Externalities of Public Policy

This dissertation focuses on the externalities of public policy, with a special focus on illegal activity.;Chapter 1 evaluates the potential for negative externalities from public housing by examining crime rates before and after the demolition of public housing projects in Chicago between 1995 and 2010. Using new data on block-level crimes by type of crime merged to detailed geographic data on individual public housing demolitions, I find evidence that Chicago's public housing imposed significant externalities on the surrounding neighborhood. Using a difference in difference approach comparing neighborhoods around public housing projects to nearby neighborhoods, I find that crime decreased by 8% after a demolition. This decrease was concentrated in violent crime and persisted for at least 5 years after the demolition.;Chapter 2 develops further an empirical method used in Chapter 1, event study methods for use in multiple event settings. Event study is a powerful tool for analyzing the dynamic effects of policy and other shocks in microeconomics. However, there is little understanding of how to apply this method when individuals or locations experience multiple events in close succession. We explore methods of estimating a multiple event study with Monte Carlo simulations. Allowing multiple event-time dummies to be turned on at once generally produces unbiased estimates, while ignoring subsequent events or duplicating observations to have one observation per individual-event-time create spurious trends in the outcome variable before and after an event. We present empirical applications which show that the choice of method can make important differences in practice.;The third chapter examines the understudied, but growing population of female criminals. Although there is a growing body of economics literature on crime, little research focuses specifically on female offenders. We examine patterns of offending over time and the types of crimes committed separately by gender. While male crime has decreased over time, we find that female crime displays a steady upward trend. To explain this pattern and how it relates to the concurrent increases in female wages and labor force participation, we propose a theoretical model emphasizing changes in the marginal value of leisure over time. Interestingly, we also observe, that the detrended time series variation in female crime shows a similar pattern to detrended male crime rates. This implies that the elements determining the short-term fluctuations in crime rates for men and women may be similar. To investigate this hypothesis, we estimate the relationship between local economic conditions and crime rates separately for men and women.