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<p>In this dissertation, I present two essays linked by their focus on forces that
act on young people as they prepare to enter adulthood and their economically independent
life. In the first, I investigate the impact of parents' location and occupational
attributes on young adult children's labor market outcomes, particularly wages. I
exploit the genealogical structure of the Panel Study of Income Dynamics (PSID) to
measure locations, occupations and wages of young adults and their parents. I find
that college graduates who live near their parents have lower wages than those who
do not, but that wages for high school graduates are not strongly correlated with
proximity to parents. In order to determine the reasons for these patterns, I build
and estimate a model of young adults' location and occupation decisions to account
for potentially competing effects parents may have on their children's wages. Using
the model, I find evidence that young adults have strong preferences for living near
parents, a result which through compensating differentials can partially account for
the tendency to earn lower wages when near parents. However, I estimate that young
people across all levels of educational attainment place similar value on this proximity.
I also find that living near parents may directly enhance productivity and/or occupation
quality and lead to higher wages. In particular, I find that high school graduates
whose fathers are in cognitive skill-intense occupations have higher wages within
and occupation and switch into more cognitive skill-intense occupations themselves
if they live in the same labor market as their father, but that this effect is not
present for college graduates. I also find a differential selection in the earnings
potential of movers and differential impacts of the cost of occupational switching
between high school and college graduates. These differences all substantially contribute
to the differences in wage and location choice patterns between high school and college
graduates.</p><p>In the second, I present joint work with V. Joseph Hotz, Peter Arcidiacono
and Esteban Aucejo on college admissions in the University of California system. College
graduation is an important outcome for future welfare, and in this chapter we examine
possible causes for an increase in college graduations among UC students who enrolled
in 1998-2000 versus those who had enrolled in the previous three years. In between
these cohorts, Proposition 209 banned using racial preferences in admissions at California's
public colleges. We analyze unique data for all applicants and enrollees within the
University of California (UC) system before and after Prop 209. After Prop 209, graduation
rates of minorities increased by 4.4\%. We characterize conditions required for better
matching of students to campuses to account for this increase. We find that Prop
209 did improve matching and this improvement was important for the graduation gains
experienced by less-prepared students. At the same time, better matching only explains
about 20\% of the overall graduation rate increase. Changes after Prop 209 in the
selectivity of enrolled students explains 34-50\% of the increase. Finally, it appears
UC campuses responded to Prop 209 by doing more to help retain and graduate its students,
which explains between 30-46\% of the post-Prop 209 improvement in the graduation
rate of minorities.</p>
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