Showing papers by "Institute for the Study of Labor published in 2011"
TL;DR: In this paper, the effects of the Great Recession on youth labour markets are reviewed and the authors argue that young people aged 16-24 have suffered disproportionately during the recession and there is a strong case for policy intervention to address the difficulties that the young are having in accessing employment.
Abstract: This article reviews the effects of the Great Recession on youth labour markets. We argue that young people aged 16-24 have suffered disproportionately during the recession. Using the USA and UK as case studies, we analyse youth unemployment using micro-data. We find that there is convincing evidence that the effects of unemployment when young impose costs on individuals and society well into the future. Although the effects of current policies on youth unemployment are uncertain, there is still a strong case for policy intervention to address the difficulties that the young are having in accessing employment.
631 citations
TL;DR: The authors used a large, nationally-representative sample of working-age adults to demonstrate that personality (as measured by the Big Five) is stable over a four-year period and that average personality changes are small and do not vary substantially across age groups.
Abstract: We use a large, nationally-representative sample of working-age adults to demonstrate that personality (as measured by the Big Five) is stable over a four-year period. Average personality changes are small and do not vary substantially across age groups. Intra-individual personality change is generally unrelated to experiencing adverse life events and is unlikely to be economically meaningful. Like other non-cognitive traits, personality can be modeled as a stable input into many economic decisions.
518 citations
TL;DR: A survey of the economics literature on overeducation can be found in this article, where the authors discuss measurement and estimation issues and give an overview of the main empirical findings in this literature.
Abstract: This paper surveys the economics literature on overeducation. The original motivation to study this topic were reports that the strong increase in the number of college graduates in the early 1970s in the US led to a decrease in the returns to college education. We argue that Duncan and Hoffman's augmented wage equation the workhorse model in the overeducation literature in which wages are regressed on years of overschooling, years of required schooling and years of underschooling is at best loosely related to this original motivation. We discuss measurement and estimation issues and give an overview of the main empirical findings in this literature. Finally we given an appraisal of the economic lessons learned.
410 citations
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TL;DR: This paper found that workers' reticence to hire in the preceding expansion, associated in part with a lack of confidence it would last, contributed to an employment shortfall equivalent to 40 percent of the missing employment decline in the recession.
Abstract: Germany experienced an even deeper fall in GDP in the Great Recession than the United States, with little employment loss. Employers' reticence to hire in the preceding expansion, associated in part with a lack of confidence it would last, contributed to an employment shortfall equivalent to 40 percent of the missing employment decline in the recession. Another 20 percent may be explained by wage moderation. A third important element was the widespread adoption of working time accounts, which permit employers to avoid overtime pay if hours per worker average to standard hours over a window of time. We find that this provided disincentives for employers to lay off workers in the downturn. Although the overall cuts in hours per worker were consistent with the severity of the Great Recession, reduction of working time account balances substituted for traditional government-sponsored short-time work.
365 citations
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TL;DR: In this article, the authors re-examine existing estimators for the panel data fixed effects ordered logit model, and propose a new one, and study the sampling properties of these estimators in a series of Monte Carlo simulations.
Abstract: The paper re-examines existing estimators for the panel data fixed effects ordered logit model, proposes a new one, and studies the sampling properties of these estimators in a series of Monte Carlo simulations. There are two main findings. First, we show that some of the estimators used in the literature are inconsistent, and provide reasons for the inconsistency. Second, the new estimator is never outperformed by the others, seems to be substantially more immune to small sample bias than other consistent estimators, and is easy to implement. The empirical relevance is illustrated in an application to the effect of unemployment on life satisfaction.
362 citations
TL;DR: The authors examined how individuals form these perceptions and posits that systematic biases arise from the extrapolation of information extracted from reference groups, and assessed the practical relevance of these biases by examining their impact on attitudes towards redistributive policies.
