Papers
Working Papers
- Type: New, Working Papers
Rising interest rates can create “mortgage rate lock” for homeowners with fixed rate mortgages, who can hold onto their low rates as long as they stay in their homes but would have to take on new mortgages with higher rates if they moved. We show mobility rates fell in 2022 and 2023 for homeowners with mortgages, as market rates rose. We observe both absolute declines and declines relative to homeowners without mortgages, who are unaffected by mortgage rate lock. Mobility declines are not explained by changes in home values. Overall, our estimates imply that rising interest rates reduced mobility in 2022 and 2023 for households with mortgages by 16% and caused $20bn of deadweight loss.
Published and Forthcoming Papers
AEA Papers & Proceedings 114.
This is a shorter version of the full paper. Access replication materials.
- Type: New, Published Papers
We use detailed location information from the Longitudinal Employer-Household Dynamics (LEHD) database to develop new evidence on the effects of spatial mismatch on the relative earnings of Black workers in large US cities. We classify workplaces by the size of the pay premiums they offer in a two-way fixed effects model, providing a simple metric for defining “good” jobs. We show that: (a) Black workers earn nearly the same average wage premiums as whites; (b) in most cities Black workers live closer to jobs, and closer to good jobs, than do whites; (c) Black workers typically commute shorter distances than whites; and (d) people who commute further earn higher average pay premiums, but the elasticity with respect to distance traveled is slightly lower for Black workers. We conclude that geographic proximity to good jobs is unlikely to be a major source of the racial earnings gaps in major U.S. cities today.
- 2024, June
Journal of Empirical Legal Studies 21(2).
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- Type: New, Published Papers
Since their inception in 1989, the U.S. News & World Report law school rankings have influenced how schools, students, and the legal profession itself think about legal education. In the Fall of 2022, however, several of the most selective law schools formally withdrew from the annual rankings. In so doing, these schools laid bare longstanding criticisms of the rankings’ questionable criteria and opaque methodology. While the long-term effect of this boycott remains to be seen, school rankings are likely here to stay. In this Article we design a more informative approach to rankings, based on actual decisions students make. Using individual level data provided by the Law School Admissions Council (LSAC), we analyze the universe of applicants to U.S. law schools for the period 1988 through 2017. In so doing, we are the first to create a revealed preference ranking based solely on where applicants matriculate given offers of admission. Our approach relies neither on potentially faulty data collection from schools nor arbitrary decisions about which factors to emphasize in rankings, thereby minimizing the scope for manipulation. It also allows us to quantify the magnitude of differences in preferences among schools and to test their statistical significance. Matriculants reveal a strong preference for a handful of the most selective schools; outside of the top tier, however, matriculants do not appear to draw meaningful distinctions between schools ranked adjacently or even near to each other. While existing school rankings sow more confusion than clarity, our analysis provides a rigorous and transparent alternative, and a blueprint for redesigning school rankings.
- 2023, August
Forthcoming, American Economic Journal: Applied Economics.
- Type: New, Published Papers
We use data from the Longitudinal Employer-Household Dynamics program to study the causal effects of location on earnings. Starting from a model with employer and employee fixed effects, we estimate the average earnings premiums associated with jobs in different commuting zones (CZs) and different CZ-industry pairs. About half of the variation in mean wages across CZs is attributable to differences in worker ability (as measured by their fixed effects); the other half is attributable to place effects. We show that the place effects from a richly specified cross sectional wage model overstate the causal effects of place (due to unobserved worker ability), while those from a model that simply adds person fixed effects understate the causal effects (due to unobserved heterogeneity in the premiums paid by different firms in the same CZ). Local industry agglomerations are associated with higher wages, but overall differences in industry composition and in CZ-specific returns to industries explain only a small fraction of average place effects. Estimating separate place effects for college and non-college workers, we find that the college wage gap is bigger in larger and higher-wage places, but that two-thirds of this variation is attributable to differences in the relative skills of the two groups in different places. Most of the remaining variation reflects the enhanced sorting of more educated workers to higher-paying industries in larger and higher-wage CZs. Finally, we find that local housing costs at least fully offset local pay premiums, implying that workers who move to larger CZs have no higher net-of-housing consumption.
- 2024, July
Behavioural Public Policy 8(3).
Read the pre-publication version or policy brief (with Samantha Fu and Elizabeth Linos).
- Type: New, Published Papers
As US college costs continue to rise, governments and institutions have quadrupled financial aid. Yet, the administrative process of receiving financial aid remains complex, raising costs for families and deterring students from enrolling. In two large-scale field experiments (N = 265,570), we test the impact of nudging high-school seniors in California to register for state scholarships. We find that simplifying communication and affirming belonging each significantly increase registrations, by 9% and 11%, respectively. Yet, these nudges do not impact the final step of the financial aid process – receiving the scholarship. In contrast, a simplified letter that affirms belonging while also making comparable cost calculations more salient significantly impacts college choice, increasing enrollment in the lowest net cost option by 10.4%. Our findings suggest that different nudges are likely to address different types of administrative burdens, and their combination may be the most effective way to shift educational outcomes.
