Three Essays in Applied Economics: (1) School Funding and Student Performance in Alabama, (2) News and Volatility of Food Prices, and (3) The Impact of NAFTA on Labor in the US

Abstract

This dissertation consists of three essays in economics on education, time series econometrics, and international economics. The first essay attempts to evaluate the impact of state funding on student performance in Alabama counties in a five-equation supply-demand framework. I also evaluate the impact of the No Child Left Behind Act (NCLB) on student performance and major school inputs, by estimating reduced-form equations using both Alabama county and US state level data. Results show that state funding, student median family income, school enrollment, and district poverty rate matter the most to student performance as measured by eighth-grade Stanford total test scores. State funding raises performance but is a strong substitute for local funding because the benefits of an increase in state funding fall more heavily on the demand side which is less elastic. With other variables controlled, there is increase in Alabama in math test score, federal funding, instructional expenditure, and the teacher-student ratio by 8.8%, 25.1%, 6.4%, and 3.3% respectively, and decrease in average teacher's salary by 4.3%, most likely attributable to the implementation of NCLB. In contrast, NCLB increased US average teacher's salary by 5.5%. The second essay examines US food markets for asymmetric news effects based on the observation that financial markets exhibit an asymmetric news effect with unexpected low prices generating more price volatility than ""news"" of high prices. Analysis of 25 years of monthly data for 45 retail food items shows that price news destabilizes about a third of the markets with unexpected price increases more destabilizing, possibly because of increased concentration in distribution and retailing and larger firms, declining farmer share of final consumer spending, or menu cost. The third essay specifies a supply and demand model of the labor market to examine the effects of NAFTA on the US labor market. Regression results suggest that NAFTA decreased yearly unemployment growth by 6.8%. Equivalently, NAFTA brought a structural break to US state level unemployment. The second finding is that the labor market began feeling the impact of NAFTA immediately after its implementation and the labor market had continued to feel its beneficial effects through 2000.