Economics

Student Honors Papers

The Student Honors Papers collection represents exemplary work in economics at Illinois Wesleyan University. The Ames Library is proud to archive these and other honors projects in Digital Commons @ IWU, the University's online archive of student, faculty and staff scholarship and creative activity.

 

The Out Migration from Illinois Cities and the Impact it has on the People Left Behind

by Evan Anderson

The state of Illinois has had one of the highest rates of outbound migration in America. This paper evaluates the impact of out-migration on the communities these people leave behind, in particular the financial hub of Chicago and the small city of Bloomington. These cities are compared to the growth city of Phoenix, whose population has exploded in this decade and is one of the most popular destinations for those migrating out of Chicago and Bloomington. Human capital theory suggests that highly educated people with high wage potential are more likely to migrate than less educated people. This paper uses the American Community Survey Census database to test the hypothesis that communities with outbound migration (Chicago and Bloomington) face increases in poverty and lower levels of educational attainment on average than the cities with inbound migration (Phoenix). This hypothesis is explored through difference-in-difference and OLS regression analysis of poverty, education, and standard of living variables.

International Migration and FDI: Can Migrant Networks Foster Investments toward Origin Countries?

by Trang Heidi Luu

With the growing trends of international migration, the literature looking at the economic impact of migrants has also expanded, focusing on both the perspectives of the host and the origin countries in regard to various aspects such as labor force growth, GDP growth, and poverty rates. In the specific literature investigating the impact of migrants on origin countries, FDI is a key factor that cannot be overlooked, as it can play an essential role in the economic development of origin countries. Studies in this area have hypothesized that migrants’ impact on FDI is positive, since the information about the origin countries that migrants can provide to potential investors outside of those countries could help reduce information asymmetries and facilitate FDI flows. Through a panel regression spanning 2000-2017, this paper estimates the above relationship, focusing on migrant networks in the US and US FDI to the migrants’ origin countries, using migration data from the American Community Surveys for 86 countries of origin. The estimation, which controls for a set of gravity specifications and FDI determinants, finds a significant migrant network effect on US FDI, which is stronger for highly educated migrants.

JEL classification: F21; F22; O11; O15

Exploring the Contributing Factors to Labor Market Assimilation Outcomes across Refugee Groups in the United States

by Hsin-Jou Lily Chang

Upon arrival in the United States, refugees suffer from a substantial disadvantage in the US labor market when compared to non-refugee immigrants and natives. However, over time, labor market assimilation occurs for refugees as their employment outcomes improve, but the degrees and rates of assimilation vary greatly among refugee groups. This paper aims to analyze why some refugee groups perform worse than others in the US labor market do when human capital differences have been accounted for. This paper has to foci; firstly, it looks at how source country-specific characteristics as measured by the source country’s GDP per capita impact the labor market performance among refugee groups. The second focus broadens the scope to identify non-human capital factors that affect wage gaps between refugees and non-refugee immigrants with similar backgrounds. Using the 2011-2015 American Community Survey data, the author conducted both descriptive statistics and Ordinary Least Squares regression analyses to compare labor market outcomes of refugees from Vietnam, Cambodia, Afghanistan, Romania, Russia and other USSR states, Laos, Iraq, and Somalia.

Upward Intergenerational Mobility of College Students: Does the Type of Institution Matters?

by Caroline Monsen

Intergenerational mobility is defined as the difference in social and economic standing between generations of the same family. Since the 2000’s, researchers have become more interested in college students and how the institutions they attend may affect their future earnings. I examine intergenerational mobility of college students based on their initial endowment coupled with the value added from each college. Do well-prepared high school students automatically enjoy higher future earnings, or does the college they attend enhance their human capital, and thus future earnings? This data set comes from the Integrated Postsecondary Education Data System (IPEDS) and Raj Chetty’s Equality of Opportunity Project, based upon data from over 30 million current and former college students. The merged data characterizes colleges with variables such as mean income of graduated students and the total instructional expenditure on each student. Such research allows intergenerational mobility to be measured by both concrete quantifiable variables and intangible variables. Findings in this research show that selectivity of an institution can majorly affect graduates’ wages. However, given a selection bias at institutions, students with qualifying SAT scores may not choose to attend the most selective schools, thus affecting future wages.

The Value of Green Certification on Single-Family Houses in the Chicagoland Area

by Raymond Bolton

In the United States, residential buildings alone account for 33% of energy consumption. Rising concerns about environmental impacts due to human consumption, as well as health concerns related to pollution have caused a higher demand for environmentally conscious houses. Homebuilders have responded by providing green certifications for houses, attesting to a building’s efficiency in various aspects, such as site design and energy and water consumption. Using Multiple Listing Services real estate data on zero- to five-year-old houses sold between 2010 and 2017 in the Chicagoland area, this study examines whether there is a price premium associated with qualifying for green certification, and whether different types of certification garner different premiums. Based on a hedonic pricing model, ordinary least squares regression suggests that a house in this dataset that qualifies for green certification has a selling price that is 9.49% higher than a comparable house without certification, which translates to a dollar amount of about $45,000.

