Showing papers in "Journal of Human Resources in 2003"

Measuring the Well-Being of the Poor Using Income and Consumption

Abstract: We examine the relative merits of consumption and income as measures of the material well-being of the poor. Consumption offers several advantages over income because consumption is a more direct measure of well-being than income and is less subject to underreporting bias. Measurement problems with income are problematic for analyses of changes in well-being of the poor because the biases appear to have changed over time and are correlated with government policies. On the other hand, income is often easier to report and is available for much larger samples, providing greater power to test hypotheses. We begin by considering the conceptual and pragmatic reasons why consumption might be better or worse than income. Then, we employ several empirical strategies to examine the quality of income and consumption data. First, we compare income and consumption reports for those with few resources, as well as their assets and liabilities, to examine measurement errors and under-reporting. Second, we examine other evidence on the internal consistency of reports of low income or consumption. Third, we compare how well micro-data in standard datasets weight up to match aggregates for classes of income and consumption that are especially important for low-resource families. Fourth, we validate income and consumption measures by comparing them to other measures of hardship or material well-being. Although the evidence tends to favor consumption measures, our analyses suggest that both measures should be used to assess the material well-being of the poor.

An Economic Model of Locus of Control and the Human Capital Investment Decision

Abstract: We present an economic model of how teenagers' outlooks-specifically their locus of control-affect their human capital investments. Locus of control measures the extent to which a person believes their actions affect their outcomes. The model allows locus of control to affect teenagers' assessment of the return to education. The effect of eighth graders' locus of control on high school completion and college attendance is examined using the National Educational Longitudinal Study. The results indicate that locus of control influences education decisions and suggests that locus of control operates through teenagers' expectations of the returns to human capital investments.

Charitable Giving by Married Couples: Who Decides and Why Does it Matter? *

Abstract: We examine how charitable giving is influenced by who in the household is primarily responsible for giving decisions. Looking first at single-person households, we find men and women to have significantly different tastes for giving, setting up a potential conflict for married couples. We find that, with respect to total giving, married households tend to resolve these conflicts largely in favor of the husband's preferences. Bargaining over charitable giving, rather than letting one spouse take charge, reduces giving by about six percent. When the woman is the decision maker, she will still make a significantly different allocation of those charity dollars, preferring to give to more charities but to give less to each. Our results give new insights into both the demographics of charitable giving and the costliness of household bargaining.

Evaluation of Swedish Youth Labor Market Programs

Abstract: This paper evaluates two Swedish active labour market programmes for youth, namely youth practice and labour market training. A non-parametric matching approach is applied to estimate the average p ...

WIC Eligibility and Participation

Abstract: The authors examine WIC eligibility and participation using the Current Population Survey (CPS), the Survey of Income and Program Participation (SIPP), and state-level administrative data.

Immigration Policy and the Skills of Immigrants to Australia, Canada, and the United States

Abstract: Census data for 1990/91 indicate that Australian and Canadian immigrants have higher levels of English fluency, education, and income (relative to natives) than do U.S. immigrants. This skill deficit for U.S. immigrants arises primarily because the United States receives a much larger share of immigrants from Latin America than do the other two countries. After excluding Latin American immigrants, the observable skills of immigrants are similar in the three countries. These patterns suggest that the comparatively low overall skill level of U.S. immigrants may have more to do with geographic and historical ties to Mexico than with the fact that skill-based admissions are less important in the United States than in Australia and Canada.

Economic Shocks, Wealth, and Welfare

Abstract: The immediate effects of the Asian crisis on the well-being of Indonesians are examined using the Indonesia Family Life Survey, an on-going longitudinal household survey. There is tremendous diversity in the effect of the shock: for some households, it was devastating; for others it brought new opportunities. A wide array of mechanisms were adopted in response to the crisis. Households combined to more fully exploit benefits of scale economies in consumption. Labor supply increased even as real wages collapsed. Households reduced spending on semi-durables while maintaining expenditures on foods. Rural households used wealth, particularly gold, to smooth consumption.

Immigrant Assimilation and Welfare Participation Do Immigrants Assimilate Into or Out of Welfare

Abstract: This paper analyzes differences in welfare utilization between immigrants and natives in Sweden using a large panel data set for the years 1990 to 1996. We find that immigrants use welfare to a greater extent than natives and that differences cannot be explained by observable characteristics. Welfare participation decreases with time spent in Sweden. Refugees assimilate out of welfare at a faster rate than nonrefugee immigrants, but neither group is predicted to reach parity with natives. Increases in unemployment and immigration, as well as the change in the composition of immigrants, contributed to the increase in welfare utilization in Sweden.

