Showing papers in "Journal of Human Resources in 2015"
TL;DR: This work considers statistical inference for regression when data are grouped into clusters, with regression model errors independent across clusters but correlated within clusters, when the number of clusters is large and default standard errors can greatly overstate estimator precision.
Abstract: We consider statistical inference for regression when data are grouped into clus- ters, with regression model errors independent across clusters but correlated within clusters. Examples include data on individuals with clustering on village or region or other category such as industry, and state-year dierences-in-dierences studies with clustering on state. In such settings default standard errors can greatly overstate es- timator precision. Instead, if the number of clusters is large, statistical inference after OLS should be based on cluster-robust standard errors. We outline the basic method as well as many complications that can arise in practice. These include cluster-specic �xed eects, few clusters, multi-way clustering, and estimators other than OLS.
3,236 citations
TL;DR: An overview of control function (CF) methods for solving the problem of endogenous explanatory variables (EEVs) in linear and nonlinear models can be found in this article, with a focus on estimating average partial effects, along with theoretical results on nonparametric identification, suggests some simple, flexible parametric CF strategies.
Abstract: This paper provides an overview of control function (CF) methods for solving the problem of endogenous explanatory variables (EEVs) in linear and nonlinear models. CF methods often can be justified in situations where “plug- in” approaches are known to produce inconsistent estimators of parameters and partial effects. Usually, CF approaches require fewer assumptions than maximum likelihood, and CF methods are computationally simpler. The recent focus on estimating average partial effects, along with theoretical results on nonparametric identification, suggests some simple, flexible parametric CF strategies. The CF approach for handling discrete EEVs in nonlinear models is more controversial but approximate solutions are available.
819 citations
TL;DR: This article discuss three distinct weighting motives: (1) to achieve precise estimates by correcting for heteroskedasticity, (2) to maintain consistent estimates by adjusting endogenous sampling, and (3) to identify average partial effects in the presence of unmodeled heterogeneity of effects.
Abstract: :When estimating population descriptive statistics, weighting is called for if needed to make the analysis sample representative of the target population. With regard to research directed instead at estimating causal effects, we discuss three distinct weighting motives: (1) to achieve precise estimates by correcting for heteroskedasticity; (2) to achieve consistent estimates by correcting for endogenous sampling; and (3) to identify average partial effects in the presence of unmodeled heterogeneity of effects. In each case, we find that the motive sometimes does not apply in situations where practitioners often assume it does.
716 citations
TL;DR: In this paper, the authors investigate whether experiencing a natural disaster affects risk-taking behavior and find that individuals who recently suffered a flood or earthquake exhibit more risk-aversion, and conclude that this change in perception of background risk causes people to take fewer risks.
Abstract: We investigate whether experiencing a natural disaster affects risk-taking behavior. We conduct standard risk games (using real money) with randomly selected individuals in rural Indonesia. We find that individuals who recently suffered a flood or earthquake exhibit more risk-aversion. Experiencing a natural disaster causes people to perceive that they now face a greater risk of a future disaster. We conclude that this change in perception of background risk causes people to take fewer risks. We provide evidence that experimental risk behavior is correlated with real-life risk behavior, highlighting the importance of our results.
355 citations
TL;DR: There is a large theoretical literature on methods for estimating causal effects under unconfoundedness, exogeneity, or selection-on-observables type assumptions using matching or propensity score methods.
Abstract: There is a large theoretical literature on methods for estimating causal effects under unconfoundedness, exogeneity, or selection-on-observables type assumptions using matching or propensity score methods. Much of this literature is highly technical and has not made inroads into empirical practice where many researchers continue to use simple methods such as ordinary least squares regression even in settings where those methods do not have attractive properties. In this paper, I discuss some of the lessons for practice from the theoretical literature and provide detailed recommendations on what to do. I illustrate the recommendations with three detailed applications.
215 citations
TL;DR: The authors found that from the 1980s to the 2000s, the mode of girls' high school GPA distribution has shifted from "B" to "A", essentially leaving boys behind.
Abstract: Using data from the “Monitoring the Future” surveys, this paper shows that from the 1980s to the 2000s, the mode of girls’ high school GPA distribution has shifted from “B” to “A,” essentially “leaving boys behind” as the mode of boys’ GPA distribution stayed at “B.” In a reweighted Oaxaca-Blinder decomposition of achievement at each GPA level, we find that changes to gender differences in post-secondary expectations, in particular expectations for attending graduate or professional school, are the most important factors accounting for this trend after controlling for school ability and they occur as early as the eighth grade.