Journal of Labor Economics 42 (S1).
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- Type: New, Published Papers
We revisit the estimation of industry wage differentials using linked employer-employee data from the U.S. LEHD program. Building on recent advances in the measurement of employer wage premiums, we define the industry wage effect as the employment-weighted average workplace premium in that industry. We show that cross-sectional estimates of industry differentials overstate the pay premiums due to unmeasured worker heterogeneity. Conversely, estimates based on industry movers understate the true premiums, due to unmeasured heterogeneity in pay premiums within industries. Industry movers who switch to higher-premium industries tend to leave firms in the origin sector that pay above-average premiums and move to firms in the destination sector with below-average premiums (and vice versa), attenuating the measured industry effects. Our preferred estimates reveal substantial heterogeneity in narrowly-defined industry premiums, with a standard deviation of 12%. On average, workers in higher-paying industries have higher observed and unobserved skills, widening between-industry wage inequality. There are also small but systematic differences in industry premiums across cities, with a wider distribution of pay premiums and more worker sorting in cities with more highpremium firms and high-skilled workers.
Annals of Applied Statistics 17 (4).
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- Type: New, Published Papers
In a pilot program during the 2016–17 admissions cycle, the University of California, Berkeley invited many applicants for freshman admission to submit letters of recommendation. This proved controversial within the university, with concerns that this change would further disadvantage applicants from disadvantaged groups. To inform this debate, we use this pilot as the basis for an observational study of the impact of submitting letters of recommendation on subsequent admission, with the goal of estimating how impacts vary across predefined subgroups. Understanding this variation is challenging in an observational setting because estimated impacts reflect both actual treatment effect variation and differences in covariate balance across groups. To address this, we develop balancing weights that directly optimize for “local balance” within subgroups while maintaining global covariate balance between treated and control units. Applying this approach to the UC Berkeley pilot study yields excellent local and global balance, unlike more traditional weighting methods, which fail to balance covariates within subgroups. We find that the impact of letters of recommendation increases with applicant strength. However, we find little average difference for applicants from disadvantaged groups, although this result is more mixed. In the end we conclude that soliciting letters of recommendation from a broader pool of applicants would not meaningfully change the composition of admitted undergraduates
Journal of Human Resources 58 (5).
Read the pre-publication version or supplementary materials. Replication materials are available on the Harvard Dataverse; backup on Berkeley Box.
- Type: New, Published Papers
I study cohort patterns in the labor market outcomes of recent college graduates, examining changes surrounding the Great Recession. Recession entrants have lower wages and employment than those of earlier cohorts; more recent cohorts’ employment is even lower, but the newest entrants’ wages have risen. I relate these changes to “scarring” effects of initial conditions. I demonstrate that adverse early conditions permanently reduce new entrants’ employment probabilities. I also replicate earlier results of medium-term scarring effects on wages that fade out by the early 30s. But scarring cannot account for the employment collapse for recent cohorts. There was a dramatic negative structural break in college graduates’ employment rates, beginning around the 2005 entry cohort, that shows no sign of abating.
Industrial and Labor Relations Review 76 (2).
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- Type: Published Papers
The authors use de-identified data from California personal income tax returns to measure the frequency and nature of independent contracting and self-employment in California. They identify this work by the presence of a Schedule C on the tax return and/or the receipt of a Form 1099 information return. The authors estimate that 14.4% of California workers aged 18 to 64 in tax year 2016 had some independent contracting or self-employment income and approximately half of this subgroup also had earnings from traditional W-2 jobs during the year. Only a small share (1.4%) of workers had earnings from online labor platforms (often called gig work). Workers with low earnings were significantly more likely to earn independent contracting or self-employment income and to rely primarily or exclusively on that income. The article explores the characteristics of workers engaging in independent contracting and self-employment and their distribution across family type, geography, and industry.
American Economic Journal: Applied Economics 15(1).
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- Type: Published Papers
We use the introduction of the Texas Top Ten Percent rule to estimate the effect of access to a selective college on graduation and earnings outcomes for two groups of students. For highly ranked students at more disadvantaged high schools, who gained access under the policy, college enrollment and graduation increased. Less highly ranked students at more advantaged schools, who tended to lose access, shifted toward less-selective colleges under the policy, but did not see declines in overall college enrollment, graduation, or earnings. The policy thus benefited students targeted for admission without evidence of adverse effects on displaced students.
American Economic Journal: Economic Policy 14(4).
