Showing papers by "Institute for the Study of Labor published in 2019"
TL;DR: The authors show that people lie surprisingly little and that a preference for being seen as honest is one of the main motivations for truth-telling in economics, psychology, and sociology, and formalize a wide range of potential explanations for the observed behavior and identify testable predictions that can distinguish between the models.
Abstract: Private information is at the heart of many economic activities. For decades, economists have assumed that individuals are willing to misreport private information if this maximizes their material payoff. We combine data from 90 experimental studies in economics, psychology, and sociology, and show that, in fact, people lie surprisingly little. We then formalize a wide range of potential explanations for the observed behavior, identify testable predictions that can distinguish between the models, and conduct new experiments to do so. Our empirical evidence suggests that a preference for being seen as honest and a preference for being honest are the main motivations for truth‐telling.
308 citations
TL;DR: The authors study how different forms of communication influence the inflation expectations of individuals in a randomized controlled trial and find that reading the actual Federal Open Market Committee (FOMC) statement has about the same average effect on expectations as simply being told about the Federal Reserve's inflation target.
Abstract: We study how different forms of communication influence the inflation expectations of individuals in a randomized controlled trial. We first solicit individuals’ inflation expectations in the Nielsen Homescan panel and then provide eight different forms of information regarding inflation. Reading the actual Federal Open Market Committee (FOMC) statement has about the same average effect on expectations as simply being told about the Federal Reserve’s inflation target. Reading a news article about the most recent FOMC meetings results in a forecast revision which is smaller by half. Our results have implications for how central banks should communicate to the broader public.
192 citations
TL;DR: Algorithms are not only a threat to be regulated; with the right safeguards in place, they have the potential to be a positive force for equity.
Abstract: The law forbids discrimination. But the ambiguity of human decision-making often makes it extraordinarily hard for the legal system to know whether anyone has actually discriminated. To understand how algorithms affect discrimination, we must therefore also understand how they affect the problem of detecting discrimination. By one measure, algorithms are fundamentally opaque, not just cognitively but even mathematically. Yet for the task of proving discrimination, processes involving algorithms can provide crucial forms of transparency that are otherwise unavailable. These benefits do not happen automatically. But with appropriate requirements in place, the use of algorithms will make it possible to more easily examine and interrogate the entire decision process, thereby making it far easier to know whether discrimination has occurred. By forcing a new level of specificity, the use of algorithms also highlights, and makes transparent, central tradeoffs among competing values. Algorithms are not only a threat to be regulated; with the right safeguards in place, they have the potential to be a positive force for equity.
153 citations
TL;DR: This article found that gender differences in job preferences contribute 10% to the gender wage gap, which is more than job tenure, previous employment status or field of study, and the role of job preferences is particularly strong at the top of the wage distribution.
Abstract: The gender wage gap has declined over time. However, most of the remaining gap is unexplained, partly because of gender convergence in wage‐determining characteristics. In this paper, we show the degree of convergence differs substantially across Europe. In some countries, predominantly in Eastern Europe, the gender wage gap is entirely unexplained. However, in other countries, differences between the characteristics of men and women explain a relatively large proportion of the wage gap. Gender differences in job preferences contribute 10% to the wage gap, which is more than job tenure, previous employment status or field of study. The role of job preferences is particularly strong at the top of the wage distribution.
74 citations
TL;DR: In this paper, the authors examined the associations between an onset of serious mental disorders before the age of 25 with subsequent employment, income and education outcomes, finding that serious mental disorder is associated with low employment rates and poor educational outcomes, leading to a substantial loss of total earnings over the life course.