112 citations
TL;DR: This paper used a Swedish data set that links individual measures of lifetime earnings for three generations and data on educational attainment for four generations to find that estimates obtained from data on two generations severely underestimate long-run intergenerational persistence in both labor earnings and educational attainments.
Abstract: Most previous studies of intergenerational transmission of human capital are restricted to two generations: how parents influence their children. In this study, we use a Swedish data set that links individual measures of lifetime earnings for three generations and data on educational attainment for four generations. We find that estimates obtained from data on two generations severely underestimate long-run intergenerational persistence in both labor earnings and educational attainments. Long-run social mobility is hence much lower than previously thought. We attribute this additional persistence to dynastic human capital-the influence on human capital of more distant family members than parents.
105 citations
TL;DR: In this paper, the authors study an intensive math instruction policy that assigned low-skilled ninth graders to an algebra course that doubled instructional time, altered peer composition and emphasized problem solving skills.
Abstract: We study an intensive math instruction policy that assigned low-skilled ninth graders to an algebra course that doubled instructional time, altered peer composition and emphasized problem solving skills. A regression discontinuity design shows substantial positive impacts of double-dose algebra on credits earned, test scores, high school graduation, and college enrollment rates. Test score effects underpredict attainment effects, highlighting the importance of long-run evaluation of such a policy. Perhaps because the intervention focused on verbal exposition of mathematical concepts, the impact was largest for students with below-average reading skills, emphasizing the need to target interventions toward appropriately skilled students.
103 citations
TL;DR: In this paper, the authors estimate the impacts of secondary school on human capital, occupational choice, and fertility for young adults in Kenya, showing that the probability of admission to government secondary school rises sharply at a score close to the national mean on a standardized 8th grade examination.
Abstract: This paper estimates the impacts of secondary school on human capital, occupational choice, and fertility for young adults in Kenya. The probability of admission to government secondary school rises sharply at a score close to the national mean on a standardized 8th grade examination, permitting the estimation of causal effects of schooling in a regression discontinuity framework. The analysis combines administrative test score data with a recent survey of young adults to estimate these impacts. The results show that secondary schooling increases human capital, as measured by performance on cognitive tests included in the survey. For men, there is a drop in the probability of low-skill self-employment, as well as suggestive evidence of a rise in the probability of formal employment. The opportunity to attend secondary school also reduces teen pregnancy among women.
84 citations
TL;DR: This paper found no evidence of a positive mean impact of acceleration in any specification and significant negative effects on performance in both Algebra I and the traditional followup course, Geometry, concluding that this mechanism explains only a small fraction of the result.
Abstract: The proportion of students taking a first algebra course in middle school has doubled over the past generation and there have been calls to make eighth grade algebra universal. We use significant policy shifts in the timing of algebra in two large North Carolina districts to infer the impact of accelerated entry into algebra on student performance in math courses as students progress through high school. We find no evidence of a positive mean impact of acceleration in any specification and significant negative effects on performance in both Algebra I and the traditional followup course, Geometry. Accelerating algebra to middle school appears benign or beneficial for higher-performing students but unambiguously harmful to the lowest performers. We consider whether the effects reflect the reliance on less-qualified teachers and conclude that this mechanism explains only a small fraction of the result.
71 citations
TL;DR: The authors reported the results of a field experiment in Gurgaon, India that offered cash and noncash incentives to learn either to children or to their parents while finding no evidence that the identity of the recipient or form of the reward mattered in the aggregate.
Abstract: I report the results of a field experiment in Gurgaon, India that offered cash and noncash incentives to learn either to children or to their parents While I find no evidence that the identity of the recipient or form of the reward mattered in the aggregate, noncash incentives targeted to children were more effective for initially low-performing children while cash incentives were more effective for high-performing children To explore the mechanisms behind this result, I present a model of household education production and find additional empirical results consistent with the model
TL;DR: This article explored how enrollment of older, nontraditional students responds to educational subsidies and found that the higher level of benefits increased college enrollment of separated veterans by between 15 and 20 percent while also shifting the composition of enrollment toward four-year schools.
Abstract: The Post-9/11 GI Bill brought about an enormous expansion in veteran education benefits, roughly doubling the average maximum benefit level and generating large variation in the magnitude of benefit expansion across states. Using this context, I explore how enrollment of older, nontraditional students responds to educational subsidies. The transition from a conditional cash transfer to a more in-kind benefit affects the relative prices of different types of education, pushing veterans to invest in more expensive (plausibly higher-quality) schooling. Using a difference-in-differences strategy, combined with state level variation in the degree of benefit expansion, I find that the higher level of benefits increased college enrollment of separated veterans by between 15 and 20 percent while also shifting the composition of enrollment toward four-year schools.
