Katy Bergstrom
Job Market Candidate

Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305
650-804-5281
katyberg@stanford.edu

Curriculum Vitae

Fields:
Primary: Development Economics
Secondary: Public Economics
Expected Graduation Date:
June, 2019

Advisors:
Pascaline Dupas (Primary):
pdupas@stanford.edu
Raj Chetty:
chetty@fas.harvard.edu
Melanie Morten:
memorten@stanford.edu
Petra Persson:
perssonp@stanford.edu

Job Market Paper

The Targeting Benefit of Conditional Cash Transfers
(with William Dodds)

Conditional cash transfers (CCTs) are a popular type of social welfare program that make payments to households conditional on human capital investments in children. Compared to unconditional cash transfers (UCTs), CCTs may exclude the poorest households, as access is tied to the consumption of normal goods. However, we argue that conditionalities based on children's schooling may actually improve the targeting of transfers to low consumption households. Sending a child to school can result in a discrete loss of child income, so that schooling is negatively correlated with household consumption. Thus, schooling decisions may act as a useful "tag" for cash transfers. The size of the targeting benefit is directly related to two elasticities already popular in the literature: the income effect of a UCT and the price effect of a CCT. We estimate these elasticities for a large CCT program in rural Mexico, Progresa, using variation in transfers to younger siblings to identify income effects. We find that the targeting benefit is almost as large as the cost of excluding some low income households; this implies that if the only benefit of imposing conditions is improved targeting, 55% of the Progresa budget should go to a CCT over a UCT.

Working Papers

Sources of Income Inequality: Productivities vs. Preferences
(with William Dodds)

This paper develops a new method to understand how much of income inequality is due to differences in productivities as opposed to differences in preferences for consumption relative to leisure. In our theoretical framework, individuals have heterogeneous productivities and preferences for consumption relative to leisure. Individuals make partially observable labor supply decisions conditional on their primitives (productivities and preferences); individual optimization problems define a mapping between primitives and labor supply decisions. We show that we can invert this mapping, recovering primitives from observables. Crucially, we express this inverse mapping entirely in terms of observable reduced form elasticities with respect to the tax rate. We then implement our method empirically in the context of the U.S., showing how the relevant empirical parameters change our inferences about the sources of income inequality. Higher income effects and larger differences between the elasticity of income and hours worked with respect to the tax rate imply that preferences play a more important role in driving income inequality. Finally, we show via simulation that once we account for both productivity and preference heterogeneity, that larger income effects and larger differences between the income and hours worked elasticities imply lower optimal tax rates relative to a Mirrleesian benchmark in which all income heterogeneity is due to productivity differences.

Intrahousehold Investment Decisions and Child Mortality: Explaining the First Child Preference in India
(with William Dodds)

Jayachandran and Pande (2017) discovered the existence of a strong first child bias in India, suggesting that a preference for eldest sons is responsible for this birth-order-gradient. We explore whether this phenomenon could arise as a rational investment decision from the parentsí perspective. We develop a model to show that if parents are faced with significant child mortality risk and plan to rely on their children for support in old age, parents will invest more in the first child relative to their second. Our model predicts a negative relationship between investment differentials across the first- and second-born children and the infant survival rate, as well as a positive relationship between investment differentials and the early-childhood survival rate. Using data on the heights of Indian children from demographic health surveys, we find evidence that both predictions hold in the data.

Publications

Does Selling State Silver Generate Private Gold? Neighbourhood Impacts of State House Sales
(with Arthur Grimes and Steven Stillman) Urban Studies (2014)

Work in Progress

Does the Order of Targeting Matter?

Developing countries make extensive use of targeting procedures to identify those most in need of receiving social programs. Moreover, it is standard for transfer programs to use multiple targeting procedures in conjunction with one another. This paper focuses on the optimal order in which we should use two general targeting procedures: (1) self-selection, targeting procedures in which the applicant incurs a cost, and (2) screening, targeting procedures in which the government incurs a cost. We show that Type I errors are smaller when using a screening procedure first, while Type II errors are larger. As a result, the order in which we should apply these procedures will depend on the objective function. We show that under an income maintenance objective (in which the government aims to maximize the number of poor households receiving a minimum benefit), for large enough budgets it is always optimal to use a screening procedure first. Conversely, under a transfer expenditure objective (in which the government aims to maximize the total amount of money going to poor households), it is optimal to use a self-selection procedure first.