Dissertation

Essays on Household Finance

Hampole, Menaka

2023

Overview

Chapter 1 investigates asks the question how do financial frictions affect the type of human capital investments that students make in college? To study this question, I build a novel dataset covering more than 700,000 U.S. students, merging commencement records with address histories, credit bureau records, and professional resumes. I document that students trade off initial earnings against lifetime earnings when choosing college majors and that students from low-income families are more likely to choose majors associated with higher initial earnings but lower lifetime earnings. I provide causal estimates of how student debt affects this trade-off using the staggered implementation of universal no-loan policies across 22 universities from2001 to 2019. I find that students who are required to take on more student loans to finance their education choose majors with higher initial earnings but lower lifetime earnings. Furthermore, student debt affects students differentially depending on their family backgrounds: Students from low-income families display greater sensitivity to changes in student debt. Finally, I show that differences in student debt amounts lead to different job profiles and earnings later in life. Combined, these findings highlight the role of financial frictions in human capital investments and subsequent labor market trajectories. Chapter 2 asks what role do social connections play in women's career advancement. Women continue to be underrepresented in corporate leadership positions. We investigate whether access to a larger share of female peers in business school affects the gender gap in senior managerial positions. Merging administrative data from a top-10 US business school with public LinkedIn profiles, we first document that female MBAs are 24 percent less likely than male MBAs to enter senior management within 15 years of graduation. Next, we use the exogenous assignment of students into sections to show that a larger proportion of female MBA section peers increases the likelihood of entering senior management for women but not for men. This effect is driven by female-friendly firms, such as those with more generous maternity leave policies and greater work schedule flexibility. A larger proportion of female MBA peers induces women to transition to these firms where they attain senior management roles. We find suggestive evidence that some of the mechanisms behind these results include job referrals and gender-specific information transmission. These findings highlight the role of social connections in reducing the gender gap in senior management positions. Chapter 3 asks how should regulators evaluate the costs and benefits when firms require consumers to provide additional data? Using a model of asymmetric information in non-Walrasian markets, we show that consumer surplus can increase, even when more data leads to higher average prices. We test the model's predictions in mortgage markets using the staggered implementation of Automated Underwriting Systems in the 1990s, where new credit risk models increased the use of and interaction between additional financial variables. We find that average interest rates went up in line with the model's predictions. However, the effects are driven by increased credit supply on the extensive margin, benefiting marginal borrowers from groups historically excluded from credit markets. Our results challenge the standard regulatory approach of relying on prices as a sufficient statistic for consumer surplus.

• Publisher: ProQuest Dissertations & Theses
• Subject: Economics / Education finance / Higher education
• ISBN: 9798379586416