Essays in Applied Microeconometrics

Abstract

This dissertation contains three essays applying microeconometric methods to unique panel datasets to answer economically-motivated research questions at the individual or firm level. The first essay uses microeconometric methods to analyze firm-level data on patenting. The second and third essays use anonymized individual-level credit bureau data to investigate the effects of a national health care policy on financial well-being and borrowing behavior. The first chapter examines the effect of being the target of patent litigation on the efficiency of patenting-intense firms' knowledge production. To test the hypothesis, I construct a new, unique data set by linking firm-level patent, financial, and patent litigation data for any firm with more than 1000 lifetime U.S. patents from 2000-2010. Estimating a dynamic count data model via generalized method of moments (GMM), I find that a 1% increase in patent litigation leads to a small, but statistically significant 0.214% decrease in patent production for small firms relative to large firms. The second chapter analyzes if the passage of the Affordable Care Act's (ACA) dependent coverage mandate in 2010 reduced financial distress for young adults. To test if increased health insurance coverage leads to improvements in financial well-being, I use a large, nationally representative database of anonymized consumer credit report information from the years 2009-2013. I employ a difference-in-differences research design to examine financial outcomes for young adults that were born in 1982-1983 and 1985-1986, with the latter cohort serving as a treatment group. I find that the mandate reduced debt in third-party collections by 3% and bankruptcies by 1.2 per 1000 people for young adults covered by the mandate. These effects are stronger in counties that experienced higher rates of uninsurance and states that experienced higher rates of unemployment at the time the mandate was passed. The estimates also show that these reductions are transitory, as they diminish after an individual ages out of the mandate at age 26. These results are consistent with other recent research showing that the implications of health care policy extend beyond measures of physical health. The third chapter, using similar data and empirical methodology employed by the second chapter, examines the effect of providing health insurance on consumption and borrowing choices of young adults. Using the ACA's 2010 dependent coverage mandate as an exogenous change in medical expenditure risk for those young adults gaining health insurance coverage, empirical estimates show that individuals affected by the mandate increased their use of credit cards, auto loans, and student loans, while also maintaining higher balances on these loans. Coefficient estimates also show that lenders provided affected individuals with higher credit limits and larger loans. These findings suggest that a reduction in medical expenditure risk due to insurance coverage may allow young adults to expand their consumption and borrowing and accept additional financial risks.