Kevin Milligan

Professor

Research Classification

Economic Policies

Research Interests

Public Finance
Taxation
Pensions
Children
Inequality

Relevant Degree Programs

 

Research Methodology

Empirical

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Doctoral students
Any time / year round

Graduate Student Supervision

Doctoral Student Supervision (Jan 2008 - May 2019)
Essays in applied microeconomics (2017)

The first chapter studies parents’ intra-household time and resource allocation, focusing on parental quality time, and the implications for early childhood development. I develop a model that explains the "parental time-education gradient" puzzle, and I confirm its predictions, exploiting exogenous, drastic daycare price decrease in Quebec. I find that as daycare becomes cheaper, parents increase time devoted to their children, at the expense of home production and leisure, while consuming more of home production market goods (eating out, domestic help), and child market goods (daycare, games and toys); the time reallocation is larger for higher-educated parents. The estimated structural parameters uncover the pivotal role of complementarity (substitutability) between time and market goods in child human capital (home) production, and suggest a time efficiency advantage in non-market activities for higher-educated parents. I use them to assess how universal daycare shapes skill gaps in early childhood. My findings point to differential parental investment and time efficiency as important mechanisms behind widening skill gaps in early childhood.The second chapter measures the causal impact of academic redshirting---the practice of postponing school entry of an age-eligible child---on student achievement and mental health. I use Hungarian administrative testscore data for 2008-2014, and an instrumental variable framework. The institutional feature I exploit is a school-readiness evaluation, compulsory for potentially redshirted children born before January 1st. I compare children born around this cutoff and find that (1) although there are large student achievement gains for all, disadvantaged boys benefit the most from redshirting---and only they benefit in terms of mental health; (2) the positive effects of higher school-starting age are driven by absolute, rather than within-class relative age advantage.The third chapter studies how closely private insurers’ payment schedules follow Medicare's, exploiting institutional changes in Medicare's payments and dramatic bunching in markups over Medicare rates. We find that, although Medicare's rates are influential, 25 percent of physician services, representing 45 percent of spending, deviate from this benchmark. Heterogeneity in the pervasiveness and direction of deviations reveals that the private market coordinates around Medicare's pricing for simplicity but innovates when sufficient value is at stake.

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Essays in the economics of education : evidence from choice programs in Canada (2016)

This dissertation uses elementary school-choice programs in Canada in order to examine issues relating to the economics of education. Chapter 2 examines the role of parents’ uncertainty and learning in a setting where parents make dynamic education choices for their children and learn over time about unknown, child-specific returns to schooling. Using administrative data from the province of British Columbia and the French Immersion program, I estimate a dynamic model that incorporates imperfect information and parental learning into a school-choice framework. I find that new information parents receive after the initial enrolment decision accounts for a large fraction of program attrition, particularly in earlier grades, and also raises student achievement. In chapter 3, using the same data as in chapter 2, I estimate the causal impact that the French Immersion program has on short and medium-run student outcomes using a control function and instrumental variables approach that exploits variation in the distance to the nearest immersion and non-immersion schools within a given neighbourhood. I find that initial entry into the French Immersion program has large negative and significant effects on student outcomes in grade 4 in each of math, reading and writing. Over time, these effects decline such that by grade 10, I find no effect on English scores, but there remains a negative effect on math scores. Chapter 4 examines how changes in peer composition from school-choice policies impacts students’ own achievement. Using administrative data from the Canadian provinces of Ontario and British Columbia and exploiting the Late French Immersion program, I estimate these peer effects using a two-stage residual inclusion approach along with a school-fixed effects model. I find that as more children leave for the choice program, there is a negative and significant effect on the remaining students; however, this result masks substantial heterogeneity. I find that an increase in the fraction of low performing students to enter the choice program leads to increases in achievement for the remaining students; conversely, I find that high-performing leavers cause large reductions in the achievement of the remaining students.