Income Mobility Through Education in the United States

by Maxwell Leonard

This study makes use of the National Longitudinal Survey of Youth (NLSY) in order to examine the relationship between experiencing poverty as a youth and income as an adult. Human capital theory, as well as previous empirical research suggests that as standard of living as a youth increases, future income as an adult should increase as well. This paper attempts to study this effect through both direct and indirect pathways. The indirect pathway that we are interested in is education. We measure this indirect pathway by multiplying the effect on income of having a certain degree by the effect of being in poverty on the likelihood one obtains that degree. This process is done for two cohorts of NLSY survey respondents in order to examine how this relationship has changed over time. Our results show that those who grew up in poverty are less likely to achieve a higher degree. This in turn affects these impoverished youths' ability to obtain higher wages, perpetuating a cycle of poverty.

The Effect of China's One-Child Policy on Male and Female Immigrant Earnings: Does it Pay to be an Only Child?

by Stephanie McAtee

China's one-child policy is one of the most controversial population control measures implemented in modem society. While most literature focuses on the effects this policy has had on China's population size and economic growth, very little research has been dedicated to analyzing how this policy has affected wage differentials between Chinese men and women. Research suggests that the one-child policy redirected more educational resources towards Chinese daughters than in the past. Human capital theory hypothesizes that equalization in educational attainment corresponds to an equalizing in relative earnings. This paper uses data from the American Community Survey to test the hypothesis that the one-child policy advanced the relative earnings of Chinese immigrant women in the United States. A difference-indifferences methodology is used to answer two questions: first, to what extent is the one-child policy's effect on educational attainment for Chinese women reflected in the immigrant population? Second, if the one-child policy had a positive effect on the level of educational attainment for Chinese immigrant women, is this reflected in their wage-earning profile, relative to their Chinese male immigrant counterparts? The findings of this research suggest that Chinese immigrant women born after the one-child policy attain higher levels of education than those born before. The impacts of these findings are not presently reflected in the wage-earning profiles of Chinese female immigrants because of their young age. However, this provides an opportunity for future research on the positive effects of education on earnings once women born under the one-child policy have engaged in work for a more substantial amount of time.

Second-Generation Immigrants: The Effect of Parental Nativity Status on Earnings

by Karen Silverman

There has been a significant amount of debate in recent years about the economic performance of immigrants. Understanding the economic contribution of the second-generation is important in order to provide a more comprehensive picture of the total impact of immigrants in the United States. There is strong evidence to suggest that second-generation immigrants have experienced upward income mobility, and human capital theory hypothesizes that the economic performance of the second-generation will match that of their native-born counterparts. It also predicts that having one immigrant parent and one native-born parent as opposed to having two immigrant parents will lead to an earnings advantage. The purpose of this research is to determine if second generation immigrants have reached income parity with native-born individuals as a whole and on a country specific basis, and how the parental nativity status of the second generation affects those earnings. Data from the 20 I 0-20 15 IPUMS Current Population Survey allows the nativity and birthplace status of the respondents' parents to be related to their income. An analysis of those data indicates that second-generation immigrants as a whole have reached income parity with native-born individuals. Furthermore, second generation immigrants with an immigrant mother and native father experience a slight edge in their earnings over those who are native-bam and their cohorts. This pattern follows when analyzing the second-generation of Mexican immigrants, but not East Asian immigrants.

An Economic Study of the Illinois Shakespeare Festival

by Tyler Stacey

Since 1978, the Illinois Shakespeare Festival, or ISF, has been an important cultural attraction for the Bloomington-Normal community. What once started as small scale performances of classic theatre on the tennis courts of Ewing Manor has grown into a full sized venue with a full sized audience. The festival hosts over 10,000 guests and a large number of seasonal staff over the summer months: 125 were listed in their most recently available annual report (Season Report 2012). The festival also has an extensive summer camp program, community outreach, and a touring company. The Illinois Shakespeare Festival's cultural impact has been documented in media all over the world, from Chicago to England (Illinois Shakespeare Festival). However, despite their long standing reputation and significant employment, the Illinois Shakespeare Festival only covers around 25% of its million dollar budget through ticket sales (Seasonal Report 2012). The rest of the income largely comes from donations, fundraising, and university support (Seasonal Report 2012). This study contains two parts. The first, an economic impact study, will largely focus on the festival's overall impact on the surrounding community, which will be useful information to attract the donations and support which make up 75% of the budget. The second part will be a study of patronage, used to help better understand the audience and how the ISF makes that other 25% of their budget.

Intra-regional Currency Linkages and the Evolution of Exchange Rate Regime of the ASEAN Region

by Tung Nguyen

This paper investigates the intra-regional currency linkages and evolution of exchange rate regimes of the Association of South East Asian Nations (A SEAN) region. Do nations follow regimes they are classified into? Have exchange rate regimes of ASEAN nations become more flexible and less dependent on the US dollar? Are the intra-regional currency linkages strong enough for ASEAN nations to form a monetary union? Answers to these are important as the official regimes announced by ASEAN countries may not reflect their actual behaviors. Using monthly exchange rates per unit SDR and foreign exchange reserves data spanning the entire post-Bretton Woods era (1973-2014), and employing the Frankel-Wei estimation model, I find that before the Asian financial crisis period (1973-1996), ASEAN currencies were mostly defacto dollar peggers and the intra-regional currency linkages were very weak. However, post-crisis (1999-201 4) ASEAN currencies have become more flexible and the intra-regional currency linkages have increased considerably.