nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2023‒03‒27
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Does School Choice Increase Crime? By Andrew Bibler; Stephen B. Billings; Stephen Ross
  2. Why should we invest in Early Childhood Education and Care? By Claire Crawford; Laura Outhwaite
  3. Parental Education and Invention: The Finnish Enigma By Philippe Aghion; Ufuk Akcigit; Ari Hyytinen; Otto Toivanen
  4. The Unexpected Compression: Competition at Work in the Low Wage Labor Market By David Autor; Arindrajit Dube; Annie McGrew
  5. Paying Moms to Stay Home: Short and Long Run Effects on Parents and Children By Jonathan Gruber; Tuomas Kosonen; Kristiina Huttunen

  1. By: Andrew Bibler; Stephen B. Billings; Stephen Ross
    Abstract: School choice lotteries are an important tool for allocating access to high-quality and oversubscribed public schools. While prior evidence suggests that winning a school lottery decreases adult criminality, there is little evidence for how school choice lotteries impact non-lottery students who are left behind at their neighborhood school. We leverage variation in actual lottery winners conditional on expected lottery winners to link the displacement of middle school peers to adult criminal outcomes. We find that non-applicant boys are more likely to be arrested as adults when applicants from their neighborhood win the school choice lottery. These effects are concentrated among boys who are at low risk of being arrested based on observables. Finally, we confirm evidence in the literature that students who win the lottery decrease adult criminality but show that after accounting for the negative impact on the students who forego the lottery, lotteries increase overall arrests and days incarcerated for young men.
    JEL: I24 I26 K42 R29
    Date: 2023–02
  2. By: Claire Crawford (UCL Centre for Education Policy & Equalising Opportunities); Laura Outhwaite (UCL Centre for Education Policy & Equalising Opportunities)
    Abstract: There are large gaps in skills between children from different backgrounds by the time they start school. For example, nationally representative data from the Millennium Cohort Study shows that less than one in ten individuals from the poorest 20% of families are identified as being in the top quintile of cognitive development at age 3 compared to around a third of individuals from the richest 20% of families. There are similarly large gaps in socio-emotional development as well (Cattan et al., 2022). One reason for this is the different environments they experience in their pre-school years, with children from disadvantaged backgrounds less likely to access high-quality early childhood education and care (ECEC) provision and less likely to be exposed to rich home learning environments, both of which contribute to children's development (Cattan et al., 2022; Cornelissen et al., 2018). For example, less than three quarters of disadvantaged 2-year-olds take up their entitlement to 15 hours of free early education per week during term-time, and even amongst those who access some of their entitlement, not all children access the full 15 hours available each week (DfE, 2022). At the same time, accessing high-quality ECEC provision is challenging for some families, especially before age 3, because fees are high and financial support is limited. This may hinder children's development, particularly for those from disadvantaged backgrounds, but is also likely to limit parents' – especially mothers' – ability and incentive to work, holding back productivity at a time of high labour demand and skills shortages. This briefing note summarises the evidence underlying the case for investment in high-quality ECEC provision. It also explores the more limited evidence on the amount and type of investment that could provide the greatest return.
    Keywords: early years; early years education; childcare; children's outcomes
    Date: 2023–03
  3. By: Philippe Aghion; Ufuk Akcigit; Ari Hyytinen; Otto Toivanen
    Abstract: Why is invention strongly positively correlated with parental income not only in the US but also in Finland which displays low income inequality and high social mobility? Using data on 1.45M Finnish individuals and their parents, we find that: (i) the positive association between parental income and off-spring probability of inventing is greatly reduced when controlling for parental education; (ii) instrumenting for the parents having a MSc-degree using distance to nearest university reveals a large causal effect of parental education on offspring probability of inventing; and (iii) the causal effect of parental education has been markedly weakened by the introduction in the early 1970s of a comprehensive schooling reform.
    JEL: J24 O3
    Date: 2023–02
  4. By: David Autor; Arindrajit Dube; Annie McGrew
    Abstract: Labor market tightness following the height of the Covid-19 pandemic led to an unexpected compression in the US wage distribution that reflects, in part, an increase in labor market competition. Rapid relative wage growth at the bottom of the distribution reduced the college wage premium and counteracted approximately one-quarter of the four-decade increase in aggregate 90-10 log wage inequality. Wage compression was accompanied by rapid nominal wage growth and rising job-to-job separations—especially among young non-college (high school or less) workers. At the state-level, post-pandemic labor market tightness became strongly predictive of price increases (price-Phillips curve), real wage growth among low-wage workers (wage-Phillips curve), and aggregate wage compression. Simultaneously, the wage-separation elasticity—a key measure of labor market competition—rose among young non-college workers, with wage gains concentrated among workers who changed employers and industries. Seen through the lens of a canonical job ladder model, the pandemic increased the elasticity of labor supply to firms in the low-wage labor market, reducing employer market power and spurring rapid relative wage growth among young non-college workers who disproportionately moved from lower-paying to higher-paying and potentially more-productive jobs.
    JEL: E31 J2 J3 J42 J64
    Date: 2023–03
  5. By: Jonathan Gruber; Tuomas Kosonen; Kristiina Huttunen
    Abstract: We study the impacts of a policy designed to reward mothers who stay at home rather than join the labor force when their children are under age three. We use regional and over time variation to show that the Finnish Home Care Allowance (HCA) decreases maternal employment in both the short and long term. The effects are large enough for the existence of home care benefit system to explain the higher short-term child penalty in Finland than comparable nations. Home care benefits also negatively affect the early childhood cognitive test results of children, decrease the likelihood of choosing academic high school, and increase youth crimes. We confirm that the mechanism of action is changing work/home care arrangements by studying a day care fee reform that had the opposite effect of raising incentives to work – with corresponding opposite effects on mothers and children compared to HCA. Our findings suggest that shifting child care from the home to the market increases labor force participation and improves child outcomes.
    JEL: H31 J13
    Date: 2023–02

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