Abstract: Individual perceptions of income distribution play a vital role in political economy and public finance models, yet there is little evidence regarding their origins or accuracy. This study examines how individuals form these perceptions and posits that systematic biases arise from the extrapolation of information extracted from reference groups. A tailored household survey provides original evidence on the significant biases in individuals’ evaluations of their own relative position in the distribution. Furthermore, the data supports the hypothesis that the selection process into the reference groups is the source of those biases. Finally, this study also assesses the practical relevance of these biases by examining their impact on attitudes towards redistributive policies. An experimental design incorporated into the survey provides consistent information on the own ranking within the income distribution to a randomly selected group of respondents. Confronting agents’ biased perceptions with this information has a significant effect on their stated preferences for redistribution. Those who had overestimated their relative position and thought of themselves relatively richer than they were demand higher levels of redistribution when informed of their true ranking. This relationship between biased perceptions and political attitudes provides an alternative explanation for the relatively low degree of redistribution observed in modern democracies.
318 citations
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TL;DR: In this article, the authors examine the causes and consequences of differences in labor market outcomes across local labor markets within a country, where workers and firms are free to move across localities and local prices adjust to maintain the spatial equilibrium.
Abstract: I examine the causes and the consequences of differences in labor market outcomes across local labor markets within a country. The focus is on a long-run general equilibrium setting, where workers and firms are free to move across localities and local prices adjust to maintain the spatial equilibrium. In particular, I develop a tractable general equilibrium framework of local labor markets with heterogenous labor. This framework is useful in thinking about differences in labor market outcomes of different skill groups across locations. It clarifies how, in spatial equilibrium, localized shocks to a part of the labor market propagate to the rest of the economy through changes in employment, wages and local prices and how this diffusion affects workers’ welfare. Using this framework, I address three related questions. First, I analyze the welfare consequences of productivity differences across local labor markets. I seek to understand what happens to the wage, employment and utility of workers with different skill levels when a local economy experiences a shift in the productivity of a group of workers. Second, I analyze the causes of productivity differences across local labor markets. To a large extent, productivity differences within a country are unlikely to be exogenous. I review the theoretical and empirical literature on agglomeration economies, with a particular focus on studies that are relevant for labor economists. Finally, I discuss the implications for policy.
281 citations
TL;DR: In this article, the causal effect of life expectancy on income per capita growth is investigated and it is shown that the effect is non-monotonic, negative (but often insignificant) before the onset of the demographic transition, but strongly positive after its onset.
Abstract: This paper investigates the hypothesis that the causal effect of life expectancy on income per capita growth is non-monotonic. This hypothesis follows from the recent literature on unified growth, in which the demographic transition represents an important turning point for population dynamics and hence plays a central role for the transition from stagnation to growth. Results from different empirical specifications and identification strategies document that the effect is non-monotonic, negative (but often insignificant) before the onset of the demographic transition, but strongly positive after its onset. The results provide a new interpretation of the contradictory existing evidence and have relevant policy implications.
278 citations
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TL;DR: In this article, the authors apply a regression discontinuity design in close elections to identify the effect of political alignment on federal transfers to municipal governments in Brazil and find that municipalities where the mayor is affiliated with the coalition of the Brazilian President receive larger (discretionary) infrastructure transfers by about 40% in pre-election years.
Abstract: This paper uses a quasi-experimental strategy to disclose utterly political reasons behind the allocation of intergovernmental transfers in a federal state. We apply a regression discontinuity design in close elections to identify the effect of political alignment on federal transfers to municipal governments in Brazil. We find that municipalities where the mayor is affiliated with the coalition of the Brazilian President receive larger (discretionary) infrastructure transfers by about 40% in pre-election years. This effect is mainly driven by the fact that the federal government penalizes municipalities run by mayors from the opposition coalition who won by a narrow margin, thereby tying their hands for the next election.
276 citations
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TL;DR: A model of patient demand and supplier behavior is developed to explain parallel trends in technology growth and cost growth in the United States, showing that health care productivity depends on the heterogeneity of treatment effects across patients, the shape of the health production function, and the cost structure of procedures such as MRIs with high fixed costs and low marginal costs.