Abstract: Objective To examine the associations between an onset of serious mental disorders before the age of 25 with subsequent employment, income and education outcomes. Methods Nationwide cohort study including individuals (n = 2 055 720) living in Finland between 1988-2015, who were alive at the end of the year they turned 25. Mental disorder diagnosis between ages 15 and 25 was used as the exposure. The level of education, employment status, annual wage or self-employment earnings, and annual total income between ages 25 and 52 (measurement years 1988-2015) were used as the outcomes. Results All serious mental disorders were associated with increased risk of not being employed and not having any secondary or higher education between ages 25 and 52. The earnings for individuals with serious mental disorders were considerably low, and the annual median total income remained rather stable between ages 25 and 52 for most of the mental disorder groups. Conclusions Serious mental disorders are associated with low employment rates and poor educational outcomes, leading to a substantial loss of total earnings over the life course.
69 citations
TL;DR: In this paper, the authors measure the size of the fiscal multiplier using a heterogeneous-agent model with incomplete markets, capital and rigid prices and wages, and find that market incompleteness is key to determining the number of multiplier for any combination of fiscal and monetary policies of interest.
Abstract: We measure the size of the fiscal multiplier using a heterogeneous-agent model with incomplete markets, capital and rigid prices and wages. The environment encompasses the essential elements necessary for a quantitative analysis of fiscal policy. First, output is partially demand-determined due to pricing frictions in product and labor markets, so that a fiscal stimulus increases aggregate demand. Second, incomplete markets deliver a realistic distribution of dynamic consumption and investment responses to stimulus policies across the population. These elements give rise to the standard textbook Keynesian-cross logic which, and unlike conventional wisdom would suggest, is significantly reinforced in our dynamic forward looking model.
We find that market incompleteness is key to determining the size of the fiscal multiplier, which is uniquely determined in our model for any combination of fiscal and monetary policies of interest. The multiplier is 1.34 if deficit-financed and 0.61 if contemporaneously tax-financed for a pegged nominal interest rate, with similar values in a liquidity trap. If monetary policy follows a Taylor rule, the numbers drop to 0.66 and 0.54, respectively. We elucidate the importance of market incompleteness for our results and contrast them to models featuring complete markets or hand-to-mouth consumers.
69 citations
TL;DR: In this paper, the authors developed theory and a tightly-linked field experiment to explore the supply side implications of corporate social responsibility (CSR) and found that when a firm advertises work as socially-oriented, it attracts employees who are more productive, produce higher quality work, and have more highly valued leisure time.
Abstract: We develop theory and a tightly-linked field experiment to explore the supply side implications of corporate social responsibility (CSR). Our natural field experiment, in which we created our own firm and hired actual workers, generates a rich data set on worker behavior and responses to both pecuniary and CSR incentives. Making use of a novel identification framework, we use these data to estimate a structural principal-agent model. This approach permits us to compare and contrast treatment and selection effects of both CSR and financial incentives. Using data from more than 1100 job seekers, we find strong evidence that when a firm advertises work as socially-oriented, it attracts employees who are more productive, produce higher quality work, and have more highly valued leisure time. In terms of enhancing the labor pool, for example, CSR increases the number of applicants by 25 percent, an impact comparable to the effect of a 36 percent increase in wages. We also find an economically important complementarity between CSR and wage offers, highlighting the import of using both to hire and motivate workers. Beyond lending insights into the supply side of CSR, our research design serves as a framework for causal inference on other forms of non-pecuniary incentives and amenities in the workplace, or any other domain more generally.
60 citations
TL;DR: It is concluded that although the immediate health effects of exposure to the 1918 pandemic were huge, the long-term effects were modest in size and results fail to provide consistent evidence supporting any long- term consequences of fetal exposure.
Abstract: The 1918 influenza pandemic had not only a massive instant death toll but also lasting effects on its survivors. Several studies have shown that children born in 1919, and thus exposed to the H1N1 virus in utero, experienced worse health and socioeconomic outcomes in older ages than surrounding birth cohorts. This study combines several sources of contemporary statistics with full-population individual-level data for Sweden during 1968–2012 to examine the influence of fetal exposure to the Spanish flu on health, adulthood income, and occupational attainment. For both men and women, fetal exposure resulted in higher morbidity in ages 54–87, as measured by hospitalization. For males, exposure during the second trimester also affected mortality in cancer and heart disease. Overall, the effects on all-cause mortality were modest, with about three months shorter remaining life expectancy for the cohorts exposed during the second trimester. For socioeconomic outcomes, results fail to provide consistent evidence supporting any long-term consequences of fetal exposure. We conclude that although the immediate health effects of exposure to the 1918 pandemic were huge, the long-term effects were modest in size.
