Family income is a positive predictor of children's health, human capital, and later-life earnings, but determining the extent to which these associations reflect causal effects is challenging. A recent wave of natural and randomized experiments, together with increased accessibility of large-scale administrative data, are allowing us to gain new perspectives about the importance of families' monetary resources in the U.S. and other high-income countries. This review pulls the emerging literature together to provide deeper insights into what we know, and what we don't know, about the extent to which policies that provide more generous income transfers could make a difference to children's life chances. My reading of the evidence suggests that policies providing financial resources to economically vulnerable families have the potential to improve children's outcomes. The magnitude of predicted impacts varies considerably across studies, however, and may be related to specific features of the income-generating event that researchers' leverage.

A comparison of the correlations between brothers and neighboring boys in their adult earnings suggests that the earnings resemblance between brothers stems more from growing up in the same family than from growing up in the same neighborhood. Much of the neighbor correlation is explicable in terms of the large earnings differential between urban and nonurban areas combined with the strength with which urbanicity of childhood neighborhood predicts urbanicity of adult location. This pattern is subject to a variety of interpretations, but it is quite different from the usual view of neighborhood effects.

This paper uses variation induced by firm closures to explore the intergenerational effects of worker displacement. Using a Canadian panel of administrative data that follows almost 60,000 father-child pairs from 1978 to 1999 and includes detailed information about the firms at which the father worked, we construct narrow treatment and control groups whose fathers had the same level of permanent income prior to 1982 when some of the fathers were displaced. We demonstrate that job loss leads to large permanent reductions in family income and small increases in mobility and divorce. Comparing outcomes among individuals whose fathers experienced an employment shock to outcomes among individuals whose fathers did not, we find that children whose fathers were displaced have annual earnings about 9% lower than similar children whose fathers did not experience an employment shock. They are also more likely to receive unemployment insurance and social assistance. The estimates are driven by the experiences of children whose family income was at the bottom of the income distribution, and are robust to a number of specification checks. This work was completed while Oreopoulos was a Statistics Canada Research Fellow and member of the Family and Labour Studies Division of Statistics Canada. The financial support of the National Science Foundation is gratefully acknowledged. We also wish to thank Miles Corak, and seminar participants at Brown University, MIT, Princeton University, Stanford University, Yale University, the University of California Berkeley, UCLA, the University of Toronto and the NBER summer institute for their helpful comments.

Researchers using cross-sectional data have failed to produce systematic evidence that teacher salaries affect student outcomes. These studies generally do not account for non-pecuniary job attributes and alternative wage opportunities, which affect the opportunity cost of choosing to teach. When we employ the methodology used in previous studies, we replicate their results. However, once we adjust for labor market factors, we estimate that raising teacher wages by 10% reduces high school dropout rates by 3% to 4%. Our findings suggest that previous studies have failed to produce robust estimates because they lack adequate controls for non-wage aspects of teaching and market differences in alternative occupational opportunities.

This article attempts to improve our understanding of the causal processes that contribute to intergenerational immobility by exploiting historical changes in compulsory schooling laws that affected the educational attainment of parents without affecting their innate abilities or endowments. We examine the influence of parental compulsory schooling on children’s grade‐for‐age using the 1960, 1970, and 1980 U.S. censuses. Our estimates indicate that a 1‐year increase in the education of either parent reduces the probability that a child repeats a grade by between 2 and 4 percentage points.

Because many individuals do not complete their degrees in the standard number of years, previous estimates of diploma effects, which have been based only on an individual's years of education, are biased. Using a data set from a matched sample of the 1991 and 1992 March Current Population Survey that has information on both years of education and diplomas received, this paper improves on earlier estimates and finds that using 'true' information on degree receipt substantially increases estimated sheepskin effects of high school and college degrees. Unlike past research, this paper finds that there are few statistically significant differences in sheepskin effects between race and sex groups. The relative returns to Associates and post-graduate degrees are also examined.

This study proposes using correlations between neighboring children in their later socioeconomic status to bound the proportion of inequality in socioeconomic outcomes that can be attributed to disparities in neighborhood background. We apply this approach to educational attainment data from the Panel Study of Income Dynamics, which has sampled neighboring children and followed them into adulthood. We find that, once the effects of a few readily observed family background characteristics are accounted for, the correlation between neighboring children in their eventual educational attainment is only about 0.1. Given that even this figure is inflated by neighbors' similarity in unmeasured aspects of family background, the results suggest a limited role for neighborhood factors in accounting for inequality in educational attainment.

Why aren't there more women in science? This paper begins to shed light on this question by exploiting data from the U.S. Air Force Academy, where students are randomly assigned to professors for a wide variety of mandatory standardized courses.We focus on the role of professor gender. Our results suggest that although professor gender has little impact on male students, it has a powerful effect on female students' performance in math and science classes, and high-performing female students' likelihood of taking future math and science courses, and graduating with a STEM degree. The estimates are largest for students whose SAT math scores are in the top 5% of the national distribution. The gender gap in course grades and STEM majors is eradicated when high-performing female students are assigned to female professors in mandatory introductory math and science coursework.

Why Are Recessions Good for Your Health? by Douglas L. Miller, Marianne E. Page, Ann Huff Stevens and Mateusz Filipski. Published in volume 99, issue 2, pages 122-27 of American Economic Review, May 2009

We examine multi-generational impacts of positive in utero health interventions using a new research design that exploits sharp increases in prenatal Medicaid eligibility that occurred in some states. Our analyses are based on U.S. Vital Statistics Natality files, which enables linkages between individuals' early life Medicaid exposure and the next generation's health at birth. We find evidence that the health benefits associated with treated generations' early life program exposure extend to later offspring. Our results suggest that the returns on early life health investments may be substantively underestimated.