The path of income inequality in post-reform China has been widely interpreted as “China’s Kuznets curve.” We show that the Kuznets growth model of structural transformation in a dual economy, alongside population urbanization, has little explanatory power for our new series of inequality measures back to 1981. Our simulations tracking the partial “Kuznets derivative” of inequality with respect to urban population share yield virtually no Kuznets curve. More plausible explanations for the inequality turning points relate to determinants of the gap between urban and rural mean incomes, including multiple agrarian policy reforms. Our findings warn against any presumption that the Kuznets process will assure that China has passed its time of rising inequality. More generally, our findings cast doubt on past arguments that economic growth through structural transformation in poor countries is necessarily inequality increasing, or that a turning point will eventually be reached after which that growth will be inequality decreasing. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
{"title":"Is that Really a Kuznets Curve? Turning Points for Income Inequality in China","authors":"M. Ravallion, Shaohua Chen","doi":"10.3386/w29199","DOIUrl":"https://doi.org/10.3386/w29199","url":null,"abstract":"The path of income inequality in post-reform China has been widely interpreted as “China’s Kuznets curve.” We show that the Kuznets growth model of structural transformation in a dual economy, alongside population urbanization, has little explanatory power for our new series of inequality measures back to 1981. Our simulations tracking the partial “Kuznets derivative” of inequality with respect to urban population share yield virtually no Kuznets curve. More plausible explanations for the inequality turning points relate to determinants of the gap between urban and rural mean incomes, including multiple agrarian policy reforms. Our findings warn against any presumption that the Kuznets process will assure that China has passed its time of rising inequality. More generally, our findings cast doubt on past arguments that economic growth through structural transformation in poor countries is necessarily inequality increasing, or that a turning point will eventually be reached after which that growth will be inequality decreasing. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.","PeriodicalId":19091,"journal":{"name":"NBER Working Paper Series","volume":"07 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84476333","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This research provides a single explanation for: (i) the persistence of malnutrition and (ii) the increased prevalence of metabolic disease (diabetes, hypertension, cardiovascular disease) among normal weight individuals with economic development. Our model is based on a set point for BMI or bodyweight that is adapted to conditions of scarcity in the pre-modern economy, but which subsequently fails to adjust to rapid economic change. During the process of development, some individuals thus remain at their low-BMI set point, despite the increase in their consumption, while others who have escaped the nutrition trap (but are not necessarily overweight) are at increased risk of metabolic disease. The model and the underlying biological mechanism, which are validated with micro-data from India, Indonesia and Ghana can jointly explain inter-regional (Asia-Africa) differences in nutritional status and the prevalence of diabetes.
{"title":"Economic Development, the Nutrition Trap and Metabolic Disease","authors":"N. Luke, Kaivan Munshi, A. Oommen, Swapnil Singh","doi":"10.3386/w29132","DOIUrl":"https://doi.org/10.3386/w29132","url":null,"abstract":"This research provides a single explanation for: (i) the persistence of malnutrition and (ii) the increased prevalence of metabolic disease (diabetes, hypertension, cardiovascular disease) among normal weight individuals with economic development. Our model is based on a set point for BMI or bodyweight that is adapted to conditions of scarcity in the pre-modern economy, but which subsequently fails to adjust to rapid economic change. During the process of development, some individuals thus remain at their low-BMI set point, despite the increase in their consumption, while others who have escaped the nutrition trap (but are not necessarily overweight) are at increased risk of metabolic disease. The model and the underlying biological mechanism, which are validated with micro-data from India, Indonesia and Ghana can jointly explain inter-regional (Asia-Africa) differences in nutritional status and the prevalence of diabetes.","PeriodicalId":19091,"journal":{"name":"NBER Working Paper Series","volume":"73 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73403874","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the effect of a restorative justice intervention targeted at youth ages 13 to 17 facing felony charges of medium severity (e.g., burglary, assault). Eligible youths were randomly assigned to participate in the Make-it-Right (MIR) restorative justice program or to a control group in which they faced criminal prosecution. We estimate the effects of MIR on the likelihood that a youth will be rearrested in the four years following randomization. Assignment to MIR reduces the likelihood of a rearrest within six months by 19 percentage points, a 44 percent reduction relative to the control group. Moreover, the reduction in recidivism persists even four years after randomization. Thus, our estimates show that juvenile restorative justice conferencing can reduce recidivism among youth charged with relatively serious offenses and can be an effective alternative to traditional criminal justice practices.
