Intergenerational income transmission varies across commuting zones (CZs). I investigate whether children’s educational outcomes help to explain this variation. Differences among CZs in the relationship between parental income and children’s human capital explain only one-ninth of the variation in income transmission. A similar share is explained by differences in the return to human capital. One-third reflects earnings differences not mediated by human capital, and 40% reflects differences in marriage patterns. Intergenerational mobility appears to reflect job networks and the structure of local labor and marriage markets more than it does the education system.

Growing concerns over the inadequate achievement of U.S. students have led to proposals to reward good teachers and penalize (or fire) bad ones. The leading method for assessing teacher quality is "value added" modeling (VAM), which decomposes students' test scores into components attributed to student heterogeneity and to teacher quality. Implicit in the VAM approach are strong assumptions about the nature of the educational production function and the assignment of students to classrooms. In this paper, I develop falsification tests for three widely used VAM specifications, based on the idea that future teachers cannot influence students' past achievement. In data from North Carolina, each of the VAMs' exclusion restrictions is dramatically violated. In particular, these models indicate large "effects" of fifth grade teachers on fourth grade test score gains. I also find that conventional measures of individual teachers' value added fade out very quickly and are at best weakly related to long-run effects. I discuss implications for the use of VAMs as personnel tools. (c) 2010 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

Chetty, Friedman, and Rockoff (2014a, b) study value-added (VA) measures of teacher effectiveness. CFR (2014a) exploits teacher switching as a quasi-experiment, concluding that student sorting creates negligible bias in VA scores. CFR (2014b) finds VA scores are useful proxies for teachers' effects on students' long-run outcomes. I successfully reproduce each in North Carolina data. But I find that the quasi-experiment is invalid, as teacher switching is correlated with changes in student preparedness. Adjusting for this, I find moderate bias in VA scores, perhaps 10–35 percent as large, in variance terms, as teachers' causal effects. Long-run results are sensitive to controls and cannot support strong conclusions. (JEL H75, I21, J45)

Teacher contracts that condition pay and retention on demonstrated performance can improve selection into and out of teaching. I study alternative contracts in a simulated teacher labor market that incorporates dynamic self-selection and Bayesian learning. Bonus policies create only modest incentives and thus have small effects on selection. Reductions in tenure rates can have larger effects, but must be accompanied by substantial salary increases; elimination of tenure confers little additional benefit unless firing rates are extremely high. Benefits of both bonus and tenure policies exceed costs, though optimal policies are sensitive to labor market parameters about which little is known. (JEL I21, J22, J23, J24, J31, J41, J45)

School choice policies promise to align the incentives of school administrators with the demands of parents, and may therefore lead to more efficient educational production (Milton Friedman 1962; Geoffrey Brennan and James Buchanan 1980; John Chubb and Terry M. Moe 1990). Absent a large-scale school voucher program in the United States, however, this prediction has been difficult to test. Several authors (e.g., Melvin V. Borland and Roy M. Howsen 1992; Clive R. Belfield and Henry M. Levin 2002) have suggested studying the effects of choice, the use of the residential location decision to select among local monopoly education providers. The idea here is that fragmented governance induces competition among school districts analogous to that which would occur among schools with nonresidential choice. In an influential paper, Caroline M. Hoxby (2000) points out that current governance structures are potentially endogenous to school productivity, and proposes that variation in topography, which may have influenced optimal jurisdiction size before modern transportation technologies, provides a source of exogenous variation. She estimates instrumental variables regressions of individual test scores and school spending on a metropolitan-level Tiebout choice index, defined as one minus a Herfindahl concentration index with districts' enrollments as their market shares, using as excluded instruments the number of larger and smaller streams in the area. She reports substantial positive effects of district fragmentation on student test scores and negative effects on spending. This Comment presents a reanalysis of Hoxby's test score results, which form the core of her empirical analysis. These results turn out to be quite sensitive to plausible alterations to Hoxby's specification. In particular, the large, significant effect of choice on achievement obtains

In a multicommunity model, high-income families cluster together in any equilibrium, and cluster near effective schools if effectiveness is an important component of community desirability. Governmental fragmentation facilitates this residential sorting. Thus, if parents prefer effective schools, income correlates with effectiveness in high-choice-market equilibrium. I examine the distribution of student background and test scores across schools within metropolitan areas that differ in the structure of educational governance. I find little indication of the “effectiveness sorting” that is predicted if parents choose neighborhoods for the efficacy of the local schools. This suggests caution about the productivity implications of school choice policies.

We revisit the estimation of industry wage differentials using linked employer-employee data. Cross-sectional industry differences overstate pay premiums due to unmeasured heterogeneity. Estimates based on models with person and industry effects understate true premiums: workers who switch to a higher-premium industry typically move from higher-paying firms in their origin industry to lower-paying firms in their destination (and vice versa). The corrected standard deviation of log wage effects is 0.122 across narrowly defined industries and is similar at higher levels of aggregation. Higher-skilled workers sort to higher-pay industries. Premiums and worker sorting are more variable in cities with higher-wage firms and higher-skilled workers.

Unemployment Insurance benefit durations were extended during the Great Recession, reaching 99 weeks for most recipients. The extensions were rolled back and eventually terminated by the end of 2013. Using matched CPS data from 2008-2014, we estimate the effect of extended benefits on unemployment exits separately during the earlier period of benefit expansion and the later period of rollback. In both periods, we find little or no effect on job-finding but a reduction in labor force exits due to benefit availability. We estimate that the rollbacks reduced the labor force participation rate by about 0.1 percentage point in early 2014.

Social Security Disability Insurance (SSDI) awards rise during recessions. If marginal applicants are able to work but unable to find jobs, countercyclical Unemployment Insurance (UI) benefit extensions may reduce SSDI uptake. Exploiting UI extensions in the Great Recession as a source of variation, we find no indication that expiration of UI benefits causes SSDI applications and can rule out effects of meaningful magnitude. A supplementary analysis finds little overlap between the two programs' recipient populations: only 28% of SSDI awardees had any labor force attachment in the prior calendar year, and of those, only 4% received UI.

Despite extensive public infrastructure spending, surprisingly little is known about its economic return. In this paper, we estimate the value of school facility investments using housing markets: standard models of local public goods imply that school districts should spend up to the point where marginal increases would have zero effect on local housing prices. Our research design isolates exogenous variation in investments by comparing school districts where referenda on bond issues targeted to fund capital expenditures passed and failed by narrow margins. We extend this traditional regression discontinuity approach to identify the dynamic treatment effects of bond authorization on local housing prices, student achievement, and district composition. Our results indicate that California school districts underinvest in school facilities: passing a referendum causes immediate, sizable increases in home prices, implying a willingness to pay on the part of marginal homebuyers of $1.50 or more for each $1 of capital spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners, and the impact on test scores appears to explain only a small portion of the total housing price effect.