Knowledge that Transforms

The government has attempted to ameliorate gaps in college access and success by providing need-based grants, but little evidence exists on the long-term impacts of such aid. We examine the effects of the Florida Student Access Grant (FSAG) using a regression-discontinuity strategy and exploiting the cut-off used to determine eligibility. We find that grant eligibility had a positive effect on attendance, particularly at public 4-year institutions. Moreover, FSAG increased the rate of credit accumulation and bachelor’s degree completion within 6 years, with a 22% increase for students near the eligibility cut-off. The effects are robust to sensitivity analysis.

This paper presents a theoretical and empirical analysis of the effects of routine-biased technical change on occupational transition patterns and wage changes of individual workers using a general equilibrium model with endogenous sorting of workers into occupations. Consistent with the predictions of the model, data from the Panel Study of Income Dynamics show strong evidence of selection on ability in the occupational mobility patterns of routine workers, a significant fall in the wage premium in routine occupations, and faster wage growth over long-run horizons for workers switching out of routine jobs relative to those who stay.

The high pace of reallocation across producers is pervasive in the US economy. Evidence shows that this high pace of reallocation is closely linked to productivity. While these patterns hold on average, the extent to which the reallocation dynamics in recessions are “cleansing” is an open question. We find that downturns prior to the Great Recession are periods of accelerated reallocation even more productivity enhancing than reallocation in normal times. In the Great Recession, we find that the intensity of reallocation fell rather than rose and that the reallocation that did occur was less productivity enhancing than in prior recessions.

We measure impacts of entry conditions on labor market outcomes for the US college graduating classes of 1974–2011. A large recession reduces initial earnings by 10%, through full-time work and wages, with small persistent impacts on wages. Those in high-paying majors experience smaller impacts on most labor market outcomes, widening earnings inequality across majors. In the Great Recession, early earnings losses are much larger than predicted given past patterns and the size of the recession. This is partially because the cyclical sensitivity of demand for college graduates has more than doubled. Recession effects also became more evenly distributed across majors.

This paper argues that several of the poor labor market outcomes observed in the Great Recession can be traced back to a change in the demand pattern for skilled workers that started with the tech bust of 2000. In particular, we show that around the year 2000, the demand for cognitive tasks underwent a reversal. In response, high-skilled workers moved down the occupational ladder and increasingly displaced lower-educated workers in less skill-intensive jobs. While these effects were present before the financial crisis of 2008, they became more obvious after jobs associated with the housing bubble disappeared.

Authors often add covariates to a base model sequentially either to test a particular coefficient’s “robustness” or to account for the “effects” on this coefficient of adding covariates. This is problematic, due to sequence sensitivity when added covariates are intercorrelated. Using the omitted variables bias formula, I construct a conditional decomposition that accounts for various covariates’ role in moving base regressors’ coefficients. I also provide a consistent covariance formula. I illustrate this conditional decomposition with NLSY data in an application that exhibits sequence sensitivity. Related extensions include instrumental variables, the fact that my decomposition nests the Oaxaca-Blinder decomposition, and a Hausman test result.

We compare the income and wage trajectories of women to those of their male partners before and after parenthood. Focusing on the within-couple gap allows us to control for both observed and unobserved attributes of the spouse and to estimate both short- and long-term effects of entering parenthood. We find that 15 years after the first child has been born, the male-female gender gaps in income and wages have increased by 32 and 10 percentage points, respectively. In line with a collective labor supply model, the magnitude of these effects depends on counterfactual relative incomes or wages within the family.

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