The second edition of this acclaimed graduate text provides a unified treatment of two methods used in contemporary econometric research, cross section and data panel methods. By focusing on assumptions that can be given behavioral content, the book maintains an appropriate level of rigor while emphasizing intuitive thinking. The analysis covers both linear and nonlinear models, including models with dynamics and/or individual heterogeneity. In addition to general estimation frameworks (particular methods of moments and maximum likelihood), specific linear and nonlinear methods are covered in detail, including probit and logit models and their multivariate, Tobit models, models for count data, censored and missing data schemes, causal (or treatment) effects, and duration analysis. Econometric Analysis of Cross Section and Panel Data was the first graduate econometrics text to focus on microeconomic data structures, allowing assumptions to be separated into population and sampling assumptions. This second edition has been substantially updated and revised. Improvements include a broader class of models for missing data problems; more detailed treatment of cluster problems, an important topic for empirical researchers; expanded discussion of "generalized instrumental variables" (GIV) estimation; new coverage (based on the author's own recent research) of inverse probability weighting; a more complete framework for estimating treatment effects with panel data, and a firmly established link between econometric approaches to nonlinear panel data and the "generalized estimating equation" literature popular in statistics and other fields. New attention is given to explaining when particular econometric methods can be applied; the goal is not only to tell readers what does work, but why certain "obvious" procedures do not. The numerous included exercises, both theoretical and computer-based, allow the reader to extend methods covered in the text and discover new insights.

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Econometric Analysis of Cross Section and Panel Data

A Treatise on the Family. G. S. Becker. Cambridge, MA: Harvard University Press. 1981. Gary Becker is one of the most famous and influential economists of the second half of the 20th century, a fervent contributor to and expounder of the University of Chicago free-market philosophy, and winner of the 1992 Nobel Prize in economics. Although any book with the word "treatise" in its title is clearly intended to have an impact, one coming from someone as brilliant and controversial as Becker certainly had such a lofty goal. It has received many article-length reviews in several disciplines (Ben-Porath, 1982; Bergmann, 1995; Foster, 1993; Hannan, 1982), which is one measure of its scholarly importance, and yet its impact is, I think, less than it may have initially appeared, especially for scholars with substantive interests in the family. This book is, its title notwithstanding, more about economics and the economic approach to behavior than about the family. In the first sentence of the preface, Becker writes "In this book, I develop an economic or rational choice approach to the family." Lest anyone accuse him of focusing on traditional (i.e., material) economics topics, such as family income, poverty, and labor supply, he immediately emphasizes that those topics are not his focus. "My intent is more ambitious: to analyze marriage, births, divorce, division of labor in households, prestige, and other non-material behavior with the tools and framework developed for material behavior." Indeed, the book includes chapters on many of these issues. One chapter examines the principles of the efficient division of labor in households, three analyze marriage and divorce, three analyze various child-related issues (fertility and intergenerational mobility), and others focus on broader family issues, such as intrafamily resource allocation. His analysis is not, he believes, constrained by time or place. His intention is "to present a comprehensive analysis that is applicable, at least in part, to families in the past as well as the present, in primitive as well as modern societies, and in Eastern as well as Western cultures." His tone is profoundly conservative and utterly skeptical of any constructive role for government programs. There is a clear sense of how much better things were in the old days of a genderbased division of labor and low market-work rates for married women. Indeed, Becker is ready and able to show in Chapter 2 that such a state of affairs was efficient and induced not by market or societal discrimination (although he allows that it might exist) but by small underlying household productivity differences that arise primarily from what he refers to as "complementarities" between caring for young children while carrying another to term. Most family scholars would probably find that an unconvincingly simple explanation for a profound and complex phenomenon. What, then, is the salient contribution of Treatise on the Family? It is not literally the idea that economics could be applied to the nonmarket sector and to family life because Becker had already established that with considerable success and influence. At its core, microeconomics is simple, characterized by a belief in the importance of prices and markets, the role of self-interested or rational behavior, and, somewhat less centrally, the stability of preferences. It was Becker's singular and invaluable contribution to appreciate that the behaviors potentially amenable to the economic approach were not limited to phenomenon with explicit monetary prices and formal markets. Indeed, during the late 1950s and throughout the 1960s, he did undeniably important and pioneering work extending the domain of economics to such topics as labor market discrimination, fertility, crime, human capital, household production, and the allocation of time. Nor is Becker's contribution the detailed analyses themselves. Many of them are, frankly, odd, idiosyncratic, and off-putting. …

A Treatise on the Family

We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.

