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on Labor Markets - Supply, Demand, and Wages |
| By: | Araújo, Isabel; Carneiro, Anabela |
| Abstract: | Exploring a rich matched employer-employee data set over the 1998-2012 period and a novel measure of educational mismatch, this study analyses the short and medium-term effects of over- and undereducation on the wages of newly hired workers. The data show that more than 50 percent of the employed in the private sector in Portugal experienced a job mismatch at the moment of being hired. According to the statistical measure based on the flows of newly hired workers, in the period under scrutiny overeducation is decreasing and undereducation is increasing, indicating that labour market demand is keeping pace with the rise in educational attainment of the Portuguese population. The results reveal that the wage differential between adequately matched workers and mismatched workers decreases considerably once worker and firm unobserved heterogeneity is taken into account. In fact, worker permanent heterogeneity explains two-thirds of the overducated wage penalty and three-fourths of the undereducated wage premium, indicating that the undereducated seem to correspond to a higher-ability group of employees, while the overeducated seem to correspond to a lower-ability group of workers. Heterogeneity in firm paying policies also play an important role in explaining the wage gap of newly hired mismatched workers. Finally, the results also indicate that the wages of individuals in the beginning of their labour market career are the most affected by a job mismatch. |
| Keywords: | educational mismatches,overeducation,undereducation,wages,two-way fixed effects |
| JEL: | I26 J24 J31 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:668&r=all |
| By: | Shai Bernstein; Richard R. Townsend; Ting Xu |
| Abstract: | This paper investigates how economic downturns affect the flow of human capital to startups. Using proprietary data from AngelList Talent, we study how individuals’ online job searches and applications changed during the emergence of the COVID-19 crisis. We find that job seekers shifted their searches toward larger firms and away from early-stage ventures, even within the same individual over time. Simultaneously, job seekers broadened their other search parameters, considering lower salaries and a wider variety of job types, roles, markets, and locations. Relative to larger firms, early-stage ventures experienced a decline in the number of applications per job posting, a decline driven by higher quality and more experienced job seekers. This led to a deterioration in the quality of the human capital pool available to early-stage ventures during the downturn. These declines hold within a firm as well as within a job posting over time. Our findings uncover a flight to safety channel in the labor market, which may amplify the pro-cyclical nature of entrepreneurial activities. |
| JEL: | E32 J22 J24 L26 M13 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27907&r=all |
| By: | Jillian Grennan (Duke University - Fuqua School of Business; Duke Innovation & Entrepreneurship Initiative); Roni Michaely (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute) |
| Abstract: | Policymakers fear artificial intelligence (AI) will disrupt labor markets, especially for high-skilled workers. We investigate this concern using novel, task-specific data for security analysts. Exploiting variation in AI's power across stocks, we show analysts with portfolios that are more exposed to AI are more likely to reallocate efforts to soft skills, shift coverage towards low AI stocks, and even leave the profession. Analyst departures disproportionately occur among highly accurate analysts, leaving for non-research jobs. Reallocating efforts toward tasks that rely on social skills improve consensus forecasts. However, increased exposure to AI reduces the novelty in analysts' research which reduces compensation. |
| Keywords: | artificial intelligence, big data, technology, automation, sell-side analysts, job displacement, labor and finance, social skills, non-cognitive skills, tasks, skill premium, skill-biased technological change, compensation |
| JEL: | G17 G24 J23 J24 J31 O33 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2084&r=all |
| By: | Galanakis, Yannis |
| Abstract: | This paper looks at the extent of labour market mismatch of public-sector female employees. It contributes to earlier findings for the British labour market by taking into account the endogenous self-selection into jobs. Estimates are based on data from the British Household Panel Study and the ’Understanding Society’ covering the years 1991-2016. The analysis verifies that the public sector offers a few lowskilled jobs and employs, mostly, high-educated (female) workers. Regarding the market flows, findings show the greater mobility of the female workforce, which moves proportionately between sectors. Greater in-/out-flows to/from private sector are observed regardless the gender of the employee. Once comparing women to the median employee, a sizeable incidence of mismatch arises due to negative selection. Specifications using the selection model for the public sector illustrate a systematically higher magnitude of mismatch. Pooled results seem to dominate when women seen in the male labour market or in a restricted subsample. Finally, the map of occupations in mismatch supports that the public sector is more attractive as a waiting room for highly-qualified graduates. They queue less time until they find a good job. Hence, policy implications regarding the allocation of jobs for women may arise. |
