Early childcare, child cognitive outcomes and inequalities in the UK

March 21, 2017

 

By: Daniela Del Boca (University of Turin and Collegio Carlo Alberto) ; Daniela Piazzalunga (IRVAPP) ; Chiara Pronzato (University of Turin, CHILD and Collegio Carlo Alberto)
In this empirical analysis, we estimate the link between formal childcare and child cognitive outcomes, controlling for a large number of variables. We use the Millennium Cohort Survey (MCS) for the United Kingdom, which provides very detailed information about several modalities of childcare as well as several child outcomes. We also simulate how an increase in formal childcare attendance can affect inequalities across children. Our results indicate that childcare attendance has a positive impact on child cognitive outcomes, which are stronger for children from low socioeconomic background.
Keywords: childcare, child cognitive outcomes, Millennium Cohort Survey, MCS
JEL: J13 D10 I21
URL: http://d.repec.org/n?u=RePEc:hka:wpaper:2017-005&r=ltv

Earnings and Consumption Dynamics: A Nonlinear Panel Data Framework

March 21, 2017

 

By: Manuel Arellano (CEMFI, Centro de Estudios Monetarios y Financieros) ; Richard Blundell (University College London) ; Stéphane Bonhomme (University of Chicago)
We develop a new quantile-based panel data framework to study the nature of income persistence and the transmission of income shocks to consumption. Log-earnings are the sum of a general Markovian persistent component and a transitory innovation. The persistence of past shocks to earnings is allowed to vary according to the size and sign of the current shock. Consumption is modeled as an age-dependent nonlinear function of assets, unobservable tastes and the two earnings components. We establish the nonparametric identification of the nonlinear earnings process and of the consumption policy rule. Exploiting the enhanced consumption and asset data in recent waves of the Panel Study of Income Dynamics, we find that the earnings process features nonlinear persistence and conditional skewness. We confirm these results using population register data from Norway. We then show that the impact of earnings shocks varies substantially across earnings histories, and that this nonlinearity drives heterogeneous consumption responses. The framework provides new empirical measures of partial insurance in which the transmission of income shocks to consumption varies systematically with assets, the level of the shock and the history of past shocks.
Keywords: Earnings dynamics, consumption, partial insurance, panel data, quantile regression, latent variables.
JEL: C23 D31 D91
URL: http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2016_1606&r=ltv

 


Distributional National Accounts: Methods and Estimates for the United States

February 7, 2017

 

By: Thomas Piketty ; Emmanuel Saez ; Gabriel Zucman
This paper combines tax, survey, and national accounts data to estimate the distribution of national income in the United States since 1913. Our distributional national accounts capture 100% of national income, allowing us to compute growth rates for each quantile of the income distribution consistent with macroeconomic growth. We estimate the distribution of both pre-tax and post-tax income, making it possible to provide a comprehensive view of how government redistribution affects inequality. Average pre-tax national income per adult has increased 60% since 1980, but we find that it has stagnated for the bottom 50% of the distribution at about $16,000 a year. The pre-tax income of the middle class—adults between the median and the 90th percentile—has grown 40% since 1980, faster than what tax and survey data suggest, due in particular to the rise of tax-exempt fringe benefits. Income has boomed at the top: in 1980, top 1% adults earned on average 27 times more than bottom 50% adults, while they earn 81 times more today. The upsurge of top incomes was first a labor income phenomenon but has mostly been a capital income phenomenon since 2000. The government has offset only a small fraction of the increase in inequality. The reduction of the gender gap in earnings has mitigated the increase in inequality among adults. The share of women, however, falls steeply as one moves up the labor income distribution, and is only 11% in the top 0.1% today.
JEL: E01 H2 H5 J3
URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:22945&r=ltv

 


Globalization and Wage Inequality

February 7, 2017

 

By: Elhanan Helpman
Globalization has been blamed for rising inequality in rich and poor countries. Yet the views of many protagonists in this debate are not based on evidence. To help form an evidence-based opinion, I review in this paper the theoretical and empirical literature on the relationship between globalization and wage inequality. While the initial analysis that started in the early 1990s focused on a particular mechanism that links trade to wages, subsequent studies have considered several other channels, and the quantitative assessment of the size of these influences has been carried out in multiple studies. Building on this research, I conclude that trade played an appreciable role in increasing wage inequality, but that its cumulative effect has been modest, and that globalization does not explain the preponderance of the rise in wage inequality within countries.
JEL: F10 F61 F66
URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:22944&r=ltv

 


The Life-cycle Benefits of an Influential Early Childhood Program

February 7, 2017

By: Jorge Luis García ; James J. Heckman ; Duncan Ermini Leaf ; María José Prados
This paper estimates the long-term benefits from an influential early childhood program targeting disadvantaged families. The program was evaluated by random assignment and followed participants through their mid-30s. It has substantial beneficial impacts on health, children’s future labor incomes, crime, education, and mothers’ labor incomes, with greater monetized benefits for males. Lifetime returns are estimated by pooling multiple data sets using testable economic models. The overall rate of return is 13.7% per annum, and the benefit/cost ratio is 7.3. These estimates are robust to numerous sensitivity analyses.
JEL: C93 I28 J13
URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:22993&r=ltv

Intergenerational Mobility and Preferences for Redistribution

February 7, 2017

By: Alesina, Alberto ; Stantcheva, Stefanie ; Teso, Edoardo
Using newly collected cross-country survey and experimental data, we investigate how beliefs about intergenerational mobility affect preferences for redistribution in five countries: France, Italy, Sweden, U.K., and U.S.. Americans are more optimistic than Europeans about intergenerational mobility, and too optimistic relative to actual mobility. Our randomized treatment that shows respondents pessimistic information about mobility increases support for redistribution, mostly for equality of opportunity policies. A strong political polarization exists: Left-wing respondents are more pessimistic about intergenerational mobility, their preferences for redistribution are correlated with their mobility perceptions, and they respond to pessimistic information by increasing support for redistribution. None of these apply to right-wing respondents, possibly because of their extremely negative views of government.
Keywords: Fairness; intergenerational mobility; Online Experiment; redistribution; taxation
JEL: D31 D72 H21 H23 H24
URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:11738&r=ltv

 


Do State Laws Protecting Older Workers from Discrimination Reduce Age Discrimination in Hiring? Experimental (and Nonexperimental) Evidence

February 7, 2017

 

By: David Neumark (University of California-Irvine) ; Ian Burn (University of California-Irvine) ; Patrick Button (Tulane University) ; Nanneh Chehras (University of California-Irvine)
We provide evidence from a field experiment — a correspondence study — on age discrimination in hiring for retail sales jobs. We collect experimental data in all 50 states and then relate measured age discrimination — the difference in callback rates between old and young applicants — to variation across states in antidiscrimination laws offering protections to older workers that are stronger than the federal age and disability discrimination laws. We do a similar analysis for nonexperimental data on differences across states in hiring rates of older versus younger workers. The experimental evidence points consistently to evidence of hiring discrimination against older men and more so against older women. However, the evidence on the relationship between hiring discrimination against older workers and state variation in age and disability discrimination laws is not so clear; at a minimum, there is not a compelling case that stronger state protections reduce hiring discrimination against older workers. In contrast, the nonexperimental evidence suggests that stronger disability discrimination protections increase the relative hiring of older workers.
URL: http://d.repec.org/n?u=RePEc:mrr:papers:wp349&r=ltv