| dc.description.abstract | This dissertation consists of three papers that use modern microeconometric methods to estimate the causal effect of intergovernmental grant programs on local spending and policy outcomes. The first chapter explores how Clean Water Act (CWA) grant receipt affected local spending. We leverage variation in the timing of grant receipt with a difference-in-differences design to show that, on average, each dollar of CWA grant revenue caused a $0.45 increase in targeted spending. Dividing previously estimated benefit-to-cost ratios of CWA grants by this estimate suggests that each CWA grant dollar that municipalities spent on the targeted category generated an average return of $1.01. In addition to funding grants, the Act set new capital standards for all wastewater treatment facilities in the United States. We show that CWA grants caused a dollar-for-dollar increase in targeted spending up to the amount needed to cover the costs of capital upgrades newly mandated by the CWA, but after municipalities met these capital requirements, or if the capital mandate was not binding, they reduced their own contribution to targeted expenditure in response to grant receipt. Municipalities then redistributed grant money to local residents by reducing water bills. The second chapter estimates how reductions in pollution caused by CWA grants affected infant health. Comparing births up and downstream from wastewater treatment facilities, we find that CWA grants increased average birth weight by 8 grams. A back-of-the-envelope calculation bounds infant health benefits of CWA grants below $32 billion. The third chapter examines Race to the Top (RTTT), a competitive federal grant program that allocated $4.35 billion to state education agencies according to states' compliance with a number of education reform policies. I show that student achievement increased in qualifying states regardless of grant receipt. This demonstrates that competitive grants can lead to the desired policy outcome in states that do not receive grants by encouraging policy changes. These improvements were statistically larger in states that received grants, suggesting that policy changes are more effective when paired with extra funding. | |