| Keywords: | Human Capital Mismatch,women,British public-sector |
| JEL: | I24 I26 J21 J24 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:669&r=all |
| By: | Duman, Anil |
| Abstract: | The paper aims to identify the effect of non-standard employment on wages in the Turkish labour market across gender and decompose the gap to understand the role of endowments and returns in generating the earning differences. Our findings show that non-standard employment reduces wages for women at every quantile but no such results are attained for men. Besides, females with standard jobs in Turkey earn more than men, however, the opposite holds for females in non-standard positions. Also, a big part of the gender pay gap is attributable to returns, especially at the lower end of the distribution. Women in low-paid and atypical jobs face larger pay gaps, and the role of unexplained component suggests they are discriminated. The distinct impact of non-standard employment on men and women suggest that policies geared towards labour market flexibilisation should take gender perspective into account. |
| Keywords: | Non-standard employment,Gender pay gap,Quantile regressions,Recentered Influence Function (RIF),Decomposition,Discrimination |
| JEL: | J31 J24 J41 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:664&r=all |
| By: | Santiago Caicedo; Miguel Espinosa; Arthur Seibold |
| Abstract: | We study firm responses to a large-scale change in apprenticeship regulation in Colombia. The reform requires firms to train, setting apprentice quotas that vary discontinuously in firm size. We document strong heterogeneity in responses across sectors, where firms in sectors with high skill requirements tend to avoid training apprentices, while firms in low-skill sectors seek apprentices. Guided by these reduced-form findings, we structurally estimate firms’ training costs. Especially in high-skill sectors, many firms face large training costs, limiting their willingness to train apprentices. Yet, we find substantial overall benefits of expanding apprenticeship training, in particular when the supply of trained workers increases in general equilibrium. Finally, we show that counterfactual policies that take into account heterogeneity across sectors can deliver similar benefits from training while inducing less distortions in the firm size distribution and in the allocation of resources across sectors. |
| JEL: | E24 J21 J24 M5 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1743&r=all |
| By: | Lodefalk, Magnus; Sjöholm, Fredrik; Tang, Aili |
| Abstract: | We examine if international trade improves labor market integration of immigrants in Sweden. Immigrants participate substantially less than natives in the labor market. However, trading with a foreign country is expected to increase the demand for immigrants from that country. By hiring immigrants, a firm may access foreign knowledge and networks needed to overcome information frictions in trade. Using granular longitudinal matched employer–employee data and an instrumental variable approach, we estimate the causal effects of a firm’s bilateral trade on employment and wages of immigrants from that country. We find a positive, yet heterogeneous, effect of trade on immigrant employment but no effect on immigrant wages. |
| Keywords: | Export,Import,Immigrants,Employment,Wages |
| JEL: | F16 F22 J21 J31 J61 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:659&r=all |
| By: | Alexandra Tsvetkova; Simone Grabner; Wessel Vermeulen |
| Abstract: | This paper explores patterns of short-term labour demand weakening in Metropolitan Statistical Areas (MSAs) of the United States and the associated regional factors. The paper considers online job vacancy postings in February-June 2020. The data show that in larger MSAs, online job postings contracted more and the recovery was slower compared to smaller MSAs. Non-tradable service occupations, particularly those involving face-to-face interactions, contracted the most. The regression analysis reveals that different metropolitan characteristics were associated with the initial drop (February-April) and the recovery (May-June) in online job posting. The associations of online job postings with regional characteristics also differed between teleworkable (with high feasibility of performing work duties remotely) and non-teleworkable jobs. Cities with higher share of teleworkable employment had more online vacancy announcements during the first months of the COVID-19 pandemic. |
| JEL: | J23 J21 L16 R11 |
| Date: | 2020–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:oec:cfeaaa:2020/06-en&r=all |
| By: | Hui, Kai-Lung; Zhou, Jiali |