{"title":"Can Restorative Justice Conferencing Reduce Recidivism? Evidence from the Make-it-Right Program","authors":"Yotam Shem-Tov, S. Raphael, A. Skog","doi":"10.3386/w29150","DOIUrl":"https://doi.org/10.3386/w29150","url":null,"abstract":"This paper studies the effect of a restorative justice intervention targeted at youth ages 13 to 17 facing felony charges of medium severity (e.g., burglary, assault). Eligible youths were randomly assigned to participate in the Make-it-Right (MIR) restorative justice program or to a control group in which they faced criminal prosecution. We estimate the effects of MIR on the likelihood that a youth will be rearrested in the four years following randomization. Assignment to MIR reduces the likelihood of a rearrest within six months by 19 percentage points, a 44 percent reduction relative to the control group. Moreover, the reduction in recidivism persists even four years after randomization. Thus, our estimates show that juvenile restorative justice conferencing can reduce recidivism among youth charged with relatively serious offenses and can be an effective alternative to traditional criminal justice practices.","PeriodicalId":19091,"journal":{"name":"NBER Working Paper Series","volume":"46 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91024479","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Andrés Fernández, Daniel Guzmán, Ruy Lama, Carlos A. Végh
To explain the fact that government spending and tax policy are procyclical in emerging and developing countries, we develop a model for the joint behavior of optimal tax rates and government spending over the business cycle. Our set-up relies on financial frictions, which have been shown to be critical features of emerging markets, captured by various degrees of asset market incompleteness as well as varying levels of debt-elastic interest rate spreads. We first uncover a novel theoretical result within a simple static framework: incomplete markets can account for procyclical government spending but not necessarily procyclical tax policy. Explaining procyclical tax policy also requires that the ratio of private to public consumption comoves positively with the business cycle, which leads to larger fluctuations in the tax base. We then show that the procyclicality of tax policy holds in a more realistic DSGE model calibrated to emerging markets. Finally, we illustrate how larger financial frictions, which amplify the business cycle through more procyclical fiscal policies, have sizeable Lucas-type welfare costs. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
{"title":"Procyclical Fiscal Policy and Asset Market Incompleteness","authors":"Andrés Fernández, Daniel Guzmán, Ruy Lama, Carlos A. Végh","doi":"10.3386/w29149","DOIUrl":"https://doi.org/10.3386/w29149","url":null,"abstract":"To explain the fact that government spending and tax policy are procyclical in emerging and developing countries, we develop a model for the joint behavior of optimal tax rates and government spending over the business cycle. Our set-up relies on financial frictions, which have been shown to be critical features of emerging markets, captured by various degrees of asset market incompleteness as well as varying levels of debt-elastic interest rate spreads. We first uncover a novel theoretical result within a simple static framework: incomplete markets can account for procyclical government spending but not necessarily procyclical tax policy. Explaining procyclical tax policy also requires that the ratio of private to public consumption comoves positively with the business cycle, which leads to larger fluctuations in the tax base. We then show that the procyclicality of tax policy holds in a more realistic DSGE model calibrated to emerging markets. Finally, we illustrate how larger financial frictions, which amplify the business cycle through more procyclical fiscal policies, have sizeable Lucas-type welfare costs. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.","PeriodicalId":19091,"journal":{"name":"NBER Working Paper Series","volume":"27 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84294031","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the uneven effects of air pollution from maritime ports on physical and mental health across racial groups. We exploit quasi-random variation in vessels in port from weather events far out in the ocean to estimate how port traffic influences air pollution and human health. We find that one additional vessel in a port over a year leads to 3.0 hospital visits per thousand Black residents within 25 miles of the port and only 1.0 per thousand for whites. We assess a port-related environmental regulation and show that the policy can help alleviate racial inequalities in health outcomes.
