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Category Archives: R23

Benefit Spillovers and Higher Education Financing: An Empirical Analysis of Brain Drain and State-Level Investment in Public Universities

By Chinmany G. Pandit

This paper analyzes the impact of out-migration of college graduates on state higher education investment. A three-stage least squares regression model with state and year fixed effects is developed and estimated, addressing the relationship between state legislative appropriations, tuition, and educated out-migration across 49 U.S. states from 2006-2015. The results support the notion that states respond negatively to benefit spillovers in higher education: for every one percent increase in the rate of educated out-migration, state appropriations decrease by 1.92 percent (roughly $140 per student). These findings suggest that an education subsidy
provided to states may be necessary to prevent underinvestment in higher education.

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Advisor: Thomas Nechyba | JEL Codes: H7, H75, I22, I28, R23

The Effect of Minority History on Racial Disparities in the Mortgage Market: A Case Study of Durham and New Haven

By Jisoo Yoon

In the aftermath of the housing market crash, the concentration of subprime mortgage loans in minority neighborhoods is a current and long-standing issue. This study investigates the presence of racial disparities in mortgage markets by examining two cities with contrasting histories of African American and Hispanic establishment: Durham, North Carolina and New Haven, Connecticut. This study examines data by the Home Mortgage Disclosure Act (HMDA), and distills the effect of minority legacy on the perception of racial risk by using econometric instruments to separate the behavior of national lenders and local lenders. The econometric methods allow national lenders to reflect objective risk measures and neighborhood race dynamics, while local lenders reflect subjective attitudes towards certain races. With its longer history of African American presence, Durham shows a positive attitude towards Black borrowers at the local level, while New Haven shows a more favorable attitude towards its Hispanic residents. Nonetheless, racial legacy also materializes as a negative factor in the form of increased residential segregation and spillover effects. Furthermore, a temporal variation analysis of pre- and post-mortgage market reform data affirms the disappearance of racial bias and continued presence of spillover risk in Durham.

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Advisor: Christopher Timmins | JEL Codes: C01, G21, J15, R21, R23, R31 | Tagged: Econometrics, Mortgages, Economics of Minorities, Races, Census, Migration, Population, Neighborhood Characteristics, Housing Supply and Market

The effect of Mexico’s Conditional Cash Transfer Program on Migration Decisions

By Aki Ishikawa

The Mexican conditional cash transfer program, Oportunidades, is commonly overlooked for long-term evaluations. One understudied effect of this poverty-reduction program is the change in migration behavior caused by the cash transfers. Using data from the Mexican Family Life Survey, this study outlines the effects of the social net program on international migration of low-income households in Mexico. The results suggest that the program causes a positive increase in likelihood for international migration for program participants. Within participating households, individuals who are responsible for grant income tend to migrate less compared to the other members of the households. This research provides valuable insight into existing literature on migration of low-income households in relation to the availability of the conditional cash transfer program.

Honor’s Thesis

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Advisor: Charles Becker | JEL Codes: R2, R23, R28 | Tagged: Conditional Cash Transfer Program, Developmental Economics, International Migration

The Impact of Population Mobility on repayment Rates in Microfinance Institutions

By Allison Vernerey

Several studies have attempted to model the determinants of repayment rates for group-based loans administered by micro-finance institutions (MFIs). One of the main variables that have been identifies as playing a role in determining the repayment rate is social capital. Empirical research however has struggled with quantifying this qualitative variable, resulting in vast inconsistencies across studies, aggravating cross-comparison and objective interpretation. Instead, we argue that the use of quantitative, cross-country comparable proxy that is intuitively linked to social capital would yield more consistent and reliable results. We hypothesize that population mobility is such a proxy, and that lower population mobility correlates positively with higher social capital and thus higher repayment rates. Using population mobility as a proxy for social capital would allow MFIs to lower their cost of data collection for performance assessments and simplify the process for policy makers trying to evaluate the programs success. At the village level, we find significant evidence that higher emigration within a community is strongly linked to lower repayment rates in micro-finance. These results provide micro-finance institutions with a new and more cost effective way to monitor their performance as well as improve their capacity to make well-informed lending decisions.

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Advisor: Genna Miller | JEL Codes: G, G2, G21 | Tagged: Bangladash, Microfinance Institutions, Population Mobility, Repayment Rates, Social Capital

Trailer Park Economics

By Caitlin Gorback

In this paper, we explore the various reasons behind the development of the American institution of trailer parks. The first two models arise in equilibrium, the last two respond to housing shocks. Models include “Bad Tenants” in which tenants and landowners contract to protect against bad neighbors, a basic “Capital Constraints model in which tenants and landowners share the burden of capital costs, “Uncertain Growth” in which landowners respond to boom and bust economic growth, and “Long vs. Short Run Growth” in which landowners must decide how to invest on their land given rates of land appreciation.

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Advisor: Charles Becker | JEL Codes: R21, R23, R31 | Tagged: Housing, Manufactured Housing, Rural Growth, Trailer Parks, Urban Growth

Questions?

Undergraduate Program Assistant
Jennifer Becker
dus_asst@econ.duke.edu

Director of the Honors Program
Michelle P. Connolly
michelle.connolly@duke.edu