| Abstract: | Hacking is becoming more common and dangerous. The challenge of dealing with hacking often comes from the fact that much of our wisdom about conventional crime cannot be directly applied to understand hacking behavior. Against this backdrop, this essay reviews hacking studies, with a focus on discussing the new features of cybercrime and how they affect the application of classical economic theory of crime in the cyberspace. Most findings of hacking studies can be interpreted with a parsimonious demand and supply framework. Hackers decide whether and how much to “supply” hacking by calculating the return on hacking over other opportunities. Defenders optimally tolerate some level of hacking risks because defense is costly. This tolerance can be interpreted as an indirect “demand” for hacking. Variations in law enforcement, hacking benefits, hacking costs, legal alternatives, private defense, and the dual use problem can variously affect the supply or demand for hacking, and in turn the equilibrium observation of hacking in the market. Overall, this essay suggests that the classical economic theory of crime remains a powerful framework to explain hacking behaviors. However, the application of this theory calls for considerations of different assumptions and driving forces, such as psychological motives and economies of scale in offenses, that are often less prevalent in conventional (offline) criminal behaviors, but that tend to underscore hacking in the cyberspace. |
| Keywords: | hacker, hacking, cybercrime, supply, demand, law enforcement |
| JEL: | K42 |
| Date: | 2020–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102706&r=all |
| By: | Scott Viallet-Thévenin; Cédric Chambru |
| Abstract: | This article builds on the concept of linked ecologies to present a study of the occupational careers of French colonial governors between 1830 and 1960. We consider empires as the by-product of social entities structuring themselves. Specifically, we analyse the process of empowerment of this emerging group with respect to other professional groups within the imperial space and the French metropolitan space. Using data on the career of 637 colonial governors between 1830 and 1960, we examine how variations in the recruitment of these high civil servants actually reflect the empowerment of this social entity. We rely on optimal matching technique to distinguish typical sequence models and identify ten common career trajectories that can be grouped in four main clusters. We further compare the share of each clusters in the population of governors over time and show that the rise of the colonial cluster during the Interwar period corresponded to the peak of the administrative autonomy in the colonial space. We argue that this process is consistent with the empowerment of the governors’ corps, which is embodied by a common career within the colonial administration and a collective identity as a group. |
| Keywords: | State employment decisions, empowerment, French colonial Empire, 19th century, 20th century |
| JEL: | D73 F54 H83 J45 M51 N43 N44 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:366&r=all |
| By: | Mathias Hoffmann; Lilia Ruslanova |
| Abstract: | U.S. state-level banking deregulation during the 1980’s mitigated the impact of the China trade shock (CTS) on local economies (states and commuting zones) a decade later, in the 1990s. Local economies, where local banking markets opened up earlier, were also effectively financially more integrated by the 1990’s and saw smaller declines in house prices, wages, and income following the CTS. We explain this pattern in a theoretical model that emphasizes the stabilizing effect of financial integration on demand for housing and on housing prices: faced with an adverse shock to their region’s terms-of-trade (i.e. the CTS), households in more open states can more easily access credit to smooth consumption. This stabilizes consumer demand for housing, keeps the relative price of housing up, stabilizes wages in the non-tradable sector and thus facilitates the sectoral reallocation of labor away from import-exposed manufacturing towards the housing sector. This in turn stabilizes income and consumption. We corroborate these predictions of our model in state- and commuting zone level data. Then, using granular bank-county-level data, we show that household consumption smoothing in response to the CTS was easier in financially open areas, because geographically diversified banks were more elastic in their lending response to household’s increased demand for credit. Our findings highlight the importance of household access to finance in the adjustment to asymmetric terms-of-trade shocks in monetary unions. |
| Keywords: | Banking deregulation, China trade shock, sectoral reallocation, house prices, consumer access to finance |
| JEL: | F16 F41 G18 G21 J20 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:365&r=all |
| By: | Ufuk Akcigit; Jeremy G. Pearce; Marta Prato |
