The Benjamin H. Griswold III, Class of 1933, Center for Economic Policy Studies funds policy-related research projects within Princeton’s Department of Economics. During the academic year, the Griswold Center for Economic Policy Studies (GCEPS) supports the economics policy-related research of several graduate students. Furthermore, these students are named as Graduate Student Fellows of the Center and receive invitations to all of our member events.
Rachel Anderson studies the impact of energy market design on the economic efficiency of subsidies for utility-scale solar photovoltaics (PV) in the United States. Between 2008 and 2019, United States solar photovoltaic (PV) electricity generating capacity grew from less than one gigawatt to over 58 gigawatts, contributing over 2 percent of the total electricity generation. This growth was supported by uniform federal subsidies; however, differences in regional solar adoption rates that are uncorrelated with a location’s solar electricity potential, emphasize the importance of state policies supporting in-state solar energy development. Furthermore, differences in the timing of solar PV adoption between competitive and regulated electricity markets suggest that the efficiency of federal renewable energy tax credits depends upon a state’s electricity market structure. Together, these findings suggest that cost-effective renewable energy policies should combine subsidies with regulatory policies to reduce investment risk.
Francisco Cabezon studies the optimal design of pension systems. In his work “On the Generosity and Funding of Old Age Social Security,” Cabezon borrows pension models from the optimal tax literature to identify key behavioral responses that define the social welfare implications of a pension system reform. In particular, Cabezon identifies three key elasticities that are relevant for a pension system funded through labor income. Cabezon then uses Chilean administrative data, policy variation, and exposure to market returns of pension savings during the 2008 financial crisis to estimate these behavioral responses. In addition to these elasticities, Cabezon uses “Life-cycle income dynamics” techniques to assess the inequality on life-cycle earnings and surveys to measure social preferences for redistribution. Finally, with all these components, Cabezon makes statements about an optimal pension system.
Kwok-Hao Lee explores how public housing can be allocated more efficiently and equitably, comparing market design interventions to subsidies and changing the mix of apartments available. “Market design, subsidies and supply composition: Interventions for efficient and equitable public housing” (with co-authors Andrew Ferdowsian and Luther Yap) utilizes tools from Urban Economics and Industrial Organization to formulate a dynamic choice model over housing lotteries. After estimating their model on novel public housing data from the Singaporean mechanism, they simulate wait times for households applying for apartments under various counterfactual mechanisms. They find that, to lower wait times for the poor, market design interventions can be effective. However, match rates for the poor are highest when they receive more direct subsidies, even if these subsidies are funded by raising prices on larger apartments. Finally, if the public housing authority can neither screen households by income nor disburse subsidies, adjusting the housing mix may be the only option to reduce wait times and raise match rates for the poor.
Daniel Morrison examines whether ﬁrms beneﬁt from donating to US political campaigns in his paper: “Disentangling the Motivations for Campaign Contributions: Corruption or Policy Alignment.” Firms that contributed to a member of Congress experienced negative returns following scandals that led to the connected politician’s resignation. This eﬀect was present for politicians representing swing districts, where scandals are more likely to lead to changes in party representation, but not in safe districts. Additionally, the eﬀect increases in the degree of policy alignment between ﬁrm and politician. Finally, non-connected ﬁrms that share policy goals with the connected ﬁrm experienced similar return shocks following the scandal. Together, this evidence suggests that campaign contributions do not foster favoritism, but instead reﬂect that ﬁrms endogenously contribute to candidates whose political viewpoints match their own.
Thomas Kroen studies banking and capital market regulation as well as macro-finance. In his paper, “Payout Restrictions and Bank Risk-Shifting,” he studies the effects of limiting bank dividends and share buybacks during the 2020 Covid crisis. He finds that bank debt holders benefit from these policies whereas equity values fall, suggesting that limiting payouts shifts risk from debt holders onto shareholders. Moreover, restricting payouts to shareholders influences risk-taking decisions within banks. When the restrictions are lifted, banks grow their risky lending substantially more than their safe lending. Finally, he shows that payout restrictions reduce the likelihood of banks needing to be bailed out by the public sector and quantifies the expected savings for the US. In further work, he studies the effects of liberalizing share buybacks and the macroeconomic consequences of the low interest rate environment.
Victoria Larsen’s research focuses on the impact of substance abuse treatment on health outcomes in the United States. Her current project links data on treatment facilities to health insurance claims, analyzing the eﬀect of types of treatment on future health outcomes, such as relapse and overdose. She is particularly interested in the impact of Medication-Assisted Treatment (MAT) which is used to treat opioid-use disorders. MAT has become substantially more available due to changes in regulation throughout the United States in the past decade, with 45% of facilities oﬀering some MAT in 2019 compared to 22% in 2010. This project also considers related questions, such as what factors are important when a patient is choosing which type of treatment to get, such as prices and distance to facilities.
Christopher Mills’ research focuses on the economic analysis of child welfare, and he is passionate about using linked administrative data to study the causal effects of child welfare interventions on child and family wellbeing. His research interests include human capital formation in foster care, foster parent labor supply, and expert decision-making. In “Safe from Harm? Peer Effects and Criminal Capital Formation in Foster Care” (with co-author Sarah Font), Mills leverages machine learning techniques and exogenous variation in foster care peers to study how peer composition affects children’s future criminality and risky behaviors, finding that peer influence is not a significant determinant of youth outcomes. In “More Money, Fewer Problems? The Effect of Foster Care Payments on Children’s Placement, Health Care Utilization, and Quality of Care” (with co-author Anna Chorniy), Mills shows that raising payments to foster families has surprisingly negligible effects on foster parent labor supply and child wellbeing, suggesting that foster care payments are not a cost-effective tool for improving children’s living conditions. Mills is currently evaluating the potential for algorithmic tools to improve the efficiency and equity of child welfare decisions.
Yinuo Zhang studies inequality in developed economies, and how the increasing earning inequality in the upper tail could have contributed to the wage and employment gain in the lower tail of the earning inequality distribution. Her mechanism hinges on two key empirical facts: Market-produced home production services are provided more efficiently than performing similar services at home; and high-earning individuals naturally face higher opportunity costs for doing home production. As a result, consumption spillovers from the upper percentile of the earning distribution are particularly in favor of the home service occupations which have relatively low requirements of general education levels. Zhang examines the effect of online service-providing platforms on earning inequality at the lower distribution. Her goal is to estimate how online platforms could provide more job opportunities for low-skilled individuals in urban areas and develop policy insights on whether the government should lift more regulation restrictions on the operation of online platforms..