Essays in applied microeconomics

Katie E Schultz, Purdue University

Abstract

This dissertation consists of three essays. The first two essays examine the effects of participation in high school athletics on academic outcomes. The third essay, with Kevin Mumford, investigates the effects of underwater mortgages on mobility and unemployment. The first essay investigates peer effects on high school sports teams. Most research on the effect of peers on academic outcomes studies peers at the classroom level in elementary school. Peers are difficult to identify at the high school level as students take many classes with different students. Most prior research identifies high school peers as all students within a particular grade level. This paper contributes to the peer effects literature by identifying teammates on sports teams as a relevant peer group for high school student athletes. This paper also contributes to the sports participation literature by showing that peer effects on sports teams are an important channel for how participation affects academic success. Using unique data collected from several large high schools that matches detailed academic transcripts with student level sports participation data, this paper finds that varsity teammate peers are a relevant group of peers for high school athletes and have a significant effect on a student athlete's academic performance. This paper additionally finds substantial nonlinearities in peer effects and that the variance or heterogeneity of a team's academic composition has a significant effect on the strength of peer effects. The second essay focuses on the in-season effects of participation in athletics. A great deal of recent research has focused on whether participation in athletics improves academic or labor market outcomes. Most of this research employs instrumental variables to estimate the effect from participation in athletics on academic outcomes and finds evidence of small positive effects from participation. I ask a fundamentally different question, whether an athlete performs better or worse, academically, during the season in which they participate in sports. It may be that athletes perform worse during the sports season because of the time required to participate in athletics. However, time spent on sports may substitute not from time on academics, but from time on negative leisure activities, causing academic performance to improve during the season. This paper finds a negative and significant effect on academic performance from being in-season for varsity athletes and a positive in-season effect on academic performance for JV athletes. To the extent that in-season GPA increases (for JV athletes), these increases occur through improved performance in math and science courses, while decreases in in-season GPA (for varsity athletes) occur through a decline in performance in English and history courses. Results are robust to controlling for various measures of course ease across semesters. The third essay, with Kevin Mumford, focuses on the effects of underwater mortgages on unemployment. It has been frequently claimed that the high unemployment rates during the 2007-2009 U.S. recession and the slow decline in unemployment rates during the subsequent economic recovery are partially due to an increase in structural unemployment driven by reduced mobility caused by house lock. The claim is that underwater homeowners—those that owe more on their mortgages than their homes are worth—are more likely to choose to stay in their home rather than move to cities where they would have been more likely to find employment. Using restricted-access data from the Panel Study of Income Dynamics, we compare the mobility and employment of homeowners with mortgages that go underwater to similar homeowners that do not find themselves underwater during the housing bust. We find that underwater homeowners are twice as likely to move and are no more likely to experience a period of unemployment. We find no evidence to support the claim that the house lock from underwater mortgages caused an increase in structural unemployment

Degree

Ph.D.

Advisors

Mumford, Purdue University.

Subject Area

Economics|Economic theory

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