of China in education, this paper employs a multivariate regression model. This method allows me to measure the achievement or outcome of the child between each successive wave of surveys and estimate which factors held the strongest effect on the next wave. Student achievement in early waves is measured by the student’s score on assessments in math and Chinese, and the later outcome is measured by the student’s income and the highest level of education achieved. This paper finds that effort in Math and math achievement have a positive association with better education attainment and career outcomes later in life. In addition, I find that parental education levels also have a positive association with child outcomes.
Pengpeng Xiao, Faculty Advisor
Kent P. Kimbrough, Faculty Advisor
JEL Codes: I25, I26
Short Term Effectiveness of Chinese Stock Connect Program — a Study of the Pricing Dynamics of Cross-listed Stocks
by Kaiyu Ren
Abstract
This thesis examines the pricing dynamics of cross-listed stocks in the Chinese A-share and
Hong Kong H-share markets. By identifying an announcement-implementation window, I offer a
fresh perspective on the short-term price adjustment of cross-listed stocks around the launch of
the first Stock Connect program. My findings reveal a significant increase of the A-H price ratio,
but this price discrepancy appears to have been mitigated by the implementation of the Stock
Connect program.Additionally, my observations suggest the existence of market inefficiencies,
particularly among the groups of A-share stocks that are excluded from the Stock Connect
program.
Ronald Leven, Faculty Advisor
JEL codes: G14; G18
Improving Institutional Performance: Foreign Aid Evaluation and Determinants of Foreign Aid Project Success Ratings
by Susan Sawyer O’Keefe
Abstract
In this paper, I use a regression model to predict project outcome ratings for international aid
projects by 12 multilateral and bilateral aid agencies taking place in 183 recipient countries. The
influential factors considered are project duration, project size, evaluation type, evaluation lag, donor
ratings, and country-level indicators of development. I find a significant relationship supporting
differences in project outcome ratings for projects evaluated by an independent evaluation agency, a
resource that some banks use to access project performance by an unbiased party. I also examine the
significance of other project-level factors and compare these to trends identified in past literature on
foreign aid project effectiveness.
Michelle Connolly, Faculty Advisor
JEL classification: H43, O22
Reconstruction following Destruction: Entrepreneurship in the Aftermath of a Natural Disaster
by Richard Lombardo
Abstract
Entrepreneurship is thought to be the engine of growth in many developing countries. There is, however,
a paucity of evidence on the role that entrepreneurship plays in rebuilding economic livelihoods both in
the short and longer-term in the aftermath of a large-scale shock. This is an important gap in the literature
given the increasing frequency and severity of shocks across the globe. This paper contributes to filling that
gap by investigating the evolution of entrepreneurial success following the 2004 Indian Ocean tsunami, a
large-scale and unexpected shock. Using longitudinal survey data, the Study of the Tsunami Aftermath and
Recovery (STAR), I find large declines in business ownership, profits, and capital for those most exposed
to the tsunami that persisted through 10 years following the tsunami. These estimates can be given a causal
interpretation under the plausible assumption that exposure to the tsunami can be treated as exogenous after
taking into account individual-specific unobserved heterogeneity with fixed effects, including pre-tsunami
geographical features that drove exposure. Individuals living in rural areas and individuals with the least
resources pre-tsunami fared the worst in terms of developing new businesses. However, the massive Build
Back Better reconstruction program promoted entrepreneurship. Receipt of housing aid as part of that
program is linked to an increase in the development of non-agricultural businesses that spurred gains in real
profits.
Duncan Thomas, Faculty Advisor
Michelle Connolly, Faculty Advisor
JEL classification: D1; H84; L26; Q54
To What Extent Does Relative Maturity Affect Test Scores Between Tracked and Untracked Education Systems? Evidence From TIMSS 2019
by Qi Xuan Khoo
Abstract
Most education systems enforce a cutoff birth date for school entry, and some group students based on their perceived ability—a practice known as tracking. While the former policy leads to maturity gaps among early learners, the concomitant performance gaps may or may not be exacerbated by the latter. Analyzing the Trends in International Mathematics and Science Study (TIMSS) 2019 dataset to study how relative maturity affects test scores with tracking, this paper finds that older students outperform their younger peers. This relative maturity test score premium is accentuated by tracking, and these effects are found to be more significant in mathematics than in science.
Robert Garlick, Faculty Advisor
JEL codes: I2, I24, I28
What Affects Post-Merger Innovation Outcomes? An Empirical Study of R&D Intensity in High Technology Transactions Among U.S. Firms
by Neha Karna
Abstract
High levels of global M&A activity have characterized the past decade, making the policy debate
over the impact of mergers on innovation even more pertinent. Innovation is a significant driver
of economic growth and therefore a negative effect of mergers on innovation outcomes may have
detrimental consequences. Nevertheless, the existing literature demonstrates mixed results
leaving it unclear whether the overall effect is positive or negative. This paper contributes to
existing literature on the relationship between mergers and innovation and examines the effects
of M&A on the subsequent innovative activity of acquiring firms that operate in high technology
(high-tech) industries. I construct a sample of U.S.-based public-to-public deals from 2010-2019
involving high-tech acquiring firms. Using multivariable regression with robust considerations, I
analyze factors that may explain post-merger R&D intensity defined as the merged entity’s R&D
expenditure divided by its total assets one year after deal completion. I consider firm
characteristics of the target and acquirer, including size, industry, and age, and industry
competition. I find potential positive impact of relative target size on post-merger R&D intensity
and significant interaction effects between relative target size and firm age, relative target size
and industry relatedness, and target industry competition and industry relatedness. My results
suggests that beyond the occurrence of a merger, specific deal characteristics may affect postmerger
innovation outcomes.
Grace Kim, Faculty Advisor
JEL Classification: G3; G34; L40; O31; O32;