{"title":"Racial Disparities in the Health Effects from Air Pollution: Evidence from Ports","authors":"K. Gillingham, PeiLing. Huang","doi":"10.2139/ssrn.3901686","DOIUrl":"https://doi.org/10.2139/ssrn.3901686","url":null,"abstract":"This study examines the uneven effects of air pollution from maritime ports on physical and mental health across racial groups. We exploit quasi-random variation in vessels in port from weather events far out in the ocean to estimate how port traffic influences air pollution and human health. We find that one additional vessel in a port over a year leads to 3.0 hospital visits per thousand Black residents within 25 miles of the port and only 1.0 per thousand for whites. We assess a port-related environmental regulation and show that the policy can help alleviate racial inequalities in health outcomes.","PeriodicalId":19091,"journal":{"name":"NBER Working Paper Series","volume":"34 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81130501","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Mir M. Ali, Chandler B McCellan, R. Mutter, D. Rees
Recent studies have concluded that state laws legalizing medical marijuana can reduce deaths from opioid overdoses. Using data from the National Survey on Drug Use and Health, a survey uniquely suited to assessing drug misuse, we examine the relationship between recreational marijuana laws (RMLs) and the use of opioids. Standard difference-in-differences (DD) regression estimates indicate that RMLs do not affect the likelihood of misusing prescription pain relievers such as OxyContin, Percocet, and Vicodin. Although DD regression estimates provide evidence that state laws legalizing recreational marijuana can reduce the frequency of misusing prescription pain relievers, event-study estimates are noisy and suggest that any effect on the frequency of misuse is likely transitory. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
{"title":"Recreational Marijuana Laws and the Use of Opioids: Evidence from Nsduh Microdata","authors":"Mir M. Ali, Chandler B McCellan, R. Mutter, D. Rees","doi":"10.3386/w29087","DOIUrl":"https://doi.org/10.3386/w29087","url":null,"abstract":"Recent studies have concluded that state laws legalizing medical marijuana can reduce deaths from opioid overdoses. Using data from the National Survey on Drug Use and Health, a survey uniquely suited to assessing drug misuse, we examine the relationship between recreational marijuana laws (RMLs) and the use of opioids. Standard difference-in-differences (DD) regression estimates indicate that RMLs do not affect the likelihood of misusing prescription pain relievers such as OxyContin, Percocet, and Vicodin. Although DD regression estimates provide evidence that state laws legalizing recreational marijuana can reduce the frequency of misusing prescription pain relievers, event-study estimates are noisy and suggest that any effect on the frequency of misuse is likely transitory. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.","PeriodicalId":19091,"journal":{"name":"NBER Working Paper Series","volume":"26 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89050806","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Benjamin L. Berger, A. Chandra, Craig L. Garthwaite
Regulatory review of new medicines is often viewed as a hindrance to innovation by increasing the hurdle to bring products to market. However, a more complete accounting of regulation must also account for its potential market expanding effects through quality certification. We combine data on FDA approvals for follow-on indications and patient-level data on utilization, and examine whether FDA approval of a follow-on indication increases the use of a drug for that indication. We find 5 facts for the market-expanding role of regulation: (1) follow-on approvals increase the share of patients taking a drug with that indication by 4.1 percentage points, or 40% increase over baseline use, at the time of approval; (2) there is little market learning prior to or following the approval of the follow-on indication, suggesting that such approvals fully certify the new use; (3) the effect of these approvals is larger for uses in a different disease area than previous indications, an increase equivalent to over 4 � years of market-learning; (4) it is FDA approval, not the initiation of clinical trials that generate the expansion in market size; (5) the market expansion is consistent with physicians prescribing the medicines more because of higher perceived benefits, not reduced administrative costs.
{"title":"Regulatory Approval and Expanded Market Size","authors":"Benjamin L. Berger, A. Chandra, Craig L. Garthwaite","doi":"10.3386/W28889","DOIUrl":"https://doi.org/10.3386/W28889","url":null,"abstract":"Regulatory review of new medicines is often viewed as a hindrance to innovation by increasing the hurdle to bring products to market. However, a more complete accounting of regulation must also account for its potential market expanding effects through quality certification. We combine data on FDA approvals for follow-on indications and patient-level data on utilization, and examine whether FDA approval of a follow-on indication increases the use of a drug for that indication. We find 5 facts for the market-expanding role of regulation: (1) follow-on approvals increase the share of patients taking a drug with that indication by 4.1 percentage points, or 40% increase over baseline use, at the time of approval; (2) there is little market learning prior to or following the approval of the follow-on indication, suggesting that such approvals fully certify the new use; (3) the effect of these approvals is larger for uses in a different disease area than previous indications, an increase equivalent to over 4 � years of market-learning; (4) it is FDA approval, not the initiation of clinical trials that generate the expansion in market size; (5) the market expansion is consistent with physicians prescribing the medicines more because of higher perceived benefits, not reduced administrative costs.","PeriodicalId":19091,"journal":{"name":"NBER Working Paper Series","volume":"57 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77804159","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Individuals who engage in “judging” – that is, rendering a determination in a dispute or contest between two parties – might be influenced by public pressure to favor one of the parties. Many rules and arrangements seek to insulate such individuals from public pressure or to address the effects of such pressure. We study this subject empirically, investigating the circumstances in which public pressure is more and less likely to