UCLA

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 important role in the determination of wages and reject a pure signaling model. Surveying employers, I find that the reduction in wages may have resulted from a decline in performance during the recruitment process, which led students to be placed in lower-quality firms. Using data from the recruitment process for economists at the Central Bank of Colombia, I find that the reform reduced the probability of Los Andes graduates’ being hired by 17 percentage points. The second chapter 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 find that conditional on conviction, parental incarceration increases education by 0.7 years for children whose parents are on the margin of incarceration. This positive effect is larger for boys, violent crimes, and cases in which the incarcerated parent is the mother. Finally, in the third chapter I derive a new expression that extends the Local Average Treatment Effect concept, to a setting with two sources of unobserved treatment heterogeneity.