Abstract: In the United States, health care technology has contributed to rising survival rates, yet health care spending relative to GDP has also grown more rapidly than in any other country. We develop a model of patient demand and supplier behavior to explain these parallel trends in technology growth and cost growth. We show that health care productivity depends on the heterogeneity of treatment effects across patients, the shape of the health production function, and the cost structure of procedures such as MRIs with high fixed costs and low marginal costs. The model implies a typology of medical technology productivity: (I) highly cost-effective "home run" innovations with little chance of overuse, such as anti-retroviral therapy for HIV, (II) treatments highly effective for some but not for all (e.g. stents), and (III) "gray area" treatments with uncertain clinical value such as ICU days among chronically ill patients. Not surprisingly, countries adopting Category I and effective Category II treatments gain the greatest health improvements, while countries adopting ineffective Category II and Category III treatments experience the most rapid cost growth. Ultimately, economic and political resistance in the U.S. to ever-rising tax rates will likely slow cost growth, with uncertain effects on technology growth.
268 citations
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TL;DR: In this article, the authors provided new empirical evidence on the relationship between energy consumption and economic growth for 21 African countries over the period from 1970 to 2006, using recently developed panel cointegration and causality tests.
Abstract: The aim of this paper is to provide new empirical evidence on the relationship between energy consumption and economic growth for 21 African countries over the period from 1970 to 2006, using recently developed panel cointegration and causality tests. The countries are divided into two groups: net energy importers and net energy exporters. It is found that there exists a long-run equilibrium relationship between energy consumption, real GDP, prices, labor and capital for each group of countries as well as for the whole set of countries. This result is robust to possible cross-country dependence and still holds when allowing for multiple endogenous structural breaks, which can differ among countries. Furthermore, we find that decreasing energy consumption decreases growth and vice versa, and that increasing energy consumption increases growth, and vice versa, and that this applies for both energy exporters and importers. Finally, there is a marked difference in the cointegration relationship when country groups are considered.
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TL;DR: In this paper, the authors summarize the literature on the consequences of risky health behaviors for economic outcomes such as medical care costs, educational attainment, employment, wages, and crime, and review the research on policies and strategies with the potential to modify risky health behaviours, such as taxes or subsidies, cash incentives, restrictions on purchase and use, providing information and restricting advertising.
Abstract: Risky health behaviors such as smoking, drinking alcohol, drug use, unprotected sex, and poor diets and sedentary lifestyles (leading to obesity) are a major source of preventable deaths. This chapter overviews the theoretical frameworks for, and empirical evidence on, the economics of risky health behaviors. It describes traditional economic approaches emphasizing utility maximization that, under certain assumptions, result in Pareto-optimal outcomes and a limited role for policy interventions. It also details nontraditional models (e.g. involving hyperbolic time discounting or bounded rationality) that even without market imperfections can result in suboptimal outcomes for which government intervention has greater potential to increase social welfare. The chapter summarizes the literature on the consequences of risky health behaviors for economic outcomes such as medical care costs, educational attainment, employment, wages, and crime. It also reviews the research on policies and strategies with the potential to modify risky health behaviors, such as taxes or subsidies, cash incentives, restrictions on purchase and use, providing information and restricting advertising. The chapter concludes with suggestions for future research.
TL;DR: The authors found that workers' reticence to hire in the preceding expansion, associated in part with a lack of confidence it would last, contributed to an employment shortfall equivalent to 40 percent of the missing employment decline in the recession.
Abstract: Germany experienced an even deeper fall in GDP in the Great Recession than the United States, with little employment loss. Employers’ reticence to hire in the preceding expansion, associated in part with a lack of confidence it would last, contributed to an employment shortfall equivalent to 40 percent of the missing employment decline in the recession. Another 20 percent may be explained by wage moderation. A third important element was the widespread adoption of working time accounts, which permit employers to avoid overtime pay if hours per worker average to standard hours over a window of time. We find that this provided disincentives for employers to lay off workers in the downturn. Although the overall cuts in hours per worker were consistent with the severity of the Great Recession, reduction of working time account balances substituted for traditional government-sponsored short-time work.