TL;DR: This paper used the National Education Longitudinal Study (NELS:88) and U.S. Census data to show that low-skilled immigration to an area induces local natives to improve their performance in school, attain more years of schooling, and take jobs that involve communication-intensive tasks for which they (native English speakers) have a comparative advantage.
Abstract: Large low-skilled immigration flows influence both the distribution of local school resources and also local relative wages, which exert counterbalancing pressures on the local return to schooling. I use the National Education Longitudinal Study (NELS:88) and U.S. Census data to show that low-skilled immigration to an area induces local natives to improve their performance in school, attain more years of schooling, and take jobs that involve communication-intensive tasks for which they (native English speakers) have a comparative advantage. These results point out mechanisms that mitigate the potentially negative effect of immigration on natives’ wages.
TL;DR: The authors compare the productivity of Fields Medal recipients (winners of the top mathematics prize) to that of similarly brilliant contenders, finding that the two groups have similar publication rates until the award year, after which the winners' productivity declines.
Abstract: Knowledge generation is key to economic growth, and scientific prizes are designed to encourage it. But how does winning a prestigious prize affect future output? We compare the productivity of Fields Medal recipients (winners of the top mathematics prize) to that of similarly brilliant contenders. The two groups have similar publication rates until the award year, after which the winners’ productivity declines. The medalists begin to “play the field,” studying unfamiliar topics at the expense of writing papers. It appears that tournaments can have large postprize effects on the effort allocation of knowledge producers.
TL;DR: In this paper, the authors examined how social insurance dependency spreads within neighborhoods, families, ethnic minorities, and among former schoolmates using a fixed effects methodology that accounts for endogenous group formation, contextual interactions, and time-constant as well as time-varying confounders.
Abstract: Based on administrative panel data from Norway, we examine how social insurance dependency spreads within neighborhoods, families, ethnic minorities, and among former schoolmates. We use a fixed effects methodology that accounts for endogenous group formation, contextual interactions, and time-constant as well as time-varying confounders. We report evidence that social insurance dependency is contagious. The estimated network effects are both quantitatively and statistically significant, and they rise rapidly with “relational closeness” in a way that establishes endogenous social interaction as a central causal mechanism. Social interactions do not cross ethnic borders.
TL;DR: In this paper, the authors developed a dynamic structural lifecycle model to study how heterogeneous health and medical spending shocks affect the savings behavior of the elderly, and found that health, medical spending, and health insurance are indeed the main drivers of the slow wealth decumulation in old age.
Abstract: This paper develops a dynamic structural lifecycle model to study how heterogeneous health and medical spending shocks affect the savings behavior of the elderly. Individuals are allowed to respond to health shocks in two ways: They can directly pay for their health care expenses (self-insure) or they can rely on health insurance contracts. There are two possible insurance options, one through formal contracts and another through informal care provided by family. Formal contracts may be affected by asymmetric information problems whereas informal insurance depends on social ties (cohesion) and on bequeathable wealth. I estimate the model on SHARE data using simulated method of moments for four levels of wealth in a sample of single retired Europeans. Counterfactual experiments show that health, medical spending, and health insurance are indeed the main drivers of the slow wealth decumulation in old age. I also find that social cohesion rises with age, declines with wealth, and is higher in Mediterranean countries than in Central European and Scandinavian countries. Finally, high social cohesion appears typically associated with increased life expectancy.
TL;DR: The authors exploit variation in wage growth induced by increases in world oil prices to estimate the elasticity of young men's labor market participation and school enrollment with respect to after-tax wages.
Abstract: We exploit variation in wage growth induced by increases in world oil prices to estimate the elasticity of young men’s labor market participation and school enrollment with respect to after-tax wages. Our main finding is that in the aggregate, increased wages have a dual impact: They tend to reduce—at least temporarily—young men’s full-time university enrollment rates but bring (back) into the labor market some young men who were neither enrolled in school nor employed. Contrary to previous research, we find little evidence that young men with no high school diploma now leave school in response to increased wages.
TL;DR: A discrete choice demand model for differentiated MA plans and a suggestive evidence that supply-side responses to the star rating system may explain the one-time enrollment response to CMS-published quality stars is presented.