59 citations
01 Jan 2019
TL;DR: To examine the associations between an onset of serious mental disorders before the age of 25 with subsequent employment, income and education outcomes, a large number of patients with a history of mental health problems are surveyed.
Abstract: Objective To examine the associations between an onset of serious mental disorders before the age of 25 with subsequent employment, income and education outcomes. Methods Nationwide cohort study including individuals (n = 2 055 720) living in Finland between 1988-2015, who were alive at the end of the year they turned 25. Mental disorder diagnosis between ages 15 and 25 was used as the exposure. The level of education, employment status, annual wage or self-employment earnings, and annual total income between ages 25 and 52 (measurement years 1988-2015) were used as the outcomes. Results All serious mental disorders were associated with increased risk of not being employed and not having any secondary or higher education between ages 25 and 52. The earnings for individuals with serious mental disorders were considerably low, and the annual median total income remained rather stable between ages 25 and 52 for most of the mental disorder groups. Conclusions Serious mental disorders are associated with low employment rates and poor educational outcomes, leading to a substantial loss of total earnings over the life course.
58 citations
TL;DR: The value of a statistical life (VSL) is the local tradeoff rate between fatality risk and money as discussed by the authors, which is a measure of the population's willingness to pay for risk reduction and the marginal cost of enhancing safety.
Abstract: The value of a statistical life (VSL) is the local tradeoff rate between fatality risk and money. When the tradeoff values are derived from choices in market contexts the VSL serves as both a measure of the population’s willingness to pay for risk reduction and the marginal cost of enhancing safety. Given its fundamental economic role, policy analysts have adopted the VSL as the economically correct measure of the benefit individuals receive from enhancements to their health and safety. Estimates of the VSL for the United States are around $10 million ($2017), and estimates for other countries are generally lower given the positive income elasticity of the VSL. Because of the prominence of mortality risk reductions as the justification for government policies the VSL is a crucial component of the benefit-cost analyses that are part of the regulatory process in the United States and other countries. The VSL is also foundationally related to the concepts of value of a statistical life year (VSLY) and value of a statistical injury (VSI), which also permeate the labor and health economics literatures. Thus, the same types of valuation approaches can be used to monetize non-fatal injuries and mortality risks that pose very small effects on life expectancy. In addition to formalizing the concept and measurement of the VSL and presenting representative estimates for the United States and other countries our Encyclopedia selection addresses the most important questions concerning the nuances that are of interest to researchers and policymakers.
52 citations
TL;DR: In this paper, the authors discuss the potential role of Universal Basic Incomes (UBIs) in advanced countries and develop a framework for describing transfer programs, flexible enough to encompass most existing programs as well as UBIs, and use this framework to compare various UBI schemes to the existing constellation of programs in the United States.
Abstract: We discuss the potential role of Universal Basic Incomes (UBIs) in advanced countries. A feature of advanced economies that distinguishes them from developing countries is the existence of well developed, if often incomplete, safety nets. We develop a framework for describing transfer programs, flexible enough to encompass most existing programs as well as UBIs, and use this framework to compare various UBIs to the existing constellation of programs in the United States. A UBI would direct much larger shares of transfers to childless, non-elderly, non-disabled households than existing programs, and much more to middle-income rather than poor households. A UBI large enough to increase transfers to low-income families would be enormously expensive. We review the labor supply literature for evidence on the likely impacts of a UBI. We argue that the ongoing UBI pilot studies will do little to resolve the major outstanding questions.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
TL;DR: In this paper, the authors investigate whether female early marriage is a conduit for the transmission of social norms, specifically norms relating to gender roles and rights within the household, and find evidence suggesting that schooling is a complement and the quality of the social network a substitute of later marriage in terms of their effects on attitudes towards traditional gender norms.