TL;DR: The causal effect of education on health and the part of it that is attributable to health behaviors by distinguishing between short-run and long-run mediating effects are investigated.
Abstract: In this paper we investigate the contribution of health related behaviors to the education gradient, using an empirical approach that addresses the endogeneity of both education and behaviors in the health production function. We apply this approach to a multi-country data set, which includes 12 European countries and has information on education, health and health behaviors for a sample of individuals aged 50. Focusing on self reported poor health as our health outcome, we find that education has a protective role both for males and females. When evaluated at the sample mean of the dependent variable, one additional year of education reduces self-reported poor health by 7.1% for females and by 3.1% for males. Health behaviors - measured by smoking, drinking, exercising and the body mass index - contribute to explaining the gradient. We find that the effects of education on smoking, drinking, exercising and eating a proper diet account for at most 23% to 45% of the entire effect of education on health, depending on gender.
TL;DR: In this article, the role played by real estate investors in the housing market crisis is explored, and large increases in the share of purchases, and subsequently delinquencies, by real-estate investors are documented.
Abstract: We explore a mostly undocumented but important dimension of the housing market crisis: the role played by real estate investors. Using unique credit-report data, we document large increases in the share of purchases, and subsequently delinquencies, by real estate investors. In states that experienced the largest housing booms and busts, at the peak of the market almost half of purchase mortgage originations were associated with investors. In part by apparently misreporting their intentions to occupy the property, investors took on more leverage, contributing to higher rates of default. Our findings have important implications for policies designed to address the consequences and recurrence of housing market bubbles.
TL;DR: The authors found that about 40% of a cohort of young Canadian men have been employed at some time with an employer for which their father also worked, and 6%-9% have the same employer in adulthood.
Abstract: We find that about 40% of a cohort of young Canadian men have been employed at some time with an employer for which their father also worked, and 6%–9% have the same employer in adulthood. The intergenerational transmission of employers is positively related to paternal earnings, particularly at the very top of the earnings distribution, and to the presence of self-employment income and the number of employers with which the father has had direct contact. It has an important influence on nonlinear patterns in the intergenerational elasticity of earnings.
TL;DR: In this paper, a postcard was distributed to households promising that if enough postcards were mailed back, results from a survey module on perceived corruption would be published in the national media.
Abstract: Can international migration promote better institutions at home by raising the demand for political accountability? A behavioral measure of the population's desire for better governance was designed to examine this question. A postcard was distributed to households promising that if enough postcards were mailed back, results from a survey module on perceived corruption would be published in the national media. Data from a tailored household survey were used to examine the determinants of this behavioral measure of demand for political accountability (undertaking the costly action of mailing the postcard) and to isolate the positive effect of international emigration using locality level variation. The estimated effects are robust to the use of instrumental variables, including past migration and macro shocks in the destination countries. The estimated effects can be attributed mainly to migrants who immigrated to countries with better governance, especially migrants who return home.
TL;DR: In this article, the authors analyse the rationale for short-time work benefits and their effects on labour adjustment from both a cross-country and a time-series perspective, and find that STW actually contributed to reduce job losses during the Great Recession.
Abstract: The Great Recession triggered a resurgence of short-time work (STW) throughout the OECD. Several countries introduced STW from scratch or significantly expanded the scope of the programmes already in place. In some countries like Italy, Japan and Germany between 2.5% and 5% of the workforce participated in STW schemes at the trough of the recession. In this paper we analyse the rationale for STW benefits and their effects on labour adjustment from both a cross-country and a time-series perspective. We find that STW actually contributed to reduce job losses during the Great Recession. However, the number of jobs saved, according to our macroeconomic and microeconomic estimates, is smaller than the number of participants in these schemes and the full-time equivalent jobs involved, pointing in some countries to sizeable deadweight costs. Other institutions, like plant-level bargaining over hours, wages and employment levels, may be more effective than STW in encouraging adjustment along the intensive margins in the presence of temporary shocks. Our results also suggest that STW cannot be readily extended to countries having much different institutional configurations as the demand for STW is very much affected by other institutions such as employment protection legislation and the degree of centralization of collective bargaining. Furthermore, STW must be temporary as during upturns may actually negatively affect employment. We also find that specific design features of STW – such as experience-rating and disincentives to 100% reductions in working hours – are important in improving the cyclical properties of STW.
