Knowledge that Transforms

Using multiple administrative data sources from Norway, we examine how firm performance changes after entrepreneurs become parents.Female-owned businesses experience a substantial decline in profits, steadily decreasing to 30% below baseline ten years post-childbirth.In contrast, male-owned businesses show no decline, often growing in revenues and costs after childbirth.The profit decline for female-owned firms is most pronounced among highly capable entrepreneurs, women who are majority owners, and those with working spouses.Entrepreneurial effort is key to performance, and our findings suggest that time demands from childbirth and childcare are a significant determinant of the decline in firm profits.

This paper estimates the causal impacts on child skills and the mechanisms producing these impacts using data from a randomized control experiment. We study a widely emulated early-childhood home visiting program and show the feasibility of replicating it at scale. We go beyond reporting treatment effects as unweighted item scores and assess item difficulties. To interpret treatment effects, we estimate individual-level latent skills and compare treatments and controls. The program substantially improves multiple skills. We decompose the source of treatment effects and find that enhancements in latent skills explain most of the conventional treatment effects for language and cognition.

I study the role of social networks in the propagation of economic shocks across space. Combining comprehensive data on US online friendships with extraction activity during the fracking boom, I show that exogenous changes in economic conditions in one area affect outcomes in socially proximate places, regardless of how far apart they are geographically. Social exposure to fracking generates a wage spillover amounting to one-third of every dollar of energy produced in a county’s social network. This spillover decays slowly in space and is associated with a large mobility response. Diffusion mainly stems from the commuting of transient fracking workers.

This paper utilizes wealth shocks from winning lottery prizes to examine the causal effect of financial resources on fertility. We employ extensive panels of administrative data encompassing over 0.4 million lottery winners in Taiwan and implement a triple-differences design. Our analyses reveal that a substantial lottery win can significantly increase fertility, the implied wealth elasticity of which is around 0.06. Moreover, the primary channel through which fertility increases is by prompting first births among previously childless individuals. Finally, our analysis reveals that approximately 25% of the total fertility effect stems from increased marriage rates following a lottery win.

We characterize the joint evolution of cross-sectional inequality in earnings, other sources of income and consumption across generations in the U.S. To account for cross-sectional dispersion, we estimate a model of intergenerational persistence and separately identify the influences of parental factors and of idiosyncratic life-cycle components. We find evidence of family persistence in earnings, consumption and saving behaviours, and marital sorting patterns. However, the quantitative contribution of idiosyncratic heterogeneity to cross-sectional inequality is significantly larger than parental effects. Our estimates imply that intergenerational persistence is not high enough to induce further large increases in inequality over time and across generations.

Many workers are evaluated on their ability to engage with customers. We measure the impact of gender-based customer discrimination on the productivity of online sales agents in sub-Saharan Africa. Using a novel framework that randomly varies the gender of names presented to customers without changing worker behavior, we find the assignment of a female-sounding name leads to 50 percent fewer purchases. Customers also lag in responding, are less expressive, and avoid discussing purchases. We show similar results for customers around the world and across workers. Removing customer bias, we find women would be more productive than their male coworkers.

Firstborns, on average, complete more education than laterborns. We study whether individuals’ endowments measured by genetic information amplify this effect. Our familyfixed effects approach allows exploiting exogenous variation in birth order and genetic endowments among 14,850 siblings in the UK Biobank. We find that those with higher genetic endowments benefit disproportionately more from being firstborn compared to those with lower endowments, providing a clean example of how nature and nurture interact in producing human capital. Since parental investments are a dominant channel driving birth order effects, our results are consistent with complementarity between endowments and investments in human capital formation.

We analyze trends in labor-market returns to psychological traits using data from half a million Finnish men from 2001 to 2015. Cognitive skills' value declined, while noncognitive skills' value increased. Our novel findings show that extraversion drives this rise, while conscientiousness remains stable. Extraversion's rising returns are most pronounced for lower earners and those on the employment margin. These traits predict different labor market paths: extraversion predicts lower education and more work experience, while cognitive ability and conscientiousness lead to higher education and high-paying jobs.

We investigate the role of gender norms in shaping parental childcare following changes in the relative take-home pay of mothers and fathers. Exploiting variation from Swedish tax reforms, we estimate the elasticity of substitution in parental childcare for native and immigrant couples from a variety of countries characterized by varying gender norms. Couples originating from countries with relatively conservative norms are more likely to reallocate childcare to mothers following a reduction in the father’s tax rate and less likely to reallocate childcare to fathers following a reduction in the mother’s tax rate, thereby reinforcing a traditional allocation of childcare across parents.