| Abstract: | How do innovation and education policy affect individual career choice and aggregate productivity? This paper analyzes the various layers that connect R&D subsidies and higher education policy to productivity growth. We put the development of scarce talent and career choice at the center of a new endogenous growth framework with individual-level heterogeneity in talent, frictions, and preferences. We link the model to micro-level data from Denmark and uncover a host of facts about the links between talent, higher education, and innovation. We use these facts to calibrate the model and study counterfactual policy exercises. We find that R&D subsidies, while less effective than standard models, can be strengthened when combined with higher education policy that alleviates financial frictions for talented youth. Education and innovation policies not only alleviate different frictions, but also impact innovation at different time horizons. Education policy is also more effective in societies with high income inequality. |
| JEL: | J24 O31 O38 O47 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27862&r=all |
| By: | W. Bentley MacLeod; Victoria Valle Lara; Christian Zehnder |
| Abstract: | Although conflicts typically lead to a waste of resources, organizations may still benefit from a corporate culture that tolerates or even encourages conflicts. The reason is that coordinated conflicts may help to enforce informal contracts and foster cooperation. In this paper we report results of a series of laboratory experiments designed to explore whether and under what conditions an efficiency-enhancing conflict culture can emerge. Using a principal-worker setup with subjective performance evaluation, we show that establishing a functional conflict culture is a delicate matter. If conflicts are encouraged in a careless, hands-off manner, the destructive side of conflicts is likely to dominate. To be successful a conflict culture requires a careful management of fairness norms. In our experiment we find that conflicts have positive net effects on efficiency only if an explicit code of conduct is established and conflicts are institutionalized through a grievance process. Thus, providing workers with more power may be a necessary but not sufficient condition for improving productivity when performance evaluations are subjective. |
| JEL: | D02 D03 J33 J41 M5 M52 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27857&r=all |
| By: | Federico Barbiellini (Bank of Italy); Matteo Gomellini (Bank of Italy); Lorenzon Incoronato (University College London (UCL) and Centre for Research and Analysis of Migration (CReAM)); Paolo Piselli (Bank of Italy) |
| Abstract: | This paper leverages spatial and time-series variation in the population age structure of Italian regions to uncover the causal effect of demographic shifts on labour productivity. Such effect is analysed along a ‘first-order’ channel stemming from the direct relation between an individual’s age and productivity, and a ‘second-order’ channel that captures the productivity implications of a more or less dispersed age distribution. We propose an estimation framework that relates labour productivity to the entire age distribution of the working-age population and employs instrumental variable techniques to address endogeneity issues. The estimates return a hump-shaped age-productivity profile, with a peak between 35 and 40 years, as well as a positive productivity effect associated with a more dispersed age distribution. |
| Keywords: | productivity, demography, age distribution, working-age population, long-run |
| JEL: | J11 J21 N30 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:2019&r=all |
| By: | Afridi, Farzana (Indian Statistical Institute); Bishnu, Monisankar (Indian Statistical Institute); Mahajan, Kanika (Ashoka University) |
| Abstract: | Technological change in production processes with gendered division of labor across tasks, such as agriculture, can have a differential impact on women's and men's labor. Using exogenous variation in the extent of loamy soil, which is more amenable to deep tillage than clayey soil and therefore more likely to see adoption of tractor driven equipment for primary tilling, we show that mechanization has led to significantly greater decline in women's than men's labor on Indian farms. Reduced demand for labor in weeding, a task that requires precision and is thus more often undertaken by women, explains our findings. The estimates suggest that increased mechanized tilling led to a more than 22% fall in women's agricultural labor in India during 1999-2011. Our results highlight the gendered impact of technological change in contexts where there is sex-specific specialization of labor. |
| Keywords: | gender, specialization of labor, agriculture, technology, mechanization |
| JEL: | J16 J23 J43 O33 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13712&r=all |
| By: | Blit, Joel |