— Tito Boeri and Herbert Bruecker
TL;DR: In this article, the authors investigate the effect of framing on social preferences, as revealed in a one-shot linear public goods game, and find that social preferences are robust to framing effects.
Abstract: In this paper, we report an experimental investigation of the effect of framing on social preferences, as revealed in a one-shot linear public goods game. We use two types of indicator to measure social preferences: self-reported emotional responses; and, as a behavioural indicator of disapproval, punishment. Our findings are that, for a given pattern of contributions, neither type of indicator depends on the Give versus Take framing that we manipulate. To this extent, they suggest that the social preferences we observe are robust to framing effects.
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TL;DR: The authors discuss how the use of field experiments sheds light on long standing research questions relating to firm behavior and draw common lessons from two classes of experiments: within and across firms, and discuss some of the practical issues researchers face when designing experiments and by highlighting areas for further research.
Abstract: We discuss how the use of field experiments sheds light on long standing research questions relating to firm behavior. We present insights from two classes of experiments: within and across firms, and draw common lessons from both sets. Field experiments within firms generally aim to shed light on the nature of agency problems. Along these lines, we discuss how field experiments have provided new insights on shirking behavior, and the provision of monetary and non-monetary incentives. Field experiments across firms generally aim to uncover firms' binding constraints by exogenously varying the availability of key inputs such as labor, physical capital, and managerial capital. We conclude by discussing some of the practical issues researchers face when designing experiments and by highlighting areas for further research.
TL;DR: Auerbach and Gorodnichenko as mentioned in this paper used real-time forecast data to purge policy innovations of their predictable components, allowing these multipliers to vary smoothly according to the state of the economy and using direct projections rather than the SVAR approach.
Abstract: In this paper, we estimate government purchase multipliers for a large number of OECD countries, allowing these multipliers to vary smoothly according to the state of the economy and using real-time forecast data to purge policy innovations of their predictable components. We adapt our previous methodology (Auerbach and Gorodnichenko, 2011) to use direct projections rather than the SVAR approach to estimate multipliers, to economize on degrees of freedom and to relax the assumptions on impulse response functions imposed by the SVAR method. Our findings confirm those of our earlier paper. In particular, GDP multipliers of government purchases are larger in recession, and controlling for real-time predictions of government purchases tends to increase the estimated multipliers of government purchases in recession. We also consider the responses of other key macroeconomic variables and find that these responses generally vary over the cycle as well, in a pattern consistent with the varying impact on GDP.
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TL;DR: This article investigated the influence of two widespread compensation schemes, individual piece-rates and team incentives, on participants' inclination to lie, by adapting the experimental setup of Fischbacher and Heusi.
Abstract: We investigate the influence of two widespread compensation schemes, individual piece-rates and team incentives, on participants' inclination to lie, by adapting the experimental setup of Fischbacher and Heusi (2008). Lying turns out to be more pronounced under team incentives than under individual piece-rates, which highlights a so far fairly neglected feature of these compensation schemes.
TL;DR: In this article, the economic impact of the 2007-2009 increases in the federal minimum wage (MW) was analyzed using a sample of quick-service restaurants in Georgia and Alabama.