affect judging. Using detailed data from the Bundesliga, Germany’s top soccer league, our analysis of how crowd pressure affects the decisions of referees yields two key insights. First, we show that crowd pressure biases referee’s decisions in favor of the home team for those decisions that cannot be unam-biguously identified as erroneous but not for those decisions that can. In particular, a referee exhibits a bias in favor of the home team with respect to more subjective decisions such as the showing of yellow cards (cautions), which is based on the referee’s judgment, but not with respect to more objective de-cisions such as validating goals and awarding penalty kicks, where live TV coverage often allows for objective identification of errors. Second, we show that the effect of crowd pressure on referee decisions depends on the extent to which such pressure is viewed by the referee as understandable or reasonable (or even justified). Specifically, a referee’s bias in favor of the home team in yellow card issuance is strengthened after the referee makes an objectively identifiable error against the home team and thus might view crowd heckling as understandable. This effect is stronger when the referee’s error is costlier to the home team because the game is more important or the error is more consequential due to the closeness of the game at the time of the error. The introduction of VAR (Video Assistant Referee) technology in 2017 and the restrictions im-posed due to Covid-19 pandemic, which caused games to be played without crowds for the second half of the 2019–20 season, allow us to test our results under three different regimes (pre-VAR, VAR, and VAR/no-crowd). Inspection of the results under these three different regimes serves to reinforce them. As expected, VAR reduces the number of referee errors, but the pattern of no bias with respect to errors is preserved. VAR has no effect on the number of yellow cards, or on the number of goals. Once the crowd disappears, so does the home advantage in goals. Referee errors are unaffected, but the home bias with respect to yellow cards disappears as well. This confirms the effect that the crowd has on referees’ more subjective decisions.
{"title":"Judging Under Public Pressure","authors":"Alma Cohen, Florian Auferoth, Z. Neeman","doi":"10.3386/W28894","DOIUrl":"https://doi.org/10.3386/W28894","url":null,"abstract":"Individuals who engage in “judging” – that is, rendering a determination in a dispute or contest between two parties – might be influenced by public pressure to favor one of the parties. Many rules and arrangements seek to insulate such individuals from public pressure or to address the effects of such pressure. We study this subject empirically, investigating the circumstances in which public pressure is more and less likely to affect judging. Using detailed data from the Bundesliga, Germany’s top soccer league, our analysis of how crowd pressure affects the decisions of referees yields two key insights. First, we show that crowd pressure biases referee’s decisions in favor of the home team for those decisions that cannot be unam-biguously identified as erroneous but not for those decisions that can. In particular, a referee exhibits a bias in favor of the home team with respect to more subjective decisions such as the showing of yellow cards (cautions), which is based on the referee’s judgment, but not with respect to more objective de-cisions such as validating goals and awarding penalty kicks, where live TV coverage often allows for objective identification of errors. Second, we show that the effect of crowd pressure on referee decisions depends on the extent to which such pressure is viewed by the referee as understandable or reasonable (or even justified). Specifically, a referee’s bias in favor of the home team in yellow card issuance is strengthened after the referee makes an objectively identifiable error against the home team and thus might view crowd heckling as understandable. This effect is stronger when the referee’s error is costlier to the home team because the game is more important or the error is more consequential due to the closeness of the game at the time of the error. The introduction of VAR (Video Assistant Referee) technology in 2017 and the restrictions im-posed due to Covid-19 pandemic, which caused games to be played without crowds for the second half of the 2019–20 season, allow us to test our results under three different regimes (pre-VAR, VAR, and VAR/no-crowd). Inspection of the results under these three different regimes serves to reinforce them. As expected, VAR reduces the number of referee errors, but the pattern of no bias with respect to errors is preserved. VAR has no effect on the number of yellow cards, or on the number of goals. Once the crowd disappears, so does the home advantage in goals. Referee errors are unaffected, but the home bias with respect to yellow cards disappears as well. This confirms the effect that the crowd has on referees’ more subjective decisions.","PeriodicalId":19091,"journal":{"name":"NBER Working Paper Series","volume":"26 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81148537","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We develop and calibrate a life-cycle model of labor supply and consumption to quantify the implications of alternative pension reforms on labor supply, individual welfare, and government budget for China’s basic old-age insurance program. We focus on urban males and distinguish low-skilled and high-skilled individuals, who differ in their preferences, health and labor income dynamics, and medical expense processes. We use the calibrated model to evaluate three potential pension reforms: (i) increasing the pension eligibility age from 60 to 65, but keeping the current pension benefit rule unchanged; (ii) keeping the pension eligibility age at 60, but proportionally lowering pension benefits so that the pension program’s budget is the same as under Reform (i); and (iii) increasing the pension eligibility age to 65 and simultaneously increasing the pension benefits so that individuals of both skill types attain the same individual welfare levels as in the status quo. We find that relative to the baseline, both Reforms (i) and (ii) can substantially improve the budgets of the pension system, but at the cost of substantial individual welfare loss for both skill types. In contrast, we find that Reform (iii) can modestly improve the budget of the pension system while ensuring that both skill types are as well off as in the status quo. We find that Reforms (i) and (ii) slightly increases, but Reform (iii) slightly decreases, the overall labor supply.
