Farmer School of Business lobby

Senior Theses 2013

Xin Chen (Adviser: Prof. Charles Moul)

“What Causes Unbalanced Growth? Baumol’s Costs Disease vs. Wealth Effects”

Abstract: “Baumol's Cost Disease” has been well known and intensively discussed since Baumol and Bowen proposed it in 1966. It predicts that costs in service sectors rise compared to manufacturing sectors due to their wages increasing in excess of productivity growth. While an appealing theory, relatively few empirical tests have been conducted of it with respect to labor costs in health care and education. In this paper, I use panel data from health care and education sectors from the U.S. Bureau of Labor Statistics and the International Labor Organization to test a core Baumol assumption. Furthermore, I use U.S. teachers per thousand students and adjusted annual occupational total annual working hours in the U.S. health care sector to study the equilibrium quantity of stagnant sectors in order to determine if there is an alternative explanation of the rising service costs. The results show robust evidence in favor of Baumol's assumption and his explanation of rising costs in service sector.

Benjamin Heebsh (Adviser: Prof. John Bowblis)

“Collateral Damage: Effects of Parents’ Unemployment on Children’s Well-Being in the United States”

Abstract: Unemployment’s effects on well-being have been studied extensively by economists. Utilizing United States data from the Panel Study of Income Dynamics and Child Development Supplement on parents and children ages 12-17, I examine the effects of parents’ unemployment on their children’s subjective well-being. I find parents’ unemployment is likely negatively related to their children’s well-being, but the model used does not produce statistically significant results, most likely due to small sample size. In addition, I find having a parent permanently disabled decreases children’s well-being.

Kaitlin Patzek (Adviser: Prof. Jing Li)

“Marriage and the Great Recession”

Abstract: The 2007-2009 Great Recession represented major economic hardship for many U.S. businesses and families. This paper examines the relationship and possible effects of the unemployment rate, a key measure of economic health, on the frequency of marriages and divorces during the Great Recession. Previous literature reports that significant economic impacts correlate with marriage and divorce rates in the same direction; a good economy is associated with an increase in marriage and divorce frequency. However, more mild recessions and normal business cycles are not associated with significant impacts on marriage and divorce. To determine the Great Recession’s significance, the unemployment rate combined with recently reported marriage and divorce figures were examined to assess this relationship and possible effects. As expected, the Great Recession negatively affected the frequency of new marriages and divorces. There is an exception where the Great Recession had a relatively mild impact. In certain areas, the effect of the Great Recession on marriage and divorce is strikingly similar.

Adam Walker (Adviser: Prof. Melissa Thomasson)

“(General) Practice Makes Perfect: Identifying the Key Drivers of Medical Specialization”

Abstract: This paper analyzes drivers of medical specialization by utilizing historical data from the early 1900’s. Probit regressions are used to test a variety of specialty choice theories, including the influence of competition, urbanization, and medical school quality on physician career decisions. Increased area competition between physicians is found to have a positive effect on the likelihood of specialization. Higher quality medical education is associated with a small rise in specialty careers, while the degree of urbanization in a practice area is found to have little significant effect on physician job choices.