Abstract: The economic impact of the 2007-2009 increases in the federal minimum wage (MW) is analyzed using a sample of quick-service restaurants in Georgia and Alabama. Store-level bi-weekly payroll records for individual employees are used, allowing us to precisely measure the MW compliance cost for each restaurant. We examine a broad range of adjustment channels in addition to employment, including hours, prices, turnover, training, performance standards, and non-labor costs. Exploiting variation in the cost impact of the MW across restaurants, we find no significant effect of the MW increases on employment or hours over the three years. Cost increases were instead absorbed through other channels of adjustment, including higher prices, lower profit margins, wage compression, reduced turnover, and higher performance standards. These findings are compared with MW predictions from competitive, monopsony, and institutional/behavioral models; the latter appears to fit best in the short run.
01 Jan 2011
TL;DR: The authors studied the impact of international migration on international trade and found that immigration complements rather than substitutes for trade flows between host and origin countries. But the impact is lower for trade in homogeneous goods.
Abstract: Since the early 1990s many empirical studies have been conducted on the impact of international migration on international trade, predominantly from the host country perspective. Because most studies have adopted broadly the same specification, namely a log-linear gravity model of export and import flows augmented with the logarithm of the stock of immigrants from specific source countries as an additional explanatory variable, the resulting elasticities are broadly comparable and yield a set of estimates that is well suited to meta-analysis. We therefore compile and analyze in this paper the distribution of immigration elasticities of imports and exports across 48 studies that yielded 300 observations. The results show that immigration complements rather than substitutes for trade flows between host and origin countries. Correcting for heterogeneity and publication bias, an increase in the number of immigrants by 10 percent may be expected to increase the volume of trade on average by about 1.5 percent. However, the impact is lower for trade in homogeneous goods. Over time, the growing stock of immigrants decreases the elasticities. The estimates are affected by the choice of some covariates, the nature of the data (cross-section or panel) and the estimation technique. Elasticities vary between countries in ways that cannot be fully explained by study characteristics; trade restrictions and immigration policies matter for the impact of immigration on trade. The migrant elasticity of imports is larger than that of exports in about half the countries considered, but the publication bias and heterogeneity-corrected elasticity is slightly larger for exports than for imports.
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TL;DR: In this article, the authors analyzed the effect of reducing import tariffs on intermediate inputs and final goods on the wage skill premium within firms in Indonesia, a country with a high share of unskilled workers.
Abstract: In this paper, we analyze the effect of reducing import tariffs on intermediate inputs and final goods on the wage skill premium within firms in Indonesia - a country with a high share of unskilled workers. We present a new finding that reducing input tariffs reduces the wage skill premium within firms that import their intermediate inputs. However, we do not find significant effects from reducing tariffs on final goods on the wage skill premium within firms.
TL;DR: In this paper, the authors examined the extent to which the Big Five traits and further personality characteristics, which are more specifically related to entrepreneurial tasks, influence entry into self-employment and survival of self-employed persons in Germany.
Abstract: This paper systematically investigates whether different kinds of personality characteristics influence entrepreneurial development. On the basis of a large, representative household panel survey, we examine the extent to which the Big Five traits and further personality characteristics, which are more specifically related to entrepreneurial tasks, influence entry into self-employment and survival of self-employed persons in Germany. The empirical analysis reveals that among the specific characteristics in particular risk attitudes and locus of control have strong effects on entry and survival. With respect to the Big Five approach, in particular the traits openness to experience and extraversion and to a lower extent agreeableness and neuroticism help to explain entrepreneurial development. The explanatory power of the Big Five is comparable to one of the most prominent determinants of entrepreneurship - education - and approximately three times larger than parental self-employment.
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TL;DR: The lecture was delivered on 16 February 2011 as mentioned in this paper, and the lecture was based on a lecture delivered in October 2010, and was published in 2010. This version: February 2011.
Abstract: The lecture was delivered on 16 February 2011. First draft: October 2010. This version: February 2011.
TL;DR: This paper investigated whether cohorts of children from poor households that benefited up to nine years from a conditional cash transfer program in Colombia, attained more school and performed better on academic tests at the end of high school.