Abstract: We investigate whether female early marriage is a conduit for the transmission of social norms, specifically norms relating to gender roles and rights within the household. We exploit differences in the age at menarche between sisters as an exogenous source of variation in marriage age. This approach allows us to control for beliefs and attitudes that are transmitted from parents to children. Using a sample of unmarried adolescents in Bangladesh, we first show that the timing of onset of menstruation has no direct effect on adolescent attitudes on attitudes towards gender norms. Yet we find that early marriage increases agreement with statements supportive of gender bias in the allocation of resources, and worsens the quality of a woman’s post-marital social network. We also find evidence suggesting that schooling is a complement and the quality of the social network a substitute of later marriage in terms of their effects on attitudes towards traditional gender norms.
TL;DR: This paper used sentiment analysis on the basis of psychological valence norms to compute a national valence index for the United Kingdom, the United States, Germany and Italy, indicating relative happiness in response to national and international wars and in comparison to historical trends in longevity and gross domestic product.
Abstract: In addition to improving quality of life, higher subjective wellbeing leads to fewer health problems and higher productivity, making subjective wellbeing a focal issue among researchers and governments. However, it is difficult to estimate how happy people were during previous centuries. Here we show that a method based on the quantitative analysis of natural language published over the past 200 years captures reliable patterns in historical subjective wellbeing. Using sentiment analysis on the basis of psychological valence norms, we compute a national valence index for the United Kingdom, the United States, Germany and Italy, indicating relative happiness in response to national and international wars and in comparison to historical trends in longevity and gross domestic product. We validate our method using Eurobarometer survey data from the 1970s and demonstrate robustness using words with stable historical meanings, diverse corpora (newspapers, magazines and books) and additional word norms. By providing a window on quantitative historical psychology, this approach could inform policy and economic history.
TL;DR: In this article, the effect of labor market concentration on labor compensation across the U.S. private sector has been studied and the authors distinguish between concentration in local labor markets versus local product markets, guarding against bias from confounded product market concentration.
Abstract: This paper estimates the effect of labor-market concentration on labor compensation across the U.S. private sector since 2000. We distinguish between concentration in local labor markets versus local product markets, guarding against bias from confounded product-market concentration. Analysis extends beyond wages to rates of employment-based health insurance coverage. Estimates suggest negative effects of labor-market concentration on labor compensation. This comes through both reducing the human-capital level of those in the market and reducing pay conditional on human-capital level. Higher product-market concentration exacerbates and higher unionization rates mitigates these effects.
TL;DR: It is observed that incentive contracts and implicit costs interact in a non-trivial manner and both the incentive and cost side can be used separately to shape work performance.
Abstract: Agents’ decisions to exert effort depend on the incentives and the potential costs involved. So far, most of the attention has been on the incentive side. However, our laboratory experiments underl...
Posted Content•
TL;DR: In this article, the causal impact of indoor air quality on the cognitive performance of individuals using data from official chess tournaments was studied using a chess engine to evaluate the quality of moves made by individual players and merge this information with measures of air quality inside the tournament venue.
Abstract: This paper studies the causal impact of indoor air quality on the cognitive performance of individuals using data from official chess tournaments. We use a chess engine to evaluate the quality of moves made by individual players and merge this information with measures of air quality inside the tournament venue. The results show that poor indoor air quality hampers cognitive performance significantly. We find that an increase in the indoor concentration of fine particulate matter (PM2.5) by 10 μg/m3 increases a player's probability of making an erroneous move by 26.3%. The impact increases in both magnitude and statistical significance with rising time pressure. The effect of the indoor concentration of carbon dioxide (CO2) is smaller and only matters during phases of the game when decisions are taken under high time stress. Exploiting temporal as well as spatial variation in outdoor pollution, we provide evidence suggesting a short-term and transitory effect of fine particulate matter on cognition.
