Knowledge that Transforms

This study focuses on how college students form expectations about various major-specific outcomes. For this purpose, I collect a panel data set of Northwestern University undergraduates that contains their subjective expectations about major-specific outcomes. Although students tend to be overconfident about their future academic performance, they revise their expectations in expected ways. The updating process is found to be consistent with a Bayesian learning model. I show that learning plays a role in the decision to switch majors and that major switchers respond to information from their own major. I also present evidence that learning is general and not entirely major specific.

Gibbons and Katz’s asymmetric information model of the labor market predicts that wage losses following displacement should be larger for layoffs than for plant closings. This was borne out in their empirical work. In this article, we examine how the difference in wage losses across plant closing and layoff varies with race and gender. We find that the basic prediction by Gibbons and Katz holds only for white males. We augment their asymmetric information model with heterogeneous human capital and show that this augmented model can match the data.

The Appalachian region has experienced persistently higher poverty and lower earnings than the rest of the United States. We examine whether skill differentials or differences in the returns to those skills lie at the root of the Appalachian wage gap. Using census data, we decompose the Appalachian wage gap using both mean and full distribution methods. Our findings suggest that significant upgrading of skills within the region has prevented the gap from widening over the last 20 years. Additionally we find that urban areas within Appalachia have not experienced the rise in returns to skills as in non-Appalachian urban areas.

We investigate whether selective intermarriage and endogenous ethnic identification interact to hide some of the intergenerational progress achieved by the Mexican-origin population in the United States. In part, we do this by comparing an “objective” indicator of Mexican descent (based on the countries of birth of the respondent and his parents and grandparents) with the standard “subjective” measure of Mexican self-identification (based on the respondent’s answer to the Hispanic-origin question). For third-generation Mexican American youth, we show that ethnic attrition is substantial and could produce significant downward bias in standard measures of attainment that rely on ethnic self-identification.

We use unique workplace and employee-level data to evaluate a major UK government pilot program to increase qualification-based, employer-provided training for low-qualified employees. We evaluate the program’s effect using a difference-in-differences approach. Using data on eligible employers and workers we find noevidence of a statistically significant effect on the take-up of training in the first 3 years of the program. Our results suggest that the program involved a high level of deadweight and that improving the additionality of the subsequent national program is crucial if it is to make a significant contribution toward government targets to increase qualification levels.

We estimate the causal effect of attending a state Faith school on primary education achievement in England using administrative student-level data and implementing various strategies to control for students’ selection into Faith schooling. Our regressions control for fixed effects in prior achievement and residential postcode to compare pupils who are close residential neighbors and have identical observable ability. We also use information on future school choices to control for preferences for Faith schooling. Results show that pupils progress faster in Faith primary schools, but all of this advantage is explained by sorting into Faith schools according to preexisting characteristics and preferences.