Knowledge that Transforms

This paper estimates a price elasticity using a flexible demand specification on survey data where prices are observed with errors and are correlated with household characteristics. The demand function is modeled as a polynomial/trigonometric in the unobserved true prices, and the form of the dependency between the observed prices and household characteristics is modeled parametrically. I identify and estimate the model by adapting the approach of Hausmann et al. (1991) and Schennach (2004). The flexible specifications allow us to observe that price elasticities vary across the price distribution, something missed in previous work using linear demand specifications.

We examine the effect of air pollution on school absences using administrative data for elementary and middle school children in 39 of the largest school districts in Texas merged with air quality information maintained by the Environmental Protection Agency. We address potentially confounding factors with a difference-in-difference-in-differences strategy that controls for persistent characteristics of schools, years, and attendance periods. Of the pollutants considered, we find that high carbon monoxide (CO) levels, even when below federal air quality standards, significantly increase absences. Our results suggest that the substantial decline in CO levels over the past two decades has yielded economically significant health benefits.

One rationale for work-focused welfare reform was human capital theory: work today should raise experience tomorrow, which should raise future wage offers and reduce welfare dependency. Yet few studies have estimated the effect of welfare reform on wages. I approach the problem using a novel sample selection estimator based on reservation wage data. Reservation wages solve the selection problem using bivariate censored regression methods without the need for exclusion restrictions. Whereas OLS and conventional sample selection estimates suggest that reform had little effect on wages, the reservation-wage-adjusted estimates suggest that Florida's welfare reform experiment raised wages by about 4%.

This paper provides new evidence on racial profiling using information on the race of both motorists and officers. Extending the model of Knowles, Persico, and Todd (2001), we develop a new test for distinguishing between preference-based and statistical discrimination. Our test is based on the notion that if search decisions are driven purely by statistical discrimination, then they should be independent of officer race. Our results, by contrast, demonstrate that officers are more likely to search if officer race and driver race differ. We then investigate and rule out two alternative explanations for our findings.

The intergenerational earnings mobility of Canadians born to immigrants is examined using the 2001 Census. A detailed portrait of the Canadian population is offered as are estimates of the degree of generational mobility among the children of immigrants from seventy countries. The degree of intergenerational persistence is about the same for immigrants as for the entire population, and there is more generational mobility among immigrants in Canada than in the United States. We also use quantile regressions to distinguish between the role of social capital from other constraints limiting mobility and find that these are present.

To control the deer population, state game commissions regulate the types of deer that can be legally harvested. These regulations, however, might have an unintended effect on hunting-related accidents by changing the care hunters take when firing their rifles—a moral hazard effect—or changing the composition of hunters. Using detailed data on hunting accidents and regulations in Pennsylvania counties from 1990 to 2005, we find compelling evidence that harvesting restrictions increase the care hunters take in a manner consistent with moral hazard. Thus, these regulations have a positive safety externality.

February 01 2009 Estimating the Variance of Wages in the Presence of Selection and Unobserved Heterogeneity Stacey H Chen Stacey H Chen Search for other works by this author on: This Site Google Scholar Author and Article Information Stacey H Chen Online ISSN: 1530-9142 Print ISSN: 0034-6535 Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology2009 The Review of Economics and Statistics (2009) 91 (1): 227. https://doi.org/10.1162/rest.91.1.227 Connected Content This is a correction to: Estimating the Variance of Wages in the Presence of Selection and Unobserved Heterogeneity Cite Icon Cite Permissions Share Icon Share Facebook Twitter LinkedIn Email Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Stacey H Chen; Estimating the Variance of Wages in the Presence of Selection and Unobserved Heterogeneity. The Review of Economics and Statistics 2009; 91 (1): 227. doi: https://doi.org/10.1162/rest.91.1.227 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll JournalsThe Review of Economics and Statistics Search Advanced Search View Original Article Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology2009 Article PDF first page preview Close Modal You do not currently have access to this content.

Using data for North Carolina public school students in grades 3 to 8, we examine achievement gaps between white students and students from other racial and ethnic groups. We focus on cohorts of students who stay in the state's public schools for all six years. While the black-white gaps are sizable and robust, both Hispanic and Asian students tend to gain on whites as they progress in school. Beyond simple mean differences, we find that the racial gaps in math between low-performing students have tended to shrink as students progress through school, while those for high-performing students have generally widened.

We present and estimate a model with strategic complementarities in firms' choices of on-time or delayed wage payment. Linked employer-employee panel data from Russia facilitate identification of the endogenous interactions through fixed effects for firms, workers, and local labor markets, and instrumental variables based on policy interventions. The estimated reaction function displays strongly positive neighborhood effects, and the estimated feedback loops—worker quits, effort, strikes, and legal penalties—imply that costs of wage delays are attenuated by neighborhood arrears. We also study a nonlinear case with two stable symmetric equilibria: a punctual payment and a late payment equilibrium.

Chung and Cox (1994) provided an intuitively appealing stochastic model indicating that superstars may exist regardless of talent, giving rise to the Yule distribution. We adopt a different empirical approach and test its goodness of fit using a parametric bootstrap and several powerful test statistics. Just like the discrete Pareto distribution, it is overwhelmingly rejected: it is a fairly accurate approximation of the lower quantiles of the superstar distribution but overestimates the snowball effect that makes consumers purchase records of the most successful artists. In other words, the Yule distribution captures stardom, but not superstardom. A generalization of the Yule distribution provides an excellent fit in two of the three data sets.