TL;DR: It is shown that broadband access significantly increases the share of women reporting home- or part-time working and overall life satisfaction, which is consistent with the hypothesis that access to broadband allows highly educated women, but not the less educated, to reconcile career and motherhood, which may promote a ‘digital divide’ in fertility.
Abstract: The spread of high-speed (broadband) Internet epitomizes the digital revolution. Using German panel data, we test whether the availability of broadband influences fertility choices in a low-fertility setting well known for the difficulty in combining work and family life. We exploit a strategy devised by Falck and colleagues to obtain causal estimates of the impact of broadband on fertility. We find positive effects of broadband availability on the fertility of highly educated women aged 25-45. We further confirm this result using county-level data on total fertility. We show that broadband access significantly increases the share of women reporting home- or part-time working. Furthermore, we find positive effects on time spent with children and overall life satisfaction. Our findings are consistent with the hypothesis that access to broadband allows highly educated women, but not the less educated, to reconcile career and motherhood, which may promote a 'digital divide' in fertility.
TL;DR: In this article, the authors estimate the effect of apprenticeship on the hazard function to a permanent job Identification is based on a regression discontinuity design and find that apprenticeships are "long entrance halls" towards permanent contracts, especially for 29-year-old workers.
Abstract: In Italy the main difference between apprentices and other types of temporary workers is that apprentices must receive firm-provided training The firm incentive in hiring apprentices consists in paying lower wages and labour taxes Using an Italian administrative dataset containing information on the jobs started between January 2009 and June 2012, we estimate the effect of apprenticeship on the hazard function to a permanent job Identification is based on a regression discontinuity design We find that, for 29-year-old workers, apprenticeships are “long entrance halls” towards permanent contracts, especially within the firm where the apprenticeship is performed
TL;DR: In this paper, the authors examine two behavioral factors that diminish people's ability to value a life-time income stream or annuity, drawing on a survey of about 4,000 adults in a U.S. nationally representative sample.
Abstract: This paper examines two behavioral factors that diminish people's ability to value a life-time income stream or annuity, drawing on a survey of about 4,000 adults in a U.S. nationally representative sample. By experimentally varying the degree of complexity, we provide the first causal evidence that increasing the complexity of the annuity choice reduces respondents' ability to value the annuity, measured by the difference between the sell and buy values people assign to the annuity. We also find that people's ability to value an annuity increases when we experimentally induce them to think jointly about the annuitization decision as well as how quickly or slowly to spend down assets in retirement. Accordingly, we conclude that narrow choice bracketing is an impediment to annuitization, yet this impediment can be mitigated with a relatively straightforward intervention.
TL;DR: In this paper, the authors estimate the direct and spillover effects of a large-scale early childhood intervention on the educational attainment of over 2,000 disadvantaged children in the United States.
Abstract: We estimate the direct and spillover effects of a large-scale early childhood intervention on the educational attainment of over 2,000 disadvantaged children in the United States. We show that failing to account for spillover effects results in a severe underestimation of the impact. The intervention induced positive direct effects on test scores of children assigned to the treatment groups. We document large spillover effects on both treatment and control children who live near treated children. On average, spillover effects increase a child's non-cognitive (cognitive) scores by about 1.2 (0.6 to 0.7) standard deviations. The spillover effects are localized, decreasing with the spatial distance to treated neighbors. Our evidence suggests the spillover effect on non-cognitive scores are likely to operate through the child's social network. Alternatively, parental investment is an important channel through which cognitive spillover effects operate. We view our results as speaking to several literatures, perhaps most importantly the role of public programs and neighborhoods on human capital formation at an early age.
TL;DR: In this article, the effect of paid family leave (PFL) on breastfeeding was evaluated using synthetic control models for a large, representative sample of over 270,000 children born between 2000 and 2012 drawn from the restricted-use versions of the 2003-2014 National Immunization Surveys.
