Knowledge that Transforms

Military deployments and job assignments provide an opportunity to estimate the impact of parental absences and household relocations on children’s academic achievement. Combining U.S. Army personnel data with children’s standardized test scores from Texas, I find that parental absences adversely affect children’s test scores by a tenth of a standard deviation. Likewise, household relocations have modest negative effects on children’s test scores. Both parental absences and household relocations have the greatest detrimental effect on test scores of children with single parents, children with mothers in the army, children with lower‐ability parents, and younger children.

We show how data from an evaluation in which subjects are randomly assigned to some treatment versus a control group can be combined with nonexperimental methods to estimate the differential effects of alternative treatments. We propose tests for the validity of these methods. We use these methods and tests to analyze the differential effects of labor force attachment (LFA) versus human capital development (HCD) training components with data from California’s Greater Avenues to Independence (GAIN) program. While LFA is more effective than HCD training in the short term, we find that HCD is relatively more effective in the longer term.

Using three sources of data, this article examines the direct economic return to General Educational Development (GED) certification for both native and immigrant high school dropouts. One data source—the Current Population Survey (CPS)—is plagued by nonresponse and allocation bias from the hot deck procedure that biases the estimated return to the GED upward. Correcting for allocation bias and ability bias, there is no direct economic return to GED certification. An apparent return to GED certification with age found in the raw CPS data is due to dropouts becoming more skilled over time. These results apply to both native‐born and immigrant populations.

This article examines match bias arising from earnings imputation. Wage equation parameters are estimated from mixed samples of workers reporting and not reporting earnings, the latter assigned earnings of donors. Regressions including attributes not used as imputation match criteria (e.g., union) are severely biased. Match bias also arises with attributes used as match criteria but matched imperfectly. Imperfect matching on schooling (age) flattens earnings profiles within education (age) groups and creates jumps across groups. Assuming conditional missing at random, a general analytic expression correcting match bias is derived and compared to alternatives. Reweighting a respondent‐only sample proves an attractive approach.

In this article we investigate the disincentive effects of shortening the potential duration of unemployment insurance (UI) benefits. We identify these disincentive effects by exploiting changes in Slovenia’s unemployment insurance system—a “natural experiment” that involved substantial reductions in the potential duration of benefits for four groups of workers plus no change in benefits for another group (which served as a natural control). We find that the change had a positive effect on the exit rate from unemployment—to new jobs and other options—for unemployment spells of various lengths and for several categories of unemployed workers.

We analyze data from the National Longitudinal Survey of Youth 1979 on high school completion, smoking, and obesity. First, we investigate whether GED recipients differ from other high school graduates in their smoking and obesity behaviors. Second, we explore whether the relationships between schooling and these health‐related behaviors are sensitive to controlling for background and ability measures. Third, we estimate instrumental variables models. Our results suggest that the returns to high school completion may include less smoking but the health returns to GED receipt are much smaller. We find little evidence that high school completion is associated with less obesity.

We estimate the effect of rising health insurance premiums on wages, employment, and the distribution of part-time and full-time work using variation in medical malpractice payments driven by the recent "medical malpractice crisis." We estimate that a 10% increase in health insurance premiums reduces the aggregate probability of being employed by 1.2 percentage points, reduces hours worked by 2.4%, and increases the likelihood that a worker is employed only part time by 1.9 percentage points. For workers covered by employer provided health insurance, this increase in premiums results in an offsetting decrease in wages of 2.3%.

The explanation typically given for longer tenure among workers who use informal contacts to find jobs is that relatives and friends reduce uncertainty about the quality of the match between worker and employer. An alternative explanation is that workers rely on informal information sources as a last resort. Such workers remain at their current jobs mainly because they have few alternative choices rather than because of better match quality. This article shows that the two different explanations are simultaneously valid for different types of contacts and can account for differences in the wage effects of job contacts.

Recently improved Swedish register data have made it possible to remedy many weaknesses of previous research on displaced workers. Using linked employer‐employee data, we identify all workers displaced in 1987, due to an establishment closure, and follow them over both a predisplacement period of 4 years and a postdisplacement period stretching until 1999. We find that the displaced workers suffer both earnings losses and worsened labor‐market position not only during a transitory period of adjustment but also in the longer run. These longer‐run effects seem to be driven by an increased sensitivity to subsequent macroeconomic shocks.

We apply Haider and Solon’s generalized errors‐in‐variables model to Swedish income tax data to produce estimates of the association between current and lifetime income. Our estimates demonstrate strong life‐cycle patterns. This implies that the widespread use of current income as a proxy for lifetime income leads to inconsistent parameter estimates (i.e., life‐cycle bias) even when the proxy is used as the dependent variable. Estimates for comparable cohorts of Swedish and American men demonstrate surprising similarities. There are, however, significant gender and cohort differences in this association that lead to statistically significant and quantitatively meaningful differences in life‐cycle biases.