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- Type: Published Papers
The Earned Income Tax Credit distributes more than $60 billion to over 20 million low-income families annually. Nevertheless, an estimated one-fifth of eligible households do not claim it. We ran six preregistered, large-scale field experiments with 1 million observations to test whether “nudges” could increase EITC take-up. Despite varying the content, design, messenger, and mode of our messages, we find no evidence that they affected households’ likelihood of filing a tax return or claiming the credit. We conclude that even the most behaviorally informed low-touch outreach efforts cannot overcome the barriers faced by low-income households who do not file returns.
Economics of Education Review 89.
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- Type: Published Papers
A subset of undergraduate applicants to the University of California, Berkeley were invited to submit letters of recommendation as part of their applications. I use scraped text of the submitted letters, natural language processing tools, and a within-subject experimental design wherein applications were read in parallel with and without their letters to understand the role that this qualitative information plays in admissions. I show that letters written on behalf of underrepresented applicants were modestly distinctive. I also construct an index of letter strength, measuring the predicted impact of the letter on the student’s application score. I show that underrepresented applicants tend to get weaker letters, but that readers pay less attention to letter strength for underrepresented students. Overall, the inclusion of letters modestly improved application outcomes for the average underrepresented student.
Journal of the Royal Statistical Society, Series B 84 (2).
Read the arXiv version, journal page, or supplementary materials. Obtain the Augsynth R package.
N.B.: An earlier version of this paper circulated under the title “Synthetic Controls and Weighted Event Studies with Staggered Adoption.”
- Type: Published Papers
Staggered adoption of policies by different units at different times creates promising opportunities for observational causal inference. Estimation remains challenging, however, and common regression methods can give misleading results. A promising alternative is the synthetic control method (SCM), which finds a weighted average of control units that closely balances the treated unit’s pre-treatment outcomes. In this paper, we generalize SCM, originally designed to study a single treated unit, to the staggered adoption setting. We first bound the error for the average effect and show that it depends on both the imbalance for each treated unit separately and the imbalance for the average of the treated units. We then propose ‘partially pooled’ SCM weights to minimize a weighted combination of these measures; approaches that focus only on balancing one of the two components can lead to bias. We extend this approach to incorporate unit-level intercept shifts and auxiliary covariates. We assess the performance of the proposed method via extensive simulations and apply our results to the question of whether teacher collective bargaining leads to higher school spending, finding minimal impacts. We implement the proposed method in the augsynth R package.
Journal of Labor Economics 40 (S1).
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- Type: Published Papers
In two 1992 papers, Card and Krueger used labor market outcomes to study the productivity of school spending. Following their lead, we examine the effects of post-1990 school finance reforms on students’ educational attainment and labor market outcomes. Using a state-by-cohort panel design, we find that reforms increased high school completion and college-going, concentrated among Black students and women, and raised annual earnings. The reforms also increased the return to education, particularly for Black students and men, driven by the return to high school.
Journal of the American Statistical Association 116 (536).
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- Type: Published Papers
The synthetic control method (SCM) is a popular approach for estimating the impact of a treatment on a single unit in panel data settings. The “synthetic control” is a weighted average of control units that balances the treated unit’s pretreatment outcomes and other covariates as closely as possible. A critical feature of the original proposal is to use SCM only when the fit on pretreatment outcomes is excellent. We propose Augmented SCM as an extension of SCM to settings where such pretreatment fit is infeasible. Analogous to bias correction for inexact matching, augmented SCM uses an outcome model to estimate the bias due to imperfect pretreatment fit and then de-biases the original SCM estimate. Our main proposal, which uses ridge regression as the outcome model, directly controls pretreatment fit while minimizing extrapolation from the convex hull. This estimator can also be expressed as a solution to a modified synthetic controls problem that allows negative weights on some donor units. We bound the estimation error of this approach under different data-generating processes, including a linear factor model, and show how regularization helps to avoid over-fitting to noise. We demonstrate gains from Augmented SCM with extensive simulation studies and apply this framework to estimate the impact of the 2012 Kansas tax cuts on economic growth. We implement the proposed method in the new augsynth R package.
- 2021
In Lessons from SSA Demonstrations for Disability Policy and Future Research, Austin Nichols, Jeffrey Hemmeter, and Debra Goetz Engler, eds., Rockville, MD: Abt Press.
- Type: Published Papers
- 2020, Summer
Brookings Papers on Economic Activity.