Abstract: This paper evaluates the effect of Paid Family Leave (PFL) on breastfeeding, which we identify using California’s enactment of a 2004 PFL policy that ensured mothers up to six weeks of leave at a 55 percent wage replacement rate. We employ synthetic control models for a large, representative sample of over 270,000 children born between 2000 and 2012 drawn from the restricted-use versions of the 2003 – 2014 National Immunization Surveys. Our estimates indicate that PFL increases the overall duration of breastfeeding by nearly 18 days, and the likelihood of breastfeeding for at least six months by 5 percentage points. We find substantially larger effects of PFL on breastfeeding duration for some disadvantaged mothers.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
TL;DR: This paper found that both male and female migrants from major conflict countries are positively self-selected in terms of their predicted income, while non-migrant men and women do not differ significantly.
Abstract: About 1.4 million refugees and irregular migrants arrived in Europe in 2015 and 2016. We model how refugees and irregular migrants are self-selected. Using unique datasets from the International Organization for Migration and Gallup World Polls, we provide the first large-scale evidence on reasons to emigrate, and the self-selection and sorting of refugees and irregular migrants for multiple origin and destination countries. Refugees and female irregular migrants are positively self-selected with respect to education (that is, they are more educated than the national average) while male irregular migrants are not. We also find that both male and female migrants from major conflict countries are positively self-selected in terms of their predicted income. For countries with minor or no conflict, migrant and non-migrant men do not differ in terms of their income distribution. We also analyse how border controls affect destination country choice.
TL;DR: In this article, the authors test whether the employer mandate under the Affordable Care Act (ACA) increased involuntary part-time (IPT) employment, using data from the Current Population Survey between 1994 and 20
Abstract: This study tests whether the employer mandate under the Affordable Care Act (ACA) increased involuntary part-time (IPT) employment. Using data from the Current Population Survey between 1994 and 20...
TL;DR: This paper found that attendance in vocational master's programs leads to an earnings increase of more than seven percent five years after entry, and the estimated effect remains positive even if selection on unobservables is twice as strong as selection on observables.
TL;DR: For example, this paper found that between 2003 and 2015, real aggregate debt in the hands of Americans aged 50 to 80 increased by 59 percent, while debt held by Americans in their twenties and thirties was approximately flat.
Abstract: Between 2003 and 2015, real aggregate debt in the hands of Americans aged 50 to 80 increased by 59 percent. Meanwhile, real debt held by Americans in their twenties and thirties was approximately flat. Using data from the Federal Reserve Bank of New York’s Consumer Credit Panel, we describe the extent of this debt increase and the distribution of debt growth by loan type. Real per capita home-secured debts held by older consumers show the steepest growth, though older borrowers have increased their obligations in all major debt categories. For long-held debts, these developments lead us to ask how such changes emerged: did older borrowers carry more debt through the Great Recession, after which access to consumer credit declined for new borrowers of all ages? Alternatively, have loan originations since the Great Recession favored older over younger borrowers? While our results indicate that the stock of long-held, home-secured debt sits largely with older borrowers, we also uncover evidence of a decisive tilt of new auto and mortgage originations away from younger borrowers and toward borrowers in their fifties, sixties, and even seventies. The motivation behind older consumers’ substantial new borrowing, often with long repayment terms, is the focus of ongoing research.
TL;DR: In this article, the authors identify the right human capital investments for disadvantaged youths, yet almost no rigorous evidence on the long-run effects of these investments exists outsi......
Abstract: Identifying the right human capital investments for disadvantaged youths is a key policy concern worldwide, yet almost no rigorous evidence on the long-run effects of these investments exists outsi...
TL;DR: In this paper, the authors discuss how new digital technologies might affect the labor market in the near future and develop scenarios on how digitalization is likely to affect the German labor market and derive implications for policy makers on how to shape the future of work.