Abstract: Conditional cash transfers are programs under which poor families get a stipend provided they keep their children in school and take them for health checks. Although there is significant evidence showing that they have positive impacts on school participation, little is known about the long-term impacts of the programs on human capital. This paper investigates whether cohorts of children from poor households that benefited up to nine years from Familias en Accion, a conditional cash transfer program in Colombia, attained more school and performed better on academic tests at the end of high school. Identification of program impacts is derived from two different strategies using matching techniques with household surveys, and regression discontinuity design using a census of the poor and administrative records of the program. The authors show that, on average, participant children are 4 to 8 percentage points more likely than nonparticipant children to finish high school, particularly girls and beneficiaries in rural areas. Regarding long-term impact on tests scores, the analysis shows that program recipients who graduate from high school seem to perform at the same level as equally poor non-recipient graduates, even after correcting for possible selection bias when low-performing students enter school in the treatment group. Although the positive impacts on high school graduation may improve the employment and earning prospects of participants, the lack of positive effects on test scores raises the need to further explore policy actions to couple the program's objective of increasing human capital with enhanced learning.
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TL;DR: In this article, the authors measured the impact of immigration policy on the profit of employers and shareholders, particularly in those industries with high needs for skilled immigrants, and found that shareholders in the top H-1B visa user industries enjoyed significant and positive returns with the passage of the ACWIA of 1998.
Abstract: The paper links finance theory to labor economics and political economy in the context of migration and immigration policy. Most research treating the impact of immigration has focused on the consequences for employees as measured by wages, earnings, and employment. Less is known about the impact on employers. We lack answers to basic questions concerning the quantitative impact of immigrants on employer profit, and which employers are most likely to gain (suffer) increased (reduced) profits as a result of immigration. Using event study analysis, I measure the impact of immigration policy on the profit of employers and shareholders, particularly in those industries with high needs for skilled immigrants. The American Competitiveness and Workforce Improvement Act (ACWIA) of 1998 nearly doubled the available number of H-1B visas for skilled foreign workers in FY 1999. It was the first time that the U.S. government raised the annual cap of H-1B visa since 1990. I focus on this bill and analyze whether and by how much its passage increased shareholders’ profit. The empirical results show that employers and shareholders in the top H-1B visa user industries enjoyed significant and positive returns with the passage of the ACWIA of 1998. Shareholders in high-tech industries (the top users of H-1B visa, 80% of total) such as "Computers and related equipment", and "Computer and data processing services" gained, respectively, an average 21.54% (15.88 if weighted) and 22.77% (18.11 if weighted) in cumulative excess returns in the month after the Act was passed, while industries with little need for H-1B visas experienced no significant changes in cumulative excess returns. Robustness testing including international factor comparisons, semiparametric modeling and a sample-split Chow structural break test support the results.
TL;DR: In this article, the monetary return to attending a highly selective college using the College and Beyond (C&B) Survey linked to Detailed Earnings Records from the Social Security Administration (SSA) is estimated.
Abstract: We estimate the monetary return to attending a highly selective college using the College and Beyond (C&B) Survey linked to Detailed Earnings Records from the Social Security Administration (SSA). This paper extends earlier work by Dale and Krueger (2002) that examined the relationship between the college that students attended in 1976 and the earnings they self-reported reported in 1995 on the C&B follow-up survey. In this analysis, we use administrative earnings data to estimate the return to various measures of college selectivity for a more recent cohort of students: those who entered college in 1989. We also estimate the return to college selectivity for the 1976 cohort of students, but over a longer time horizon (from 1983 through 2007) using administrative data. We find that the return to college selectivity is sizeable for both cohorts in regression models that control for variables commonly observed by researchers, such as student high school GPA and SAT scores. However, when we adjust for unobserved student ability by controlling for the average SAT score of the colleges that students applied to, our estimates of the return to college selectivity fall substantially and are generally indistinguishable from zero. There were notable exceptions for certain subgroups. For black and Hispanic students and for students who come from less-educated families (in terms of their parents? education), the estimates of the return to college selectivity remain large, even in models that adjust for unobserved student characteristics.