The Longitudinal Structure of Earnings Losses among Work-Limited Disabled Workers

Abstract: This paper asks: What are the dynamic effects of disability on earnings? Unlike most of the previous literature, it uses panel data, and fixed effects methods are used to assess how the earnings of disabled workers depart from expected levels over many years before and after the date of onset of their disability. The paper also examines how worker characteristics affect earnings losses from disability, with particular attention paid to the age at which the person suffers onset. Disabled men are found to experience sharp drops in earnings that predate the measured date of onset. Earnings recover rapidly soon after onset, with much of the immediate reduction made up in the first two post-onset years. A modest downward trendfollows, resulting in significant long-term losses in expected annual earnings of about 12 percent per year. Being older at onset, nonwhite, more chronically disabled, and less educated cause the losses from disability to be larger and the recovery smaller. A large portion of these differences across groups appear to derive from industry affiliation after onset. The Paper argues the facts are all consistent with a simple human capital explanation of the disability process.

Children’s Health and Maternal Work Activity Estimates under Alternative Disability Definitions

Abstract: Past empirical findings indicate that children’s health problems reduce married mothers’ employment but are inconclusive in the case of female heads. These studies use diverse disability definitions, samples, and specifications. This paper uses pooled SIPP panels to investigate the impact of alternative disability measures on maternal market work. Negative effects of several disability definitions on female heads’ and wives’ employment and hours at a point in time are found. In contrast, while female heads’ growth in work hours over time and probabilities of entering employment appear adversely affected by child disability, there is no evidence for analogous effects on wives.

Understanding Educational Outcomes of Students from Low-Income Families Evidence from a Liberal Arts College with a Full Tuition Subsidy Program

Abstract: Issues related to schooling attainment of children from low-income families arise frequently in current education policy debates. There has been a specific interest in understanding why a very high percentage of children from low-income families do not graduate from college and why the college graduation rates of children from low-income families are substantially lower than those of children from other families. Using unique new data obtained directly from a high-quality liberal arts college that maintains a full tuition subsidy program (and large room and board subsidies) for all students, this paper provides direct evidence that reasons unrelated to the direct costs of college are very important in explaining these realities.

Gender Differences in Salary and Promotion for Faculty in the Humanities 1977-95

Abstract: This study uses data from the Survey of Doctorate Recipients to evaluate gender differences in salaries and promotion for academics in the humanities. Over time, gender salary differences can largely be explained by academic rank. Substantial gender differences in promotion to tenure exist after controlling for productivity and demographic characteristics. However, we observe a slight decline in the gender promotion gap for the most recent cohort evaluated. On the basis of this evidence, we conclude that gender discrimination for academics in the humanities tends to operate through differences in promotion, which in turn affects wages.

Food Stamps and the Elderly: Why Is Participation so Low?

Abstract: Estimates imply that only one-third of elderly persons who are eligible for food stamps actually participate in the program, which is half the rate that exists among younger people This study investigates potential reasons for the relatively low take-up rate among the elderly Analyzing new data, we conclude that the low take-up rate is not explained by measurement error and little is explained by various behavioral factors Despite this much lower take-up rate, elderly who are eligible for assistance but not enrolled in the program do not appear to be especially needy

The Labor Market Effects of Disability Discrimination Laws

Abstract: We present new evidence on the effects of disability discrimination laws based on variation induced by state-level antidiscrimination measures passed prior to the Americans with Disabilities Act (ADA). The evidence expands upon other research that focuses solely on the impact of the ADA by using a ‘‘quasi-experimental’ ’ framework that generates treatment and comparison groups. We find that disability discrimination laws are associated with lower relative earnings of the disabled, with slightly lower disabled relative labor force participation rates, but are not associated with lower relative employment rates for the disabled once we control for preexisting employment trends among the disabled.

Short Recertification Periods in the U.S. Food Stamp Program

Abstract: The federal government requires states to recertify most participants in the Food Stamp Program at least once a year. In recent years, many states have dramatically increased their use of short recertification periods (three months or less) in an effort to lower their food stamp error rates. This trend has been especially pronounced for working households. This article investigates the impact of recertification regimes on error rates and program participation rates, for households with and without earnings. Based on these estimates, it quantifies the tradeoff that states faced during the 1990s between maintaining low error rates and encouraging program participation.

