The Non-Market Benefits of Education and Ability

November 23, 2017
By: James J. Heckman (The University of Chicago) ; John Eric Humphries (Yale University) ; Gregory Veramendi (W.P. Carey School of Business, Arizona State University)
This paper analyzes the non-market benefits of education and ability. Using a dynamic model of educational choice we estimate returns to education that account for selection bias and sorting on gains. We investigate a range of non-market outcomes including incarceration, mental health, voter participation, trust, and participation in welfare. We find distinct patterns of returns that depend on the levels of schooling and ability. Unlike the monetary benefits of education, the benefits to education for many non-market outcomes are greater for low-ability persons. College graduation decreases welfare use, lowers depression, and raises self-esteem more for less-able individuals.
Keywords: education, Inequality, returns to education, government policy, health inequality, household behavior, family economics
JEL: I14 I24 I28 D10

Is There Still Son Preference in the United States?

November 23, 2017
By: Blau, Francine D. (Cornell University) ; Kahn, Lawrence M. (Cornell University) ; Brummund, Peter (University of Alabama) ; Cook, Jason (University of Pittsburgh) ; Larson-Koester, Miriam (Cornell University)
In this paper, we use 2008-2013 American Community Survey data to update and further probe Dahl and Moretti’s (2008) son preference results, which found evidence that having a female first child increased the probability of single female headship and raised fertility. In light of the substantial increase in immigration, we examine this question separately for immigrants and natives. Among the population in the aggregate, as well as among the native-born separately, consistent with Dahl and Moretti (2008), we find that having a female first child raises the likelihood that the mother is a single parent. However, in sharp contrast to Dahl and Moretti (2008), we find that having a female first child is actually associated with lower fertility. Thus, by the 2008-2013 period, any apparent son preference among natives in their fertility decisions appears to be outweighed by factors such as cost concerns in raising girls. This change may be plausible in light of the reversal of the gender gap in college attendance beginning in the 1980s (Goldin, Katz and Kuziemko 2006), making girls more costly. For immigrants, we also find evidence that having a female first child contributes to female headship, with an effect that has the same magnitude as that for natives although is not statistically significant. However, in contrast to natives, we do find a positive fertility effect, suggesting son preference in fertility among this group. This interpretation is further supported by evidence that, for both first and second generation immigrants (second generation immigrants were examined using the Current Population Surveys) having a girl has a more positive effect on fertility for those whose source countries have lower values of the World Economic Forum’s Gender Equity Index, or lower female labor force participation rates and higher sex (boy-to-girl) ratios among births. We also examine sex selection and find no evidence that sex selection has spread beyond the race groups identified in previous work (e.g., Almond and Edlund 2008).
Keywords: gender, son preference, family structure, fertility, sex selection, immigrants
JEL: J1 J11 J12 J13 J15 J16

Inefficient Short-Time Work

November 23, 2017
By: Cahuc, Pierre ; Nevoux, Sandra
This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers’ contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating.
Keywords: experience rating; Short-time work; Unemployment insurance
JEL: J63 J65

The Long-Lasting Effects of Family and Childhood on Adult Wellbeing: Evidence from British Cohort Data

November 23, 2017
By: Sarah Flèche (Centre for Economic Performance – LSE – London School of Economics and Political Science) ; Warn Lekfuangfu (LSE – London School of Economics and Political Science, Chulalongkorn University (THAILAND) – Chulalongkorn University (THAILAND)) ; Andrew E. Clark (Centre for Economic Performance – LSE – London School of Economics and Political Science, LSE – London School of Economics and Political Science, PSE – Paris School of Economics, PJSE – Paris Jourdan Sciences Economiques – UP1 – Université Panthéon-Sorbonne – ENS Paris – École normale supérieure – Paris – INRA – Institut National de la Recherche Agronomique – EHESS – École des hautes études en sciences sociales – ENPC – École des Ponts ParisTech – CNRS – Centre National de la Recherche Scientifique)
To what extent do childhood experiences continue to affect adult wellbeing over the life course? Previous work on this link has been carried out either at one particular adult age or for some average of adulthood. We here use two British birth-cohort datasets (the 1958 NCDS and the 1970 BCS) to map out the time profile of the effect of childhood on adult outcomes, including life satisfaction. We find that the effect of many aspects of childhood do not fade away over time, but are rather remarkably stable. In both birth cohorts child non-cognitive skills are the strongest predictors of adult life satisfaction at all ages. Of these, emotional health is the strongest. Childhood cognitive performance is more important than good conduct in explaining adult life satisfaction in the earlier cohort, whereas this ranking is inverted in the more recent BCS.
Keywords: life satisfaction,cohort data,childhood,adult outcomes

The Impact of Terrorism on Well-being: Evidence from the Boston Marathon Bombing

November 23, 2017
By: Andrew E Clark (Paris School of Economics and CNRS) ; Orla Doyle (UCD School of Economics & UCD Geary Institute for Public Policy) ; Elena Stancanelli (Paris School of Economics and CNRS)
A growing literature concludes that terrorism impacts the economy, yet less is known about its impact on utility. This paper estimates the impact of the 2013 Boston Marathon Bombing on well-being, by exploiting representative U.S. daily data. Using both a regression discontinuity and an event study design, whereby the 2012 Boston marathon serves as a counterfactual, we find a sharp reduction in well-being, equivalent to a two percentage point rise in annual unemployment. The effect is stronger for women and those living in nearby States, but does not persist beyond one week, thus demonstrating the resilience of well-being to terrorism.
Keywords: Well-being, Terrorism, Regression Discontinuity Design, Differences-in-Differences
JEL: I31 J21 J22 F52

Welfare-Consistent Global Poverty Measures

November 23, 2017
By: Martin Ravallion ; Shaohua Chen
The paper provides new measures of global poverty that take seriously the idea of relative-income comparisons but also acknowledge a deep identification problem when the latent norms defining poverty vary systematically across countries. Welfare-consistent measures are shown to be bounded below by a fixed absolute line and above by weakly-relative lines derived from a theoretical model of relative-income comparisons calibrated to data on national poverty lines. Both bounds indicate falling global poverty incidence, but more slowly for the upper bound. Either way, the developing world has a higher poverty incidence but is making more progress against poverty than the developed world.
JEL: I32