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Essays on the economics of aging and housing (2016)

This dissertation uses three different studies to explore the impact of household finance on elderly households’ labour market activities. Chapter 1 provides an introduction. Chapter 2 uses the eligibility requirements of the Canadian Old Age Security (OAS) program as a novel approach to estimate a causal effect of public pensions on elderly immigrants’ labour supply decisions. I also evaluate the extent to which these individuals may adjust their labour supply behaviour prior to the receipt of public pension entitlements. The findings in this chapter illustrate that seniors only respond to the OAS benefits with a decrease in labour force participation rates. A combination of estimates implies that elderly immigrants may exhibit behavioural response in anticipation for OAS benefits. Chapter 3 investigates the effect of immigration on mobility decisions of native-born near-retirees. The research findings in this chapter push this area of literature forward by suggesting an alternative perspective for explaining native out-migration. The heterogeneity in mobility preferences across dwelling tenure groups is an important result because it may explain why Card (2001) fails to find any significant effect from immigration on aggregate native relocation decisions. Finally, Chapter 4 explores how the recent house price shock in the U.S. affected the labour supply decisions of near-retirees. This is the first study to use the national lending conditions for residential mortgage series as part of an instrumental variable strategy to explore this context. The final chapter sheds light by showing that housing exerts insignificant impact on the near-retirees’ work and retirement decisions.

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Essays on public economics (2015)

This dissertation applies various program evaluation techniques to examine both the intended and unintended consequences of government spending and regulation that affect family labor supply, children's healthcare utilization, and household saving behavior. Chapter 2 of this dissertation exploits the large and anticipated cash influx in the first quarter of the calendar year induced by the Earned Income Tax Credit (EITC) to estimate the causal effect of the receipt of a cash transfer on the timing of family labor supply. I find that income seasonality caused by EITC receipt induces changes in the intra-year labor supply patterns of married women. In contrast, the receipt of the EITC does not affect the timing of the labor supply of married men and single women.The subgroup analysis implies that my results are mainly driven by those from liquidity-constrained families and those who are secondary earners within their families.Chapter 3 exploits a sharp increase in patient cost-sharing at age 3 in Taiwan that results from young children "aging out" of the cost-sharing subsidy to examine the causal effect of cost sharing on the demand for young children's healthcare. It shows that the increase in the level of patient cost sharing at the 3rd birthday significantly reduces utilization of outpatient care. However, the utilization of inpatient care for young children does not respond to a change in cost sharing at the 3rd birthday. Chapter 4 exploits workplace pension reform in Taiwan to estimate the casual effect of workplace pension provision on the household saving rate. It shows that pension reform significantly reduces the prime-age (20-50) household saving rate by between 2.06 percentage points and imply that the degree of substitutability between workplace pensions and saving is about -0.50 to -0.60.

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Three essays in health economics : determinants of individual health, medical care use, and treatment (2015)

This dissertation studies and identifies determinants of individual health. The first chapter analyzes how the supply of medical care affects patient treatment and health outcomes, focusing on how hospitals respond to the loss of a profitable service line. This chapter provides strong evidence that hospital spillovers across service lines are empirically important and that hospitals differentiate treatment by patient payer type. Hospitals practice both revenue augmenting and cost-cutting behavior in other lines of care, targeting specific procedures and payers according to their profitability. Specifically, they increase the number of surgical procedures and perform more marginal surgeries. The effects are concentrated in medical specialties where there are more discretionary surgeries and higher profit margins. Furthermore, hospitals cut back on unprofitable treatment by reducing non-elective admissions and uninsured elective care. Hospitals also increase the intensity of treatment among private payers. The second chapter of this dissertation investigates the demand side of health care, analyzing the role that health insurance plays on primary medical care usage by young American adults. I find office-based physician visits and prescription drugs are not affected by insurance, but dental visits are. There is a small increase in out-of-pocket expenditures caused by insurance loss, concentrated heavily at the top of the distribution. No change in health status or ability to afford care is found. The findings shed light on the expected welfare benefits of recent US health care policies targeting young adults. The final chapter of this dissertation analyzes the extent to which the early childhood environment shapes child health and development outcomes and, specifically, whether universal childcare levels the playing field across children. I analyze the introduction of a universal childcare program in Quebec in 1997, testing its impact on the distribution of child health and development outcomes. I find that there is little heterogeneity in the response to the policy across the distributions of child motor skills and cognitive outcomes. I do, however, find evidence that it led to a reduction in child body weight at the upper end of the distribution.

