Publications

1. Zhou, Kit. “Choosing Sides in a Two-Sided Matching Market.” The BE Journal of Theoretical Economics 23.2 (2023): 781-807. (Link)

I model a competitive labor market in which agents of different skill levels decide whether to enter the market as a manager or as a worker. After roles are chosen, a two-sided matching market is realized and a cooperative assignment game occurs. There exists a unique rational expectations equilibrium that induces a stable many-to-one matching and wage structure. Positive assortative matching occurs if and only if the production function exhibits a condition that I call role supermodularity, which is stronger than the strict supermodularity condition commonly used in the matching literature because a high skilled agent with a role choice is only willing to enter the market as a worker if she expects that it is more profitable to cluster with only other high skilled agents than to exclusively manage. The wage structure in equilibrium is consistent with empirical evidence that the wage gap is driven both by increased within-firm positive sorting as well as between-firm segregation.

Working Papers

1. Zhou, Kit. “Performance Funding and Equity of Access to Public Universities”. Under review. (Link)

While state appropriations to public universities have historically been determined by enrollment, an alternative is to fund based on performance metrics such as degree completions (performance funding, “PF”). Advocates argue that PF incentivizes universities to decrease inefficient over-enrollment, while critics argue that PF incentivizes universities to admit fewer under-represented minority applicants, as they are less likely to graduate. I develop a framework in which a social planner and universities systematically differ in their expected returns to enrolling students and show that there exist many EF and PF rules that realign the university’s enrollment problem with the social planner’s problem. Ultimately, level of funding affects enrollment, not structure of the funding rule. I also identify conditions such that funding changes disproportionately affect under-represented minority enrollment. To assess model predictions, I estimate changes in selectivity and demographic composition of incoming first-time, full-time cohorts at public four-year universities in Ohio and Tennessee, states that switched from EF to PF in 2009 and 2010 respectively. Ohio decreased funding in the long-run, while Tennessee did not; as expected, I find evidence of increased long-run selectivity in Ohio but not in Tennessee. I also find the proportion of Black enrollment in Ohio decreased by 1.13 percentage points in the long-run, while it increased by 2.93 percentage points in Tennessee.

2. Zhou, Kit. “Crowding Out Community Colleges? The Enrollment Effects of Affiliated Campuses on Higher Education”. Under review. (Link)

Some public university systems (including the Ohio State University system and the Pennsylvania State University Commonwealth Campuses) have a “flagship campus” and a number of affiliated campuses. These affiliated campuses blend the traditional 2- and 4-year institutional missions and offer a streamlined transfer pipeline into the flagship campus. I build a general theoretical framework of college enrollment with two admissions stages (first-time and transfer) and multiple institutions (a flagship campus, community college, and potentially an affiliated campus). The model predicts that opening an affiliated campus causes community colleges to enroll less academically prepared students in first-time admissions and may cause transfer applicants from community colleges to be crowded out by less academically prepared affiliated campus applicants. Moreover, while transfer admissions strictly reduces wealth inequity in access to the flagship campus when there is no affiliated campus, opening an affiliated campus can exacerbate wealth inequity in transfer admissions. From the perspective of a social planner who considers students and institutions complements, opening an affiliated campus has ambiguous welfare effects and is never a Pareto improvement on the status quo. Finally, I show that opening an affiliated campus tends to be welfare increasing under the same circumstances that individual students prefer for an affiliated campus to be opened: when it is a closer educational substitute for the flagship campus than it is for the community college.

Works in Progress

3. The Supply-Side Determinants of Foster Care

While the U.S. federal government provides some broad national-level guidance on how foster care should be implemented, states have significant authority to decide how to run foster care systems. This creates variation in the determinants of the “supply” of foster carers. For example, it is easier for households to get licensed as a foster care household in some states than others; for another, families in different states may receive different board rates to subsidize the care of a foster child. These differences may affect the number of foster carers, quality of foster care households available, propensity for case workers to place a child in foster care, quality of matches between households and foster children, and downstream outcomes for foster children. This paper is a preliminary examination of differences in supply-side determinants of foster care and how they correlate to downstream outcomes using data from the National Child Abuse and Neglect Data System, the Adoption and Foster Care Analysis and Reporting System, and an independently created dataset on state/local requirements to become a foster care household.