The Effects of Health Events on the Economic Status of Married Couples

Abstract: This paper uses measures of exogenous health ‘‘shocks’’ to identify the different channels through which changes in health conditions affect income, wealth, and consumption behavior. The results indicate that serious health conditions have strong effects on household wealth, but that the effects for women are larger and more significant than the effects for men. The source of the asymmetry arises from the fact that general living expenses increase when wives become seriously ill, while for husbands, health shocks do not affect these expenditures.

Health, Wealth, and the Role of Institutions

Abstract: A positive relationship between socioeconomic status and health has been observed over many populations and many time periods. One of the factors mediating this relation is the institutional environment in which people function. We consider longitudinal data from two countries with very different institutional environments, the United States and The Netherlands. To structure the empirical analysis, we develop a theoretical model relating changes in health status to income and changes in income to health status. We show that income or wealth inequality is closely connected with health inequality. We empirically estimate counterparts to the theoretical relationships with generally corroborative results.

Income volatility and household consumption - The impact of food assistance programs

Abstract: The impact offood assistance programs (food stamps) in a period of rising income inequality in the United States is analyzed using 1978-92 PSID data. We assess to what extent food assistance can be viewed as an effective insurance to permanent shocks to income. The results show that the program has a substantial consumption-smoothing effect in the lowincome population: The response of food consumption to a permanent income shock is a third lower after accounting for the monetary value of food stamps.

Compensation in the Nonprofit Sector

Abstract: We investigate the determinants of pay in the nonprofit sector using data for 25–55 year olds from the 1994– 88 Current Population Survey Outgoing Rotation Groups. Our results are consistent with the hypothesis that compensation is primarily determined in competitive markets without ‘‘labor donations’ ’ to nonprofit employers. One implication is that nonprofit workers receive virtually the same wages as observationally equivalent employees in similar positions with profit-seeking enterprises. We cannot rule out the possibility of nonprofit penalties or premiums for selected groups; however, the differentials are generally small and competition appears to play a dominant role in nonprofit wage setting.

What do we learn from recall consumption data

Abstract: In this paper, we use two complementary Italian data sources (the 1995 ISTAT and Bank of Italy household surveys) to generate householdspecific nondurable expenditure in the Bank of Italy sample that contains relatively high-quality income data. We show that food expenditure data are of comparable quality and informational content across the two surveys, once we properly account for heaping, rounding, and time averaging. We therefore depart from standard practice and rely on the estimation of an inverse Engel curve on ISTAT data to impute nondurable expenditure to Bank of Italy observations, and show how we can use these estimates to analyze consumption age profiles conditional on demographics. Our key result is that predictions based on a standard set of demographic and socioeconomic indicators are quite different from predictions that also condition on simulated food consumption, in the sense that their age profile is less in line with the implications of the standard consumer intertemporal optimization problem.

The Effectiveness of Catholic Primary Schooling.

Abstract: Although extensive research has compared Catholic and public high schools, little is known about Catholic primary schools Using unique data for two cohorts of primary school students, I find that Catholic schooling does not have a significant effect on mathematics and reading test scores These findings do not change when school level test scores from the first-grade cohort are used to account for selection bias in the fourth-grade cohort In fourth grade, Catholic schooling is associated with marginally fewer student absences than is public schooling

Cinderella Goes to School The Effects of Child Fostering on School Enrollment in South Africa

Abstract: Fostering is a common institution throughout developing countries, where up to 25 percent of children are fostered. An analysis of 8,627 Black South African children suggests that foster children are not less likely than others to attend school, and they tend to move from homes that have difficulty enrolling them in school to homes that are more apt to do so. The net impact of fostering on these children is to reduce the risk of not attending school by up to 22 percent. Fostering therefore provides an important means of improving human-capital investment. Evidence that households foster-in children primarily for their domestic labor is limited.

The role of food stamps in consumption stabilization

Abstract: Although the Food Stamp Program is the largest universal entitlement program in the social safety net, little is known about its stabilizing role in household income and consumption. Using data from the Panel Study of Income Dynamics spanning 1980-99, we estimate the volatility of income with and without food stamps coupled with a variance decomposition of consumption. Among families at high ex ante risk of food stamp participation food stamps reduced income volatility by about 12 percent and food-consumption volatility by about 14 percent. There was, however, a marked decline in consumption-smoothing benefits of the program in the early 1990s relative to the 1980s.

Does Money Matter? A Comparison of the Effect of Income on Child Development in the United States and Great Britain

Abstract: In this paper, we examine the effect of income on child development in the United States and the United Kingdom, as measured by scores on cognitive, behavioral, and social assessments. In line with previous results for the United States, we find that for both countries income generally has an effect on child development that is positive and significant, but whose size is small relative to other family background variables.