Abstract: Computing power continues to grow at an enormous rate. Simultaneously, more and better data is increasingly available and Machine Learning methods have seen significant breakthroughs in the recent past. All this pushes further the boundary of what machines can do. Nowadays increasingly complex tasks are automatable at a precision which seemed infeasible only few years ago. The examples range from voice and image recognition, playing Go, to self-driving vehicles. Machines are able to perform more and more manual and also cognitive tasks that previously only humans could do. As a result of these developments, some argue that large shares of jobs are “at risk of automation”, spurring public fears of massive job-losses and technological unemployment.
This chapter discusses how new digital technologies might affect the labor market in the near future. First, the chapter discusses estimates of automation potentials, showing that many estimates are severely upward biased because they ignore that workers in seemingly automatable occupations already take over hard-to-automate tasks. Secondly, it highlights that these numbers only refer to what theoretically could be automated and that this must not be equated with job-losses or employment effects – a mistake that is done often in the public debate. Thirdly, the chapter develops scenarios on how digitalization is likely to affect the German labor market in the next five years and derives implications for policy makers on how to shape the future of work. Germany is an interesting case to study, as it is a developed country at the technological frontier. In particular, the main challenge will not be the number, but the structure of jobs and the corresponding need for supply side adjustments to meet the shift in demand both within and between occupations and sectors.
Posted Content•
TL;DR: In this paper, the authors present a general equilibrium model with a tractable life-cycle structure that allows the investigation of the main transmission mechanisms by which demography and technology affect economic growth.
Abstract: Demographic change and automation are two main structural trends shaping the macroeconomy in the next decades. We present a general equilibrium model with a tractable life-cycle structure that allows the investigation of the main transmission mechanisms by which demography and technology affect economic growth. Due to a trade-off between innovation and automation, lower fertility and population ageing lead to reductions in GDP per capita growth and the labour income share. During the demographic transition, the extent growth and factor shares are affected depends on alternative labour market confi gurations and scenarios for the integration of robots in economic activity.
TL;DR: It is hypothesized that height mediates the relationship between early-life conditions and later-life socio-economic outcomes, and that conditions during pregnancy or the first years of life and/or the years during puberty have the largest effects on height and socio- economic status.
Abstract: Adult body height appears to be a relatively accurate summary variable of early-life exposures' influence on health, and may be a useful indicator of health in populations where more traditional health-related indicators are lacking. In particular, previous studies have shown a strong, positive relationship between environmental conditions in early life (particularly nutritional availability and the disease environment) and adult height. Research has also demonstrated positive associations between height and socioeconomic status. We therefore hypothesize that height mediates the relationship between early-life conditions and later-life socio-economic outcomes. We also hypothesize that the period of exposure in early life matters, and that conditions during pregnancy or the first years of life and/or the years during puberty have the largest effects on height and socio-economic status. To test these relationships, we use a sample of 1817 Dutch military conscripts who were exposed during early life to the Dutch Potato Famine (1846-1847). We conduct mediation analyses using structural equation modelling, and test seven different time periods in early-life. We use potato prices and real wages to proxy early-life environmental conditions, and occupational status (using the HISCAM scale) to proxy socioeconomic status. We find no evidence of mediation, partial or full, in any models. However, there are significant relationships between potato prices in adolescence, height and socio-economic status. To determine causality in these relationships, further research is needed.
TL;DR: In this paper, the role of education as causal channel through which growing up poor affects the economic outcomes in adulthood in the European Union was examined and a sensitivity analysis on possible unobserved confounders, such as child ability was provided.
Abstract: This paper examines the role of education as causal channel through which growing up poor affects the economic outcomes in adulthood in the European Union. We apply a potential outcomes approach to quantify those impacts and we provide a sensitivity analysis on possible unobserved confounders, such as child ability. Our estimates indicate that being poor in childhood significantly decreases the level of income in adulthood and increases the average probability of being poor. Moreover, our results reveal a significant role of education in this intergenerational transmission. These results are particularly relevant for Mediterranean and Central and Easter European Countries.