Abstract: This paper exploits the ban on bilingual education in California arising from a voter referendum in 1998 to identify the causal impact of exposure to bilingual education on the social and labor market outcomes of young adults. I use a triple-differences strategy, in which I compare the outcomes of foreign-born Hispanics to US-born Hispanics who attended elementary school before and after the policy change in California, and address the potential issue of differential cohort trend between foreign-born and US-born using Hispanics from Texas. Using data from the 2005-2015 American Community Survey on Hispanics aged 18-23, I find that banning bilingual education decreases the likelihood of being married and of having a child for women. Investigating two potential mechanisms for these effects, language skills and education, these findings are consistent with bilingual education playing a role in shaping cultural preferences; women who are less exposed to bilingual education are shedding traditional gender norms about work, marriage and fertility and adopting US norms more rapidly.
The Effects of Marginal Tax Rate on Self-employment Entry
Abstract: This paper investigates the effects of marginal tax rates on decision to become self-employed. An individual’s marginal tax rate is a function of family income, but income and employment are jointly determined, and moreover even lagged income could reflect unobserved individual characteristics that are correlated with both marginal tax rate and employment. I address the endogeneity of marginal tax rates by using an instrumental variables strategy. Specifically, I use panel data from The Panel Study of Income Dynamics (PSID) and construct simulated tax rates from TAXSIM model along the lines of Powell and Shan (2011) as instruments. I find that while the marginal tax rate does not have a significant effect on self-employment entry on average, there is heterogeneity in effect by gender. An increase in the marginal tax rate significantly increases the likelihood that women enter self-employment, and this appears largely driven by women who help salaried jobs in the service sector.