Retaking the SAT

Abstract: Using data on applicants to three selective universities, we analyze a college applicant’s decision to retake the SAT. We model this decision as an optimal search problem, and use the model to assess the impact of college admissions policies on retaking behavior. The most common test score ranking policy, which utilizes only the highest of all submitted scores, provides large incentives to retake the test. This places certain applicants at a disadvantage: those with high test-taking costs, those attaching low values to college admission, and those with ‘‘pessimistic’’ prior beliefs regarding their own ability.

Evaluating the Labor Market Performance of Veterans Using a Matched Comparison Group Design

Abstract: A key concern in estimating the effect of military service on civilian earnings is bias from unmeasured differences between military veterans and nonveterans. The effects of activeduty service are estimated using the 1986 and 1992 Reserve Components Surveys, which permit a matched comparison between reservists who are veterans and reservists without active-duty service. Because military entrance requirements are identical for the reserves and active duty, estimated treatment effects embody control for selection by the military and selection by workers for a form of military service. Results are presented for officers and enlisted personnel and by race and era of service. The average impact of active-duty service on civilian earnings is 3 percent among the reservist population, but this average reflects treatment effects of essentially zero for enlisted personnel and 10 percent for officers. Among white enlisted personnel, veteran effects are negative but small. Treatment effects for African-American veterans average about 5 percent. Vietnam-era white draftees are found to have suffered an approximate 5 percent wage penalty and volunteers little penalty, but estimates from the reservist sample are likely to understate negative effects from Vietnamera service.

The Effect of Minimum Wages on Youth Employment in Canada A Panel Study

Abstract: Previous U.S. panel estimates of minimum wage effects have been criticized on the grounds that their identification rests on comparisons of ‘‘low-wage’’ and ‘‘high-wage’’ workers. Using Canadian panel data for 1988–90, I compare estimates based on the traditional U.S. methodology with those based on samples of ‘‘low-wage’’ workers exclusively. The results would appear to vindicate the critics: The minimum wage effect from the latter approach is virtually zero. Yet, estimates from different subgroups of low-wage workers indicate that there is a significant disemployment effect for those with longer low-wage employment histories. This highlights the heterogeneity within low-wage workers and the importance of carefully defining the target group not solely based on workers’ wages.

Understanding Differences in Household Financial Wealth between the United States and Great Britain

Abstract: In this paper, we describe the household wealth distribution in the United States and United Kingdom over the past two decades, and compare both wealth inequality and the form in which wealth is held. Unconditionally, there are large differences in financial wealth between the two countries at the top fifth of the wealth distribution. Even after controlling for age and income differences between the two countries, we show that the median U.S. household accumulates more financial wealth than their United Kingdom counterpart does. We explore a number of alternative reasons for these differences and reject some explanations as implausible. Some of the observed differences are due to what we refer to as "initial conditions," in particular previously high rates of corporate equity ownership in the U.S. and housing ownership among young British households. This only provides a partial explanation, however. Among other explanations are differences in the annuitization of retirement incomes and in the amount of wealth held in the form of housing equity. In the first case, forced and voluntary annuitization in the United Kingdom mean older households face considerably less longevity risk. In the second, higher house price volatility in the United Kingdom can create an incentive, as shown Banks, Blundell, and Smith (2002), used from stock market equity earlier in the life cycle.

Unemployment Duration: Competing and Defective Risks

Abstract: This paper examines the determinants of unemployment duration in a competing risks framework with two destination states: inactivity and employment. The innovation is the recognition of defective risks. A polynomial hazard function is used to differentiate between two possible sources of infinite durations. The first is produced by a random process of unlucky draws, the second by workers rejecting a destination state. The evidence favors the mover-stayer model over the search model. Refinement of the former approach, using a more flexible baseline hazard function, produces a robust and more convincing explanation for positive and zero transition rates out of unemployment.

Income Losses of Women and Men Injured at Work

Abstract: Women and men injured at work in Wisconsin during 1989 and 1990 have similar levels of lost earnings in the quarter of injury. However, in the three and one-half years after the post-injury quarter, women lose an average of 9.2 percent of earnings, while men lose only 6.5 percent. Even after accounting for covariates with a variant of the Oaxaca-BlinderNeumark decomposition, the disparity in long-term losses remains. Differences in injury-related nonemployment account for about half the covariate-adjusted gap over the four-year post-injury period. Changes in hours worked may explain all or part of the remaining gap. Gender differ