We study the intergenerational effect of education policy on crime. We use Swedish administrative data that links outcomes across generations with crime records, and we show that the comprehensive school reform, gradually implemented between 1949 and 1962, reduced conviction rates both for the generation directly affected by the reform and for their sons. The reduction in conviction rates occurred in many types of crime. The key mediators of this reduction in child generation are an increase in education and household income and a decrease in crime among their fathers.
In this paper we develop a novel approach to measuring individual welfare within households, recognizing that individuals may have both different preferences (particularly regarding public consumption) and differential access to resources. We construct a money metric measure of welfare that accounts for public goods (by using personalized prices) and the allocation of time. We then use our conceptual framework to analyse intrahousehold inequality in Japan, allowing for the presence of two public goods: expenditures on children and other public goods including housing. We show empirically that women have much stronger preferences for both public goods and this has critical implications for the distribution of welfare in the household.
We consider risk sharing in rural China during its rapid economic transformation from the late 1980s through the late 2000s. We document an erosion of consumption insurance against both household-level idiosyncratic and village-level aggregate income shocks, and show that this decline is related to observable economic changes: the shift out of agriculture, the decline of publicly owned Township-and-Village Enterprises, and increased migrant work. Further evidence suggests that as these changes took place at the village level, higher levels of government failed to offset these effects through the tax-and-transfer system, leaving households more exposed to both idiosyncratic and village-aggregate risk.
Positive assortative matching refers to the tendency of individuals with similar char-acteristics to form partnerships. Measuring the extent to which assortative matching differs between two economies is challenging when the marginal distributions of the characteristic along which sorting takes place (e.g., education) change for either or both sexes. We show how the use of different measures can generate different conclusions. We provide axiomatic characterization for measures such as the odds ratio, normalized trace, and likelihood ratio, and provide a structural economic interpretation of the odds ratio. We then use our approach to consider how marital sorting by education changed between the 1950s and the 1970s cohort, for which both educational attainment and returns in the labor market changed substantially.
Social connections are fundamental to human well-being. We examine the social networks of mothers of young children in rural Odisha, India. Gendered norms around marriage, mobility, and work likely shape this group’s opportunities to form and maintain ties. We track 2,170 mothers’ networks over 4 years and find a high degree of isolation. Wealthier women and women from more-advantaged castes and tribes have smaller networks than their less-advantaged peers, primarily because they know fewer women within their own socioeconomic group. There exists strong but symmetric homophily by socioeconomic group. Socioeconomic differences are associated with toilet ownership and labor force participation.
This paper develops the nonparametric identification of models with production complementarities, worker-firm specific disutility of labor and search frictions. Mobility in the model is subject to preference shocks, and we assume that firms can write wage contracts. We develop a constructive proof for the nonparametric identification of the model primitives from matched employer-employee data. We use the estimated model to decompose the sources of wage dispersion into worker heterogeneity, compensating differentials, and search frictions that generate between-firm and within-firm dispersion. We find that compensating differentials are substantial on average, but the contribution differs greatly between the lowest and highest types of workers. Finally, we use the model to provide an economic interpretation of several empirical regularities.
On the basis of a randomized controlled trial, we evaluate a scholarship program in Mexico, Programa de Becas Educación Media Superior (PROBEMS), aimed at improving graduation rates and test scores among upper secondary school students from poor backgrounds. We find that, on average, the program has no effect on either graduation rates or math and Spanish test scores. We point to two possible reasons for this failure: (i) the program was badly targeted, with many of the recipients being from less disadvantaged families than intended; and (ii) the prior academic achievement of those eligible was often insufficient for successful completion of the academic requirements of upper secondary school. This points to accumulated achievement deficits that could be addressed by interventions targeting learning at an earlier stage.
In this paper we develop a novel approach to measuring individual welfare within house-holds, recognizing that individuals may have both different preferences (particularly regarding public consumption) and differential access to resources. We construct a money metric mea-sure of welfare that accounts for public goods (by using personalized prices) and the allocation of time. We then use our conceptual framework to analyse intrahousehold inequality in Japan, allowing for the presence of two public goods: expenditures on children and other public goods including housing. We show empirically that women have much stronger preferences for both public goods and this has critical implications for the distribution of welfare in the household.