Abstract: The Centers for Medicare and Medicaid Services (CMS) has calculated and disseminated an overall contract quality star rating system (from one to five stars) for all Medicare Advantage (MA) contracts since 2009. In this paper, we study the effect of CMS-reported star ratings on MA plan enrollment. We formulate a discrete choice demand model for differentiated MA plans and estimate the model with market-level plan enrollment data. We identify separate enrollment effects for each star level using a regression discontinuity research design that exploits plausibly random variation around star thresholds. The results suggest that the 2009 published star ratings directed beneficiaries away from low-rated plans more than actively toward high-rated plans. When we repeat the analysis for 2010 published quality stars, we find no significant effects. We present suggestive evidence that supply-side responses to the star rating system may explain the one-time enrollment response to CMS-published quality stars.
TL;DR: In this article, the causal effect of BMI growth on employment among the obese was investigated and it was shown that weight loss positively affects the employment prospects of obese women but not of obese men.
Abstract: This study presents credible estimates for the causal effect of BMI growth on employment among the obese. By exploring random assignment of a weight-loss intervention based on monetary rewards, I provide convincing evidence that weight loss positively affects the employment prospects of obese women but not of obese men. Consistent with this, significant effects of weight loss on proxy variables for labor productivity are found only for obese women.
TL;DR: The authors found that women's suffrage exacerbated racial inequality in education expenditures and substantially delayed relative gains in black human capital observed later in the century, and attributed up to one-third of the 1920-40 rise in public school expenditures to the Nineteenth Amendment.
Abstract: Gains in 20th century real wages and reductions in the black-white wage gap have been linked to the midcentury ascent of school quality. With a new data set uniquely appropriate to identifying the impact of female voter enfranchisement on education spending, we attribute up to one-third of the 1920–40 rise in public school expenditures to the Nineteenth Amendment. Yet the continued disenfranchisement of black Southerners meant white school gains far outpaced those for blacks. As a result, women’s suffrage exacerbated racial inequality in education expenditures and substantially delayed relative gains in black human capital observed later in the century.
TL;DR: This article found that native European workers are more likely to move to occupations associated with higher skills and status when a larger number of immigrants entered their labor market and no evidence of an increase in their probability of becoming unemployed.
Abstract: Following a representative longitudinal sample of native European residents over the period 1995–2001, we identify the effect of the inflows of immigrants on natives’ career, employment, and wages. We control for individual, country-year, occupation group-year, and occupation group-country heterogeneity and shocks, and construct an imputed inflow of the foreign-born population that is exogenous to local demand shocks. We find that native European workers are more likely to move to occupations associated with higher skills and status when a larger number of immigrants enters their labor market. We find no evidence of an increase in their probability of becoming unemployed.
TL;DR: This paper found evidence of employer learning for each skill type, for college and high school graduates, and for blue-and white-collar workers, but no evidence that employer learning varies significantly across skill or worker type.
Abstract: We ask whether employer learning in the wage-setting process depends on skill type and skill importance to productivity, using measures of seven premarket skills and data for each skill’s importance to occupation-specific productivity. Before incorporating importance measures, we find evidence of employer learning for each skill type, for college and high school graduates, and for blue- and white-collar workers, but no evidence that employer learning varies significantly across skill or worker type. When we allow parameters identifying employer learning and screening to vary by skill importance, we identify tradeoffs between learning and screening for some (but not all) skills.
TL;DR: In this paper, a nonparametric Bayesian stochastic volatility model was used to characterize the volatility distribution of individual labor earnings in the United States and found no systematic rise in volatility for the vast majority of individuals, driven almost entirely by rising earnings volatility of those with the most volatile earnings.
Abstract: Recent research has documented a rise in the volatility of individual labor earnings in the United States since 1970. Existing measures of this trend abstract from within-group latent heterogeneity, effectively estimating an increase in average volatility for observable groups. We decompose this average and find no systematic rise in volatility for the vast majority of individuals. Increasing average volatility has been driven almost entirely by rising earnings volatility of those with the most volatile earnings, identified ex ante by large past earnings changes. We characterize dynamics of the volatility distribution with a nonparametric Bayesian stochastic volatility model from Jensen and Shore (2011).
TL;DR: In this paper, the authors study an intensive math instruction policy that assigned low-skilled ninth graders to an algebra course that doubled instructional time, altered peer composition and emphasized problem solving skills.
Abstract: We study an intensive math instruction policy that assigned low-skilled ninth graders to an algebra course that doubled instructional time, altered peer composition and emphasized problem solving skills. A regression discontinuity design shows substantial positive impacts of double-dose algebra on credits earned, test scores, high school graduation, and college enrollment rates. Test score effects underpredict attainment effects, highlighting the importance of long-run evaluation of such a policy. Perhaps because the intervention focused on verbal exposition of mathematical concepts, the impact was largest for students with below-average reading skills, emphasizing the need to target interventions toward appropriately skilled students.
