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Abstract

Economists often evaluate public policies by measuring the effects of those policies on participants' wage income. I use two historical settings to argue that this focus on wage income biases estimates of the returns to education, the returns to local investment, and the measurement of inequality. I investigate a rich set of non-wage outcomes that are available in historical decennial Census data, and I show that by augmenting standard economic and econometric analyses with these new outcomes, economists and policymakers can develop a more complete understanding of long-run trends in inequality and the causal effects of public policies on children. In the first chapter of my dissertation, I measure the causal effects of public libraries on children. Between 1890 and 1921, Andrew Carnegie funded the construction of 1,618 public libraries in cities and towns across the United States. I link these library construction grants to census data and measure the effect of childhood public library access on adult outcomes. Library construction grants increased children's educational attainment by 0.10 years, did not affect wage income, and increased non-wage income by 4%. These income effects are driven by occupational choice. Access to a public library caused children to shift away from occupations like manual labor, factory-work, and mining into safer and more prestigious occupations like farm-ownership, clerical, and technical jobs. I show that compulsory schooling laws had parallel effects on children, increasing educational attainment, non-wage income and occupational prestige without affecting wage income. Economists often rely solely on wage income to measure the returns to education. But public libraries and compulsory schooling laws in the early 1900s increased educational attainment and had positive effects on children's adult labor market outcomes without affecting wage income. In the second chapter of my dissertation, I embed income and mortality in a unified measure of black-white inequality. In the 1940 census, white males earned twice as much as black males. But white males born in 1900 had lifetime earnings 3.4 times as large as black males born in 1900. The black-white lifetime earnings gap is so much larger than the cross-sectional earnings gap because of the large black-white gap in life expectancy. 48% of black males born in 1900 died before the age of 30 as compared to just 26% of white males. Economists often use cross-sectional earnings gaps to measure inequality between groups, but a more complete measure of inequality combines income profiles and mortality risk. I develop a model of optimal consumption in a world with mortality and I calibrate the model separately for each cohort of black and white males born between 1900 and 1970. Using this model, I find that the black-white welfare gap shrank by 48% from the 1900 to the 1920 birth cohorts as black and white mortality rates converged, but the black-white welfare gap declined only modestly from the 1920 to 1970 birth cohorts.

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