Evolution and Rationality Some Recent Game-Theoretic Results. Identification and Estimation of Local Average Treatment Effects

We use administrative records on the incomes of more than 40 million children and their parents to describe three features of intergenerational mobility in the United States. First, we characterize the joint distribution of parent and child income at the national level. The conditional expectation of child income given parent income is linear in percentile ranks. On average, a 10 percentile increase in parent income is associated with a 3.4 percentile increase in a child’s income. Second, intergenerational mobility varies substantially across areas within the U.S. For example, the probability that a child reaches the top quintile of the national income distribution starting from a family in the bottom quintile is 4.4% in Charlotte but 12.9% in San Jose. Third, we explore the factors correlated with upward mobility. High mobility areas have (1) less residential segregation, (2) less income inequality, (3) better primary schools, (4) greater social capital, and (5) greater family stability. While our descriptive analysis does not identify the causal mechanisms that determine upward mobility, the publicly available statistics on intergenerational mobility developed here can facilitate research on such mechanisms. The opinions expressed in this paper are those of the authors alone and do not necessarily reect

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Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States*

Between 1973 and 1978, the Indonesian Government constructed over 61,000 primary schools throughout the country. This is one of the largest school construction programs on record. I evaluate the effect of this program on education and wages by combining differences across regions in the number of schools constructed with differences across cohorts induced by the timing of the program. The estimates suggest that the construction of primary schools led to an increase in education and earnings. Children aged 2 to 6 in 1974 received 0.12 to 0.19 more years of education for each school constructed per 1,000 children in their region of birth. Using the variations in schooling generated by this policy as instrumental variables for the impact of education on wages generates estimates of economic returns to education ranging from 6.8 percent to 10.6 percent.

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Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment

This paper uses layoffs and business closings to identify the effect of a permanent parental income shock on children’s long-run socioeconomic outcomes. We find that estimates of the intergenerational effects of parental job loss are sensitive to our definition of job displacement. Focusing on measures of displacement that are most likely to be exogenous, we find no evidence of intergenerational effects of job loss on the average child. In contrast, among disadvantaged children (defined by family income or race), we find evidence of negative effects of parental displacement on income, earnings, and completed education. ∗This research was funded by the Annie E. Casey Foundation. We thank them for their support but acknowledge that the findings and conclusions presented in this report are those of the authors alone, and do not necessarily reflect the opinions of the Foundation. Email: mepage@ucdavis.edu, annstevens@ucdavis,edu, jlindo@ucdavis.edu.

Parental Income Shocks and Outcomes of Disadvantaged Youth in the United States

A growing literature documents cyclical movements in mortality and health We examine this pattern more closely and attempt to identify the mechanisms behind it Specifically, we distinguish between mechanisms that rely on fluctuations in own employment or time use and those involving factors that are external to the individual Our investigation suggests that changes in individuals' own behavior contribute very little to pro-cyclical mortality Looking across broad age and gender groups, we find that own-group employment rates are not systematically related to own-group mortality In addition, we find that most of the additional deaths that occur during times of economic growth are among the elderly, particularly elderly women, who have limited labor force attachment Focusing on mortality among the elderly, we show that cyclicality is especially strong for deaths occurring in nursing homes, and is stronger in states where a higher fraction of the elderly reside in nursing homes We also demonstrate that staffing in skilled nursing facilities moves counter-cyclically Taken together, these findings suggest that cyclical fluctuations in the mortality rate may be largely driven by fluctuations in the quality of health care

The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality

Minimum legal drinking age (MLDA) laws are known to reduce alcohol consumption among young adults. One additional benefit of higher MLDAs may be that they improve health outcomes among infants born to young mothers. We estimate the impact of MLDAs on infant health in the USA by comparing birth outcomes among 14-20 year old mothers who were exposed to different MLDAs because of when and where they gave birth. Infants born to mothers who were between the ages of 21 and 24 years are included as a control group. We find that low MLDAs are associated with very small birth weight reductions, but have a little relationship with other traditional measures of infant health. We find compelling evidence, however, that a low MLDA increases the probability of a female birth, which suggests that restricting alcohol access to young mothers may reduce fetal deaths.

A pint for a pound? Minimum drinking age laws and birth outcomes.

Estimating the distributional effects of education reforms: A look at Project STAR

We examine multi-generational impacts of positive in utero health interventions using a new research design that exploits sharp increases in prenatal Medicaid eligibility that occurred in some states. Our analyses are based on U.S. Vital Statistics Natality files, which enables linkages between individuals' early life Medicaid exposure and the next generation's health at birth. We find robust evidence that the health benefits associated with treated generations' early life program exposure extend to later offspring. Our results suggest that the returns on early life health investments may be substantively underestimated.

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Marianne Page

Papers

Parental Income Shocks and Outcomes of Disadvantaged Youth in the United States

The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality

A pint for a pound? Minimum drinking age laws and birth outcomes.

Estimating the distributional effects of education reforms: A look at Project STAR

Multi-generational Impacts of Childhood Access to the Safety Net: Early Life Exposure to Medicaid and the Next Generation’s Health