TL;DR: This paper investigated the effects of being evaluated under a subjective assessment system where independent inspectors visit schools at short notice, disclose their findings, and sanction schools rated fail, and demonstrate that a fail inspection rating leads to test score gains for primary school students.
Abstract: This paper investigates the effects of being evaluated under a novel subjective assessment system where independent inspectors visit schools at short notice, disclose their findings, and sanction schools rated fail. I demonstrate that a fail inspection rating leads to test score gains for primary school students. I find no evidence to suggest that fail schools are able to inflate test score performance by gaming the system. Relative to purely test-based accountability systems, this finding is striking and suggests that oversight by evaluators who are charged with investigating what goes on inside the classroom may play an important role in mitigating such strategic behavior. There appear to be no effects on test scores following an inspection for schools rated highly by the inspectors. This suggests that any effects from the process of evaluation and feedback are negligible for nonfailing schools, at least in the short term.
TL;DR: In this article, the authors studied the effect of a 1957 amendment to the Mississippi marriage law that was aimed at delaying the age of marriage; changes included raising the minimum age for men and women, parental consent requirements, compulsory blood tests, and proof of age.
Abstract: Does the postponement of marriage affect fertility and investment in human capital? I study this question in the context of a 1957 amendment to the Mississippi marriage law that was aimed at delaying the age of marriage; changes included raising the minimum age for men and women, parental consent requirements, compulsory blood tests, and proof of age. Using a difference-indifferences design at the county level, I find that, overall, marriages per 1,000 in the population in Mississippi and its neighboring counties decreased by nearly 75 percent; the crude birth rate decreased between 2 and 6 percent; and school enrollment increased by 3 percent after the law was enacted (by 1960). An unintended consequence of the law change was that illegitimate births among young black mothers increased by 7 percent. I show that changes in labor market conditions during this period cannot explain the changes in marriages, births, and enrollment. I conclude that stricter marriage-related regulations that lead to a delay in marriage can postpone fertility and increase school enrollment.
TL;DR: This paper examined the relative quality of foreign-educated nurses using wages as a measure of skill and found that Filipinos enjoy a wage premium that is not explained by observed differences in worker or job characteristics.
Abstract: We examine the relative quality of foreign-educated nurses using wages as a measure of skill. Philippine-educated nurses enjoy a wage premium that is not explained by observed differences in worker or job characteristics. We reconcile the results with a Roy model featuring endogenous skill acquisition and provide some empirical evidence of double-selection into nursing and migration. Our results suggest that the wage premium is likely driven by strong positive selection into nursing among Filipinos resulting from high and heterogeneous returns to the occupation due to active government support for nurse migration in the Philippines.
TL;DR: The United States government required the fortification of bread with iron to reduce iron deficiency in the working-age population during World War II, which increased per capita consumption of iron by 16 percent.
Abstract: Iron deficiency reduces productive capacity in adults and impairs cognitive development in children. In 1943, the United States government required the fortification of bread with iron to reduce iron deficiency in the working-age population during World War II. This nationwide fortification of grain products increased per capita consumption of iron by 16 percent. I find that areas with lower levels of iron consumption prior to the mandate experienced greater increases in income and school enrollment in the 1940s. A long-term followup suggests that adults in 1970 with more exposure to fortification during childhood earned higher wages.
TL;DR: In this article, the authors examined how the outflow of remittances affect the wages of native workers and showed that the wage impact of immigration depends on the competing effects of an increase in labor market competition and an increasing in the consumer base.
Abstract: This paper examines how the outflow of remittances affect the wages of native workers. The model shows that the wage impact of immigration depends on the competing effects of an increase in labor market competition and an increase in the consumer base. Immigrant remittances provide a unique way of isolating this latter effect because they reduce the consumer base but not the workforce. The predictions of the model are tested using an unusually rich German data set that has detailed information on remittances and wages. As expected, the results indicate that a 1 percent increase in remittances depress the wages of native workers by 0.06 percent. Furthermore, remittances predominantly affect workers in nontraded industries that are more reliant on domestic consumption.
TL;DR: It is found that a child’s public health insurance eligibility crowds out the private health insurance of parents by 11 percentage points when it is not accompanied by parental eligibility, which corresponds to changes in self-reported health and preventive care for women.
Abstract: Measurements of the impact of public health insurance have typically focused on the health and insurance outcomes of the newly eligible child. In this paper, I investigate the consequences of public health insurance for the other members of the household. Using a regression discontinuity design, I find that a child’s public health insurance eligibility crowds out the private health insurance of parents by 11 percentage points when it is not accompanied by parental eligibility. This loss of insurance corresponds to changes in self-reported health and preventive care for women.