| Abstract: | Recent evidence suggests that recessions play a crucial role in promoting automation and the reallocation of productive resources. Consistent with this, I show that in the three previous Canadian recessions, routine jobs were disproportionately lost. COVID-19 is likely to have a similar impact, but bigger because superimposed onto the usual recessionary transformational forces are health-specific incentives to automate. Using O*NET data, I construct an index of COVID-19 health risk and of routine task intensity to measure health incentives to automate and the feasibility of doing so. Across occupations, income groups, industries, and regions, the two indices are strongly negatively correlated, suggesting that automation will not be overly focused and that it may penetrate into hitherto relatively unaffected sectors like health and education. Nevertheless, office and health support workers are likely to be disproportionately affected, as will the retail and hospitality industries. The impacts will also be primarily felt by families toward the bottom of the income distribution and in smaller cities. |
| Keywords: | COVID-19,recessions,productivity,innovation,automation |
| JEL: | O33 O40 E32 J24 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:clefwp:31&r=all |
| By: | Tim Bulman |
| Abstract: | Greece’s labour market entered the COVID-19 shock following several years of sustained employment growth and with wages picking up. Unemployment remained high and employment rates were low, especially among women, the young and older workers. The shock led to a sharp fall in labour force activity and has stalled new hiring. The improved social protection and temporary support measures have helped to support households’ incomes and protect jobs during the COVID-19 crisis. However, high tax and social security contribution rates, together with little in-work support for the low-paid, continue abetting high structural informality. This heightens insecurity – by excluding many workers from activation policies or social and employment protection – and weakens productivity. Boosting the capacity of employment services and activation policies would support the recovery from the COVID-19 shock, in addition to durably improving employment prospects especially of long-term unemployed. Giving workplaces further flexibility to adapt collective agreements to specific circumstances would help align wage growth with productivity developments and help businesses to weather the COVID-19 shock. Building on the population’s solid education levels by equipping workers with the skills needed by the labour market can support employment and incomes. This will require a substantial boost to professional education and training at all levels and ages. This chapter applies the 2018 OECD Jobs Strategy to Greece to identify reforms that can help to overcome the COVID-19 crisis and create a virtuous cycle between productivity, job creation, and well-being. |
| JEL: | E24 H24 H26 A I38 J24 J31 J6 |
| Date: | 2020–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1622-en&r=all |
| By: | Afridi, Farzana (Indian Statistical Institute); Dhillon, Amrita (King's College London); Sharma, Swati (Indian Statistical Institute) |
| Abstract: | We use high frequency worker level productivity data from garment manufacturing units in India to study the effects of caste-based social networks on individual and group productivity when workers are complements in the production function but wages are paid at the individual level. Using exogenous variation in production line composition for almost 35,000 worker-days, we find that a 1 percentage point increase in the share of own caste workers in the line increases daily individual productivity by about 10 percentage points. The lowest performing worker increases her effort by more than 15 percentage points when the production line has a more homogeneous caste composition. Production externalities that impose financial costs due to worker's poor performance on co-workers within her social network can explain our findings. Our results suggest that even in the absence of explicit group-based financial incentives, social networks can be leveraged to improve both worker and group productivity. |
| Keywords: | caste, social networks, labor productivity, assembly lines, India |
| JEL: | Y40 Z13 J15 J24 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13711&r=all |
| By: | Bjørneby, Marie (The Norwegian University of Life Sciences); Markussen, Simen (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research) |
| Abstract: | Fueled by increasing inequality and rising fiscal deficits, the interest in wealth taxation has increased over the last years, both in the public debate and in academia. Yet, knowledge about the behavioral effects of a wealth tax is limited. We utilize rich Norwegian register data and a series of tax reforms implemented between 2007 and 2017 to study how a net wealth tax imposed on owners of small and medium sized businesses affects their firms' investment and employment decisions. Identification of causal effects is based on a generalized difference-in-differences strategy. We find no empirical support for the claim that a moderate wealth tax adversely affects investments and employment in firms controlled by the taxpayers. To the contrary, our results indicate a positive causal relationship between the level of a household's wealth tax and subsequent employment growth in the firm it controls. The rationale behind this result appears to be that the tax value of a given wealth can be reduced by being invested in a non-traded firm, and that this incentive becomes stronger the higher is the wealth tax. |
| Keywords: | wealth tax, capital taxation, labor demand, investment |
