Three essays in applied labor economics

This thesis is composed of three chapters, each with its own theme and contribution to the applied microeconomics literature.;Chapter 1 is centered around a recent statistical trend. Since the mid-1990s, there has been a steady decrease in the labor force participation of married women with young children. It appears federal maternity leave mandates for mothers of infant children are most responsible for this trend. Theoretically, if a mother on maternity leave realizes her value for staying at home exceeds her value from working, she will exit the labor force once the leave expires. I estimate the effect of the Family and Medical Leave Act (FMLA) on participation by using the FMLA as a natural experiment and exploiting state-level differentiation in maternity leave statutes. Differences-in-differences estimates show that after the FMLA, an employed and expecting mother who lives in an area without state-mandated maternity leave is 11.2% more likely to leave the labor force once any leave expires. This increase accounts for one-half of the fall in labor force participation.;Turning to the economics of education, Chapter 2 is a co-authored chapter written on spillovers in the classroom. We develop a new strategy for estimating peer effects when there are multiple observations per person and the peer group varies across observations. Our iterative algorithm allows peer effects to occur through the fixed effects of peer group members. This method allows us to better measure ability, estimate unobserved effects on outcomes, and circumvent the endogeneity problem resulting from individuals' selection into peer groups based on unobservables. Monte Carlo evidence shows that our algorithm performs well even given a short panel. We apply our technique to the estimation of college grades and find statistically significant peer effects, particularly in courses of a collaborative nature.;Chapter 3 continues the peer effect theme. This paper extends the model from Chapter 2 to allow heterogeneous spillovers among different observable characteristics within a peer group. We find evidence that peer effects are indeed not homogenous across peer group members, especially when examined along gender and racial lines.