{"title":"Delay the Pension Age or Adjust the Pension Benefit? Implications for Labor Supply and Individual Welfare in China","authors":"Yuanyuan Deng, Hanming Fang, Katja Hanewald, Shang Wu","doi":"10.2139/ssrn.3858898","DOIUrl":"https://doi.org/10.2139/ssrn.3858898","url":null,"abstract":"We develop and calibrate a life-cycle model of labor supply and consumption to quantify the implications of alternative pension reforms on labor supply, individual welfare, and government budget for China’s basic old-age insurance program. We focus on urban males and distinguish low-skilled and high-skilled individuals, who differ in their preferences, health and labor income dynamics, and medical expense processes. We use the calibrated model to evaluate three potential pension reforms: (i) increasing the pension eligibility age from 60 to 65, but keeping the current pension benefit rule unchanged; (ii) keeping the pension eligibility age at 60, but proportionally lowering pension benefits so that the pension program’s budget is the same as under Reform (i); and (iii) increasing the pension eligibility age to 65 and simultaneously increasing the pension benefits so that individuals of both skill types attain the same individual welfare levels as in the status quo. We find that relative to the baseline, both Reforms (i) and (ii) can substantially improve the budgets of the pension system, but at the cost of substantial individual welfare loss for both skill types. In contrast, we find that Reform (iii) can modestly improve the budget of the pension system while ensuring that both skill types are as well off as in the status quo. We find that Reforms (i) and (ii) slightly increases, but Reform (iii) slightly decreases, the overall labor supply.","PeriodicalId":19091,"journal":{"name":"NBER Working Paper Series","volume":"9 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81702404","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates whether education weakens the relationship between early-life disadvantages and later-life SES. We use three proxies for advantage that we show are independently associated with SES in middle-age. Besides early, favorable family and neighborhood conditions, we argue that the genes a child inherits also represent a source of advantages. Using a regression discontinuity design and data for over 110,000 individuals, we study a compulsory schooling reform in the UK that generated exogenous variation in schooling. While the reform succeeded in reducing educational disparities, it did not weaken the relationship between early-life disadvantages and wages. This implies that advantaged children had higher returns to schooling. We exploit family-based random genetic variation and find no evidence that these higher returns were driven by genetically-influenced individual characteristics such as innate ability or skills.
{"title":"The Effect of Education on the Relationship between Genetics, Early-Life Disadvantages, and Later-Life Ses","authors":"S. Barcellos, Leandro S. Carvalho, P. Turley","doi":"10.3386/W28750","DOIUrl":"https://doi.org/10.3386/W28750","url":null,"abstract":"This paper investigates whether education weakens the relationship between early-life disadvantages and later-life SES. We use three proxies for advantage that we show are independently associated with SES in middle-age. Besides early, favorable family and neighborhood conditions, we argue that the genes a child inherits also represent a source of advantages. Using a regression discontinuity design and data for over 110,000 individuals, we study a compulsory schooling reform in the UK that generated exogenous variation in schooling. While the reform succeeded in reducing educational disparities, it did not weaken the relationship between early-life disadvantages and wages. This implies that advantaged children had higher returns to schooling. We exploit family-based random genetic variation and find no evidence that these higher returns were driven by genetically-influenced individual characteristics such as innate ability or skills.","PeriodicalId":19091,"journal":{"name":"NBER Working Paper Series","volume":"31 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90853997","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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