Essays in Applied Microeconomics

My thesis includes three chapters in applied microeconomics. Chapter 1 provides evidence on the multigenerational impacts of educational expansion in Vietnam. The expansion raises schooling years and educational levels, literacy, non-agricultural economic activity, earnings as well as the intergenerational educational mobility while it improves marriage rates and fertility at an extensive margin, but reduces fertility at the intensive margin for the directly affected generation. It also improves human capital investments for the children of the directly affected generation and the general health of the parents of the directly affected generation. Chapter 2 examines the causal effect of cultural heritage on modern-day educational success focusing on Confucian culture in Vietnam. The results show robust positive effects of longer historical exposure to Confucian culture on schooling years and degree achievements for adults as well as school enrollment and standardised test scores for children. These effects are found to work through increases in a positive preference and towards schooling and a belief about the importance of obtaining high education as well as increased educational investments. Chapter 3 explores the effect of a welfare reform on mental health by estimating the effect of entering unemployment and claiming Universal Credit (UC) on mental health in the United Kingdom. The results show that the welfare reform under the UC system exaggerates mental health problems of unemployed individuals. The mediation analysis reveals that the indirect effects via changes in two mediators including a cut in income and a reduction in the number of benefits claimed contribute to about 15% of the total treatment effect. These findings suggest that the costs of a welfare reform are underestimated if the mental health costs are not taken into account.