The Life-Cycle Benefits of an Influential Early Childhood Program by Jorge Luis García, James J. Heckman, Duncan Ermini Leaf, María José Prados :: SSRN

January 18, 2017

This paper estimates the long-term benefits from an influential early childhood program targeting disadvantaged families. The program was evaluated by random assignment and followed participants through their mid-30s. It has substantial beneficial impacts on health, children’s future labor incomes, crime, education, and mothers’ labor incomes, with greater monetized benefits for males. Lifetime returns are estimated by pooling multiple data sets using testable economic models. The overall rate of return is 13.7% per annum, and the benefit/cost ratio is 7.3. These estimates are robust to numerous sensitivity analyses.

Source: The Life-Cycle Benefits of an Influential Early Childhood Program by Jorge Luis García, James J. Heckman, Duncan Ermini Leaf, María José Prados :: SSRN


Unfair Pay and Health by Falk Armin, Fabian Kosse, Ingo Menrath, Pablo Emilio Verde, Johannes Siegrist :: SSRN

January 6, 2017

This paper investigates physiological responses to perceptions of unfair pay. We use an integrated approach exploiting complementarities between controlled lab and representative panel data. In a simple principal-agent experiment agents produce revenue by working on a tedious task. Principals decide how this revenue is allocated between themselves and their agents. Throughout the experiment we record agents’ heart rate variability, which is an indicator of stress-related impaired cardiac autonomic control, and which has been shown to predict coronary heart disease in the long-run. Our findings establish a link between unfair payment and heart rate variability. Building on these findings, we further test for potential adverse health effects of unfair pay using observational data from a large representative panel data set. Complementary to our experimental findings we show a strong and significant negative association between unfair pay and health outcomes, in particular cardiovascular health.

Source: Unfair Pay and Health by Falk Armin, Fabian Kosse, Ingo Menrath, Pablo Emilio Verde, Johannes Siegrist :: SSRN


Nobel economist Angus Deaton on a year of political earthquakes

December 22, 2016

He sees an epidemic of pain and a related flood of opioids into communities over the past decade as being, more than globalisation or economic dislocation, the real cause of rising mortality among middle-aged white Americans.

With Gallup’s help he has been collecting data on how many people report having felt physical pain in the past 24 hours and says the numbers are staggering in the US. What is causing that epidemic — and its links to Trump’s rise — remains unclear, he says. He seems more willing to blame pharmaceutical companies and doctors for overprescribing opioids. A surge in addiction (drug overdoses caused more deaths in the US last year than auto accidents) has, he argues, proved far more fatal than globalisation.

Source: Nobel economist Angus Deaton on a year of political earthquakes


The Fading American Dream: Trends in Absolute Income Mobility Since 1940 by Raj Chetty, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, Jimmy Narang :: SSRN

December 20, 2016

We estimate rates of “absolute income mobility” – the fraction of children who earn more than their parents – by combining historical data from Census and CPS cross-sections with panel data for recent birth cohorts from de-identified tax records. Our approach overcomes the key data limitation that has hampered research on trends in intergenerational mobility: the lack of large panel datasets linking parents and children. We find that rates of absolute mobility have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s. The result that absolute mobility has fallen sharply over the past half century is robust to the choice of price deflator, the definition of income, and accounting for taxes and transfers. In counterfactual simulations, we find that increasing GDP growth rates alone cannot restore absolute mobility to the rates experienced by children born in the 1940s. In contrast, changing the distribution of growth across income groups to the more equal distribution experienced by the 1940 birth cohort would reverse more than 70% of the decline in mobility. These results imply that reviving the “American Dream” of high rates of absolute mobility would require economic growth that is spread more broadly across the income distribution.

Source: The Fading American Dream: Trends in Absolute Income Mobility Since 1940 by Raj Chetty, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, Jimmy Narang :: SSRN


Health, Human Capital and Domestic Violence by Nicholas W. Papageorge, Gwyn C Pauley, Mardge Cohen, Tracey Wilson, Barton H. Hamilton, Robert A. Pollak :: SSRN

December 14, 2016

We study the impact of health shocks on domestic violence and illicit drug use. We argue that health is a form of human capital that shifts incentives for risky behaviors, such as drug use, and also changes options outside of violent relationships. To estimate causal effects, we examine chronically ill women before and after a medical breakthrough and exploit differences in these women’s health prior to the breakthrough. We show evidence that health improvements induced by the breakthrough reduced domestic violence and illicit drug use. Our findings provide support for the idea that health improvements can have far-reaching implications for costly social problems. The policy relevance of our findings is compounded by the fact that both domestic violence and illicit drug use are social problems often seen as frustratingly impervious to interventions. One possible reason is that the common factors that drive them, such underlying health or labor market human capital, are themselves very persistent over time. Our study provides a unique test of this hypothesis by examining what happens when factors underlying violence or drug use exogenously shift due to a medical technological advancement. Our findings suggest that both violence and drug use could be reduced by improving women’s access to better healthcare.

Source: Health, Human Capital and Domestic Violence by Nicholas W. Papageorge, Gwyn C Pauley, Mardge Cohen, Tracey Wilson, Barton H. Hamilton, Robert A. Pollak :: SSRN


“Lifecycle Benefits of an Influential Early Childhood Program” One-Pager | Heckman

December 13, 2016

Start at birth, coordinate services into comprehensive early childhood programs and achieve greater economic and social gains. Professor Heckman’s latest research, “The Lifecycle Benefits of an Influential Early Childhood Program,” shows that high quality birth-to-five programs for disadvantaged children can deliver a 13% per year return on investment—a rate substantially higher than the 7-10% return previously established for preschool programs serving 3- to 4-year-olds. Heckman, his University of Chicago colleague Jorge Luis García, Duncan Ermini Leaf of the Leonard D. Schaeffer Center for Health Policy and Economics at University of Southern California, and María José Prados of the Dornsife Center for Economic and Social Research at University of Southern California, find that significant gains are realized through better outcomes in education, health, social behaviors and employment.

Source: “Lifecycle Benefits of an Influential Early Childhood Program” One-Pager | Heckman


The Dynamic Effects of Health on the Employment of Older Workers by Richard W. Blundell, Jack Britton, Monica Costa Dias, Eric French :: SSRN

December 13, 2016

Using data from the Health and Retirement Study (HRS) and the English Longitudinal Study of Ageing (ELSA), we estimate a dynamic model of health and employment. We estimate how transitory and persistent health shocks affect employment over time. In a first step, we formulate and estimate a dynamic model of health. The procedure accounts for measurement error and the possibility that people might justify their employment status by reporting bad health. We find that health is well represented by the sum of a transitory white noise process and a persistent AR(1) process. Next, we use the method of simulated moments to estimate the employment response to these shocks. We find that persistent shocks have much bigger effects on employment than transitory shocks, and that these persistent shocks are long lived. For this reason employment is strongly correlated with lagged health, a fact that the usual cross-sectional estimates do not account for. We also show that accounting for the dynamics of health and employment leads to larger estimates of health’s effects on employment than what simple OLS estimates of health on employment would imply. We argue that the dynamic effect of health on employment could be generated by a model with human capital accumulation, where negative health shocks slowly reduce the human capital stock, and thus, gradually cause people to exit the labor market.

Source: The Dynamic Effects of Health on the Employment of Older Workers by Richard W. Blundell, Jack Britton, Monica Costa Dias, Eric French :: SSRN