We use matched employer-employee data from Sweden to study the role of the firm in affecting the stochastic properties of wages. Our model accounts for endogenous participation and mobility decisions. We find that firm-specific permanent productivity shocks transmit to individual wages, but the effect is mostly concentrated among the high-skilled workers. The pass-through of temporary shocks is smaller in magnitude and similar for high- and low-skilled workers. The updates to worker-firm specific match effects over the life of a firm-worker relationship are small. Substantial growth in earnings variance over the life cycle for high-skilled workers is driven by firms. In particular, cross-sectional wage variances by age 55 are roughly one-third higher relative to a scenario with no pass-through of firm shocks onto wages.
We examine the effects of international trade in the presence of a set of domestic distortions giving rise to informality, a prevalent phenomenon in developing countries. In our quantitative model, the informal sector arises from burdensome taxes and regulations that are imperfectly enforced by the government. Consequently, smaller, less productive firms face fewer distortions than larger, more productive ones, potentially leading to substantial misallocation. We show that in settings with a large informal sector, the gains from trade are significantly amplified, as reductions in trade barriers imply a reallocation of resources from initially less distorted to more distorted firms. We confirm findings from earlier reduced-form studies that the informal sector mitigates the impact of negative labor demand shocks on unemployment. Nonetheless, the informal sector can exacerbate the adverse welfare effects of economic downturns, amplifying misallocation. Last, our research sheds light on the relationship between trade openness and cross-firm wage inequality.
Millions of children are at risk for developmental deficits in low and-middle-income countries (LMICs). Reviews find that psychosocial interventions for children aged <3 years improve short-run child cognition and language (0.28–0.47 SD). Similarly, a meta-regression analysis of 54 preschool interventions for children aged ≥3 years found significant improvements in children’s cognitive skills (0.15 SD), executive functioning, social–emotional learning, and behavior (0.12 SD). Only 18 of these interventions were from LMICs, with 2 from India, which has the world’s largest population of children attending preschool (36 million children enrolled in Integrated Childhood Development Services [ICDS]). Interventions have had benefits in math and language. However, a survey of 298 Indian preschools found generally poor quality. Although short-run impacts of some interventions fade, some rigorous studies with long-term follow-ups found later benefits in educational attainment, reduced crime, and increased income.
We study the intergenerational effect of education policy on crime. We use Swedish administrative data that links outcomes across generations with crime records and we show that the comprehensive school reform, gradually implemented between 1949 and 1962, reduced conviction rates both for the generation directly affected by the reform and for their sons. The reduction in conviction rates occurred across many types of crime. Key mediators for this reduction in the child generation are an increase in education and a decline in crime amongst their fathers.
The 1996 US welfare reform introduced time limits on welfare receipt. We use quasi-experimental evidence and a lifecycle model of marriage, divorce, program participation, labor supply and savings to understand the impact of time limits on behavior and well-being. Time limits cause women to defer claiming in anticipation of future needs, an effect that depends on the probabilities of marriage and divorce. Time limits cost women 0.5% of life-time consumption, net of revenue savings redistributed by reduced taxation, with some groups affected much more. Expectations over future marital status are important determinants of the value of the social safety net.
This paper analyzes earnings inequality and earnings dynamics in Sweden over 1985–2016. The deep recession in the early 1990s marks a historic turning point with a massive increase in earnings inequality and earnings volatility, and the impact of the recession and the recovery from it lasted for decades. In the aftermath of the recession, we find steady growth in real earnings across the entire distribution for men and women and decreasing inequality over more than 20 years. Despite the positive trend, large gender differences in earnings dynamics persist. While earnings growth for men is more closely tied to the business cycle, women face much higher volatility overall. Earnings volatility is also substantially higher among foreign-born workers, reflecting weaker labor market attachment and high risk of large negative shocks for low-income immigrants. We document an important role of social benefits usage for the overall trends and for differences across subpopulations. Higher benefits enrollment, especially for women and immigrants, is associated with higher earnings volatility. As the generosity and usage of benefit programs declined over time, we find stronger earnings growth among low-income workers, consistent with higher self-sufficiency.