In the 1980s, many US cities initiated programs reserving a proportion of government contracts for minority-owned businesses. The staggered introduction of these set-aside programs is used to estimate their impacts on the self-employment and employment rates of African American men. Black business ownership rates increased significantly after program initiation, with the black-white gap falling 3 percentage points. The evidence that the racial gap in employment also fell is less clear as it depends on assumptions about the continuation of preexisting trends. The black gains were concentrated in industries heavily affected by set-asides, and they mostly benefited the better educated.
Journal of Labor Economics201432(1), 27-63open access
We study the effectiveness of magnet programs in an urban district that ration excess demand by admission lotteries. Differential attrition arises since students who lose the lottery are more likely to pursue options outside the school district than students who win the lottery. When students leave the district, important outcome variables are often not observed. The treatment effects are not point-identified. We exploit known quantiles of the outcome distribution to construct informative bounds on treatment effects. We find that magnet programs improve behavioral outcomes but have no significant effect on achievement.
Military assignment mechanisms provide a unique opportunity to estimate the impact of high-performing mentors on job advancement of their subordinates. Combining US Army administrative data with officer evaluation reports, we find that high-performing mentors positively affect early junior officer promotion and that early promotion probabilities rise as the duration of the high-quality mentorship increases. These effects are largest for high-ability protégés. Junior officers who were exposed to multiple high-performing mentors did not experience an additional increase in promotion rates.
Unlike in elementary school, high school teacher effects may be confounded with both selection to tracks and track-level treatments. I document confounding track effects and show that traditional tests for the existence of teacher effects are biased. After accounting for biases, high school algebra and English teachers have smaller test score effects than found in previous studies and value-added estimates are weak predictors of teachers’ future performance. Results indicate that either (a) teachers are less influential in high school than in elementary school or (b) test score effects are a weak measure of teacher quality at the high school level.
Journal of Labor Economics201432(2), 199-227open access
This article investigates the pricing distortions that arise from the use of a common nonlinear incentive scheme at a leading enterprise software vendor. The empirical results demonstrate that salespeople are adept at gaming the timing of deal closure to take advantage of the vendor’s accelerating commission scheme. Specifically, salespeople agree to significantly lower pricing in quarters in which they have a financial incentive to close a deal, resulting in mispricing that costs the vendor 6%–8% of revenue. Robustness checks demonstrate that price discrimination by the vendor does not explain the identified effects.
In most countries, employers are financially responsible for sick pay during an initial period of a worker’s absence spell, after which the public insurance system covers the bill. Based on an empirical evaluation of a quasi-natural experiment in Norway, where pay liability was removed for pregnancy-related absences, we show that the system of short-term pay liability creates a sick pay trap: firms are discouraged from letting long-term sick workers back into work since they then face the financial risk associated with subsequent relapses. We present evidence indicating that this disincentive effect is both statistically and economically significant.
We evaluate the effect of performance-based incentive programs on educational outcomes for community college students from a random assignment experiment at three campuses. Incentive payments over 2 semesters were tied to meeting two conditions—enrolling at least half-time and maintaining a C or better grade point average. Eligibility increased the likelihood of enrolling in the second semester after random assignment and total number of credits earned. Over 2 years, program group students completed nearly 40% more credits. We find little evidence that program eligibility changed types of courses taken but some evidence of increased academic performance and effort.
Journal of Labor Economics201432(1), 123-159open access
This article examines whether gay and lesbian workers sort into tolerant occupations. With information on sexual orientation, prejudice, and occupational choice taken from Australian Twin Registers, we find that gays and lesbians shy away from prejudiced occupations. We show that our segregation results are largely driven by those gay and lesbian workers with disclosed identities and are robust to the inclusion of unobserved factors that are inherited and observed factors that strongly correlate with productive skills and vocational preferences. Our segregation estimates are consistent with prejudice-based theories of employer and employee discrimination against gay and lesbian workers.
This article revisits the effectiveness of public-sponsored training programs for Germany accounting for dynamic selection into heterogeneous programs. We carefully assess to what extent various aspects of our empirical strategy, such as conditioning flexibly on employment and benefit histories, the availability of rich data, handling of later program participations, and further methodological choices affect our estimates. Our results imply pronounced negative lock-in effects in the short run and positive medium-run effects on employment and earnings when job-seekers enroll after having been unemployed for some time. We find that data and specification issues can have a large effect.
I model how children’s acquisition of a given form of human capital incentivizes adults in their household to either learn from them (if children can teach the skill to adults, adults’ cost of learning falls) or lean on them (if children’s human capital substitutes for that of adults in household production, adults’ benefit from learning falls). Using variation in compliance with an English-immersion mandate in California schools, I find that English instruction improved immigrant children’s English proficiency but discouraged adults living with them from acquiring the language. Whether family members “learn” or “lean” affects the externalities associated with education policies.