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Three essays in the economics of education : evidence from Canadian policies (2015)

This dissertation evaluates the effects of various public policies related to education in Canada. Chapter 2 analyses the long-term effects of mandating immigrant children to attend school in the language of the majority. Using the 1977 introduction of Bill 101 in Quebec, a law that compelled children, with some exceptions, to attend school in French, I identify the impacts of studying in French on first- and second-generation immigrant children in Quebec. I find strong evidence that the law led to a significant increase in immigrants’ propensity to use French at home and at work, in their probability of being employed or in school, being part of the labour force, and choosing to live outside of the Montreal metropolitan area. Chapter 3 tests the empirical predictions of three theoretical saving frameworks in the context of saving for a child’s post-secondary education: the life-cycle saving model, the fixed-goal saving model, and the procrastination saving model. Using regression discontinuity and panel data regression techniques, I evaluate the effects of three Canadian education saving incentive programs on parents’ saving behaviour in Registered Education Savings Plans (RESPs). The results indicate that the actions of parents are generally consistent with the procrastination saving model. I estimate that higher matching rates on contributions and lump-sum subsidies increased RESP contributions and savings among lower-income families who applied for the programs. Furthermore, grants conditional on opening an account generally caused all parents to start saving earlier for their child. Chapter 4 evaluates the impacts of education savings in incentivised education savings accounts on children’s overall education savings and their academic performance. To identify these effects, I employ an instrumental variable approach that relies on the structure of Canadian saving incentives offered to parents for contributions to RESPs. I find no effect of the saving incentives on parents’ overall decision to save for their child’s post-secondary education. Among parents who do save, I estimate a small but significant crowding-out effect of RESP savings on education savings in other types of saving vehicles. Finally, I find no evidence of a causal impact of savings in RESPs on children’s performance in school.

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Three essays in applied economics (2013)

This dissertation discusses three topics in applied economics.The first essay examines the causal effect of social capital on individual incomeby exploiting the historically determined pattern of family namedistribution in Chinese villages. Family name distribution impacts social capitalthrough historical inter-lineage rivalry and cooperation. The estimatesshow a strong first order effect on male villagers, which implies a onestandard deviation increase in social capital is equivalent to two to fouryears of education. No effects on female villagers were found. The gender differentiationcould be accounted for by occupation difference: male villagers' income mainly comes from market exchange, while female villagers' income comes mainly from home production. Using a simple model, it is demonstrated that a village's social capital determines its trade scope and therefore income of its residents.The second essay proposes a general method to identify subjective expectation bias.The method exploits an implication of rational expectations that requires the identicalweight of an independent variable in projecting both objective and subjective probabilities.The empirical analysis shows that female seniors do not correctly internalize ageinformation while male seniors fail at internalizing income information. Thoughcognitive ability and risk aversion can partially explain the results, they are not the sources of the identified biases.The third essay explores how seniors make long term care insurance (LTCI) decisions by developing a dynamic structural discrete choice model where a rational, risk averse, bequest motivated senior has to decide at each period whether to buy an insurance policy or not. Using the Health and Retirement Survey data, this essay finds substantial heterogeneity in bequest motive that drives LTCI decisions. Specially, the idiosyncratic bequest motive helps to explain why LTCI holders do not experience a higher incidence rate than non-holders.

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Three essays on family labour supply and health over the life cycle (2010)

The three essays in this thesis explore how intrahousehold decision making interacts with evolving health, disability shocks and aging to determine life cycle patterns of labour supply and retirement among Canadian andU.S. households. One of the main roles of marriage and cohabitation is to provide individuals with insurance against idiosyncratic risk such as health and disability shocks. The extent and effects of this insurance depend onhow household members interact and delegate tasks--for instance, whether they can specialize and easily transition between home-based or market-basedwork--and the extent to which household members commit to and cooperate with each other. The first two chapters of the thesis document and provide a structural explanation for the fact that, in general, marriage is associated not only with better health outcomes but also with better economic outcomes conditional on health status. The final chapter suggests that these better outcomes, and the role of public policy in facilitating them, maybe contingent on how cooperative household members are with each other when making career and retirement decisions. In general, the results suggest that household-level interactions have important implications for aggregate labour supply and human capital; for the role and appropriate use of public policy; and for the welfare of individuals confronted with uncertainty over the length and productivity of their working life.

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