| JEL: | H21 J23 G11 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13766&r=all |
| By: | Piper, Alan T. |
| Abstract: | Temporary employees rank lower than permanent employees on various measures of mental and physical health, including well-being. In parallel, much research has shown that the relationship between age and well-being traces an approximate U-shape, with a nadir in midlife. Temporary employment may well have different associations with well-being across the lifespan, likely harming people in midlife more than at the start of their working lives. Using over twenty years of the German Socio-economic panel (SOEP), this investigation considers the relationship between temporary employment, age and well-being. In doing so, it both sheds new light on the relationship between temporary employment and well-being, and explores a reason for the oft-found U-shaped relationship between age and well-being. The results show that temporary employment deepens the U-shape in midlife, and that this result holds when many socioeconomic factors as well as the industry, region, cohort, personality, employment security and job worries are taken into account. Furthermore, the investigation considers transitions between permanent and temporary employment and uses these to assess causation and selection. |
| Keywords: | temporary employment,permanent employment,age,life satisfaction,SOEP |
| JEL: | I31 J41 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:202015&r=all |
| By: | Oreopoulos, Philip (University of Toronto) |
| Abstract: | This article takes stock of where the field of behavioral science applied to education policy seems to be at, which avenues seem promising and which ones seem like dead ends. I present a curated set of studies rather than an exhaustive literature review, categorizing interventions by whether they nudge (keep options intact) or "shove" (restrict choice), and whether they apply a high or low touch (whether they use face-to-face interaction or not). Many recent attempts to test large-scale low touch nudges find precisely estimated null effects, suggesting we should not expect letters, text messages, and online exercises to serve as panaceas for addressing education policy's key challenges. Programs that impose more choice-limiting structure to a youth's routine, like mandated tutoring, or programs that nudge parents, appear more promising. |
| Keywords: | behavioral economics of education, nudge, shove |
| JEL: | I2 J24 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13718&r=all |
| By: | Daniel Graeber; Alexander S. Kritikos; Johannes Seebauer |
| Abstract: | We investigate how the economic consequences of the pandemic, and of the government-mandated measures to contain its spread, affected the self-employed relative to employed individuals in Germany and, secondly, to what extent the female self-employed were more strongly hit than their male counterparts. For our analysis, we use representative, real-time survey data where respondents are asked about their situation during the COVID-19 pandemic. Our findings indicate that self-employed individuals were much more likely to suffer income losses than employees. Among the self-employed, women were 35% more likely to experience income losses than men, as women are disproportionately working in industries that are more severely affected by the COVID-19 pandemic. We conclude that future policy measures intended to mitigate such shocks should account for this variation in economic hardship. |
| Keywords: | Self-employed, COVID-19, income, gender, representative real-time survey data, decomposition methods |
| JEL: | L26 J16 J31 J71 I18 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1903&r=all |
| By: | Joshua Angrist; David Autor; Amanda Pallais |
| Abstract: | Financial aid from the Susan Thompson Buffett Foundation (STBF) provides exceptionally generous support to a college population similar to that served by a host of state aid programs. In conjunction with STBF, we randomly assigned aid awards to thousands of Nebraska high school graduates from low-income, minority, and first-generation college households. Randomly- assigned STBF awards boost bachelor's (BA) degree completion for students targeting four-year schools by about 8 points. Degree gains are concentrated among four-year applicants who would otherwise have been unlikely to pursue a four-year program. Degree effects are mediated by award-induced increases in credits earned towards a BA in the first year of college. The extent of initial four-year college engagement explains heterogeneous effects by target campus and across covariate subgroups. Most program spending is a transfer, reducing student debt without affecting degree attainment. Award-induced marginal spending is modest. The projected lifetime earnings impact of awards exceeds marginal educational spending for all of the subgroups examined in the study. Projected earnings gains exceed funder costs for low-income, non-white, urban, and first-generation students, and for students with relatively weak academic preparation. |
| JEL: | H52 I22 J24 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27834&r=all |