Incentives at Work: Shaping Individual Behaviors and Institutional Outcomes in Public Policy

This dissertation examines how incentives shape behavior and institutional outcomes across three distinct domains of American public policy. Through rigorous empirical analysis using quasi-experimental methods, the essays explore unemployment insurance (UI) income disregards, federal UI trust fund lending constraints, and local cannabis regulation in California. The first essay finds that increasing UI income disregards—the amount beneficiaries can earn before benefits phase out—improves rather than weakens trust fund solvency. This occurs as the "stepping stone" effect of facilitating transitions to full employment through part-time work outweighs any expansion in total claims. The second essay evaluates how states strategically responded to stricter federal criteria for accessing interest-free UI loans implemented in 2010. While the reform succeeded in improving overall trust fund solvency, states starting furthest below federal benchmarks disproportionately achieved compliance through benefit restrictions rather than revenue expansion, potentially undermining long-term program stability. The third essay investigates the adoption of retail cannabis ordinances by California cities following state legalization in 2016. Counter to expectations about tax revenue incentives driving adoption, cities with the greatest potential to capture tax revenue from external markets were no more likely to allow cannabis sales. Instead, regional networks appeared to strongly predicted adoption, with cities significantly more likely to adopt when a higher proportion of peers in their League of California Cities division had already done so. Together, these findings demonstrate that while fiscal incentives can effectively shape behavior, their impact is mediated by political constraints, institutional structures, and networks. The dissertation contributes to scholarly understanding of fiscal federalism while offering practical insights for designing incentive-based policies across different levels of government.