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Essays in Applied Microeconomics


These essays contribute towards our understanding of applied microeconomics. This dissertation is composed of three chapters.

Chapter 1 studies the effect of private tutoring on human capital development. Private tutoring is a widespread service in many countries. However, economic research focusing on the effect of private tutoring on fundamental factors of human capital is scarce. I estimate two human capital production functions in the context of private tutoring, one for cognitive skills and the other for non-cognitive skills. To deal with endogeneity, I adopt the control function approach, based on peer behavior and household budget. The fact that cognitive and non-cognitive skills are not observable is addressed by the latent factor model, which connects unobservable skills with observable measurements. I find that private tutoring does not affect skill accumulation for both cognitive and non-cognitive skills. I also find that peer behavior positively contributes to the use of private tutoring. Chapter 2 explores effect of co-residing grandparents on educational investment for their grandchildren. Multigenerational households are not an unusual type of household in developed and developing countries, but the educational effect of this type of household on children has not been studied extensively in economic literature. This paper explores the effect of coresiding grandparents on educational investment for their grandchildren. First, by using Korean data, I show a significant negative effect on educational investment. In addition, I also find that this negative effect is directed toward female children. To explore the economic reasons behind the effect, I test whether coresiding grandparents participate in the household decision-making process by using statistical tests based on the collective model, and the results show evidence of participation. Hence, the negative effect on educational investment may be related to the preference of grandparents. Chapter 3 studies the effects of generosity from a child care assistance policy on maternal labor supply behavior, such as weekly working hours, and effects on the child care industry. These effects are estimated by exploiting variation in the copayments amount and reimbursement rates for a hypothetical family across multiple states over time. To minimize endogeneity, the fact that the size of funding is largely decided by several state-level variables is incorporated. The results suggest negative effects from higher copayments and positive effects from higher reimbursement rates, although these are less pronounced than those caused by the copayments. Only weak results are observed for the industry-level effects.

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