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  5. Education, Skill Formation, and Inequality
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Education, Skill Formation, and Inequality

Paper Session

Sunday, Jan. 3, 2021 10:00 AM - 12:00 PM (EST)

Hosted By: Econometric Society
  • Chair: James Heckman, University of Chicago

Estimating the Growth of Latent Skills From an Early Childhood Program

James Heckman
,
University of Chicago
Jin Zhou
,
University of Chicago

Abstract

This paper develops and applies a method for evaluating the causal impacts of an early childhood skill development program with treatment randomly assigned. We identify multivariate latent skill profiles for each child and compare them between the treatments and controls. As a byproduct, we identify average treatment effects on skill development. The program significantly improves child language development, fine motor, and social-emotional skills. We go beyond treatment effects to understand mechanisms generating them. Decomposing average treatment effects, we find that enhancements in inputs in a stable production function explain about 80% of the treatment effects on language and cognitive skill development. The program also shifts the production function mapping home inputs into treatment effects, although this source explains less than 20% of the average estimated treatment effects.

Are Public Universities Still Public? The Impact of Service Exports on the United States Higher Education Market

Mingyu Chen
,
Princeton University

Abstract

The education trade surplus accounts for about 14 percent of US services trade surplus in 2018. While international students bring additional tuition revenue to public universities, schools may either expand in-state enrollment or increase per-student spending. I examine the effect of education exports on various schools' behaviors and outcomes. I construct a shift-share instrument that exploits variation in economic growth, exchange rate fluctuations, and institutions' historical networks with different economies. I find that an increase in international students leads to public universities to increase in-state enrollment and graduate more domestic students. Per-student spending does not change and SAT score increases for enrolled students in the top quartile. More international students also lead to fewer state appropriations and lower published tuition price for in-state students at research institutions.

The Effect of Parental Rural-to-Urban Migration on Children's Cognitive Skill Formation

Bolun Li
,
Capital One Financial Corporation

Abstract

Large-scale rural-to-urban economic migration in developing countries leaves millions of rural-origin children growing up separated from their migrant parents. Due to the limited parent-child interaction, parental migration poses developmental challenges for left-behind children. This paper develops a structural model of household migration to evaluate the effects of parental migration decisions on the dynamics of children's cognitive skill formation from birth until the end of the developmental stage. I estimate the model using data from the Indonesian Family Life Survey via Simulated Maximum Likelihood. I find that children's cognitive skill formation is sensitive to the duration of parental migration. Using the estimated model, I find that there is a 0.3 standard deviations increase in left-behind children's skills at the end of the developmental stage had their parents not left. I also simulate a series of counterfactual migration policies. I show that migration policies that incentivize family migration with their children to urban destinations are effective in fostering children's cognitive development.

Firm Heterogeneity in Skill Returns

Michael Johannes Böhm
,
University of Bonn
Khalil Esmkhani
,
University of British Columbia
Giovanni Gallipoli
,
University of British Columbia

Abstract

This paper presents new evidence on worker–firm complementarities. We combine matched employer–employee data with direct measures of workers’ cognitive and noncognitive skills, and propose an empirical approach that separately identifies the firm-level return for each attribute. We find that similar skills command different returns across employers and that workers’ sorting into firms depends on returns to both attributes. We derive theoretical restrictions that characterize many-to-one matching in employer–employee data, linking withinfirm skill dispersion to between-firm differences in average skills. Estimates support these restrictions. Firm heterogeneity in skill returns raises both the average level and dispersion of earnings.
JEL Classifications
  • I2 - Education and Research Institutions