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- Type: Published Papers
We use traditional and nontraditional data to measure the collapse and partial recovery of the US labor market from March to early July, contrast this downturn to previous recessions, and provide preliminary evidence on the effects of the policy response. For hourly workers at both small and large businesses, nearly all of the decline in employment occurred between March 14 and 28. It was driven by low-wage services, particularly the retail and leisure and hospitality sectors. A large share of the job losses in small businesses reflected firms that closed entirely, though many subsequently reopened. Firms that were already unhealthy were more likely to close and less likely to reopen, and disadvantaged workers were more likely to be laid off and less likely to return. Most laid-off workers expected to be recalled, and this was predictive of rehiring. Shelter-in-place orders drove only a small share of job losses. Last, states that received more small business loans from the Paycheck Protection Program and states with more generous unemployment insurance benefits had milder declines and faster recoveries. We find no evidence that high unemployment insurance replacement rates drove job losses or slowed rehiring.
Annual Review of Economics 11.
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- Type: Published Papers
We discuss the potential role of universal basic incomes (UBIs) in advanced countries. A feature of advanced economies that distinguishes them from developing countries is the existence of well-developed, if often incomplete, safety nets. We develop a framework for describing transfer programs that is flexible enough to encompass most existing programs as well as UBIs, and we use this framework to compare various UBIs to the existing constellation of programs in the United States. A UBI would direct much larger shares of transfers to childless, nonelderly, nondisabled households than existing programs, and much more to middle-income rather than poor households. A UBI large enough to increase transfers to low-income families would be enormously expensive. We review the labor supply literature for evidence on the likely impacts of a UBI. We argue that the ongoing UBI pilot studies will do little to resolve the major outstanding questions.
Journal of Labor Economics 37(S1).
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- Type: Published Papers
Intergenerational income transmission varies across commuting zones (CZs). I investigate whether children’s educational outcomes help to explain this variation. Differences among CZs in the relationship between parental income and children’s human capital explain only one-ninth of the variation in income transmission. A similar share is explained by differences in the return to human capital. One-third reflects earnings differences not mediated by human capital, and 40% reflects differences in marriage patterns. Intergenerational mobility appears to reflect job networks and the structure of local labor and marriage markets more than it does the education system.
American Economic Journal: Applied Economics 10(2).
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- Type: Published Papers
We study the impact of post-1990 school finance reforms, during the so-called “adequacy” era, on absolute and relative spending and achievement in low-income school districts. Using an event study research design that exploits the apparent randomness of reform timing, we show that reforms lead to sharp, immediate, and sustained increases in spending in low-income school districts. Using representative samples from the National Assessment of Educational Progress, we find that reforms cause increases in the achievement of students in these districts, phasing in gradually over the years following the reform. The implied effect of school resources on educational achievement is large.
In The 51%: Driving Growth through Women’s Economic Participation, Diane Whitmore Schanzenbach & Ryan Nunn, eds., The Hamilton Project/Brookings Institution.
- Type: Published Papers
The Earned Income Tax Credit (EITC) is a refundable tax credit that promotes work. Research has shown that it also reduces poverty and improves health and education outcomes. The maximum credit for families with two or fewer children has remained flat in inflation-adjusted terms since 1996. Over the same period, earnings prospects have stagnated or diminished for many Americans, and prime-age employment rates have fallen. This paper proposes to build on the successes of the EITC with a ten percent acrossthe-board increase in the federal credit. This expansion would provide a meaningful offset to stagnating real wages, encourage more people to enter employment, lift approximately 600,000 individuals out of poverty, and improve health and education outcomes for millions of children.
- Fall 2017
Journal of Policy Analysis and Management 36 (4).
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- Type: Published Papers
Many Unemployment Insurance (UI) recipients do not find new jobs before exhausting their benefits, even when benefits are extended during recessions. Using Survey of Income and Program Participation (SIPP) panel data covering the 2001 and 2007 to 2009 recessions and their aftermaths, we identify individuals whose jobless spells outlasted their UI benefits (exhaustees) and examine household income, program participation, and health-related outcomes during the six months following UI exhaustion. For the average exhaustee, the loss of UI benefits is only slightly offset by increased participation in other safety net programs (e.g., food stamps), and family poverty rates rise substantially. Self-reported disability also rises following UI exhaustion. These patterns do not vary dramatically across household demographic groups, broad income level prior to job loss, or the two business cycles. The results highlight the unique, important role of UI in the U.S. social safety net.
American Economic Review 107(6).
NB: This paper previously circulated under the title “Revisiting the Impact of Teachers.”
Read the pre-publication version (with additional appendices), policy brief, a rejoinder to the Reply, older versions, or replication materials.
- Type: Published Papers
Chetty, Friedman, and Rockoff (2014a, b) study value-added (VA) measures of teacher effectiveness. CFR (2014a) exploits teacher switching as a quasi-experiment, concluding that student sorting creates negligible bias in VA scores. CFR (2014b) finds VA scores are useful proxies for teachers’ effects on students’ long-run outcomes. I successfully reproduce each in North Carolina data. But I find that the quasi-experiment is invalid, as teacher switching is correlated with changes in student preparedness. Adjusting for this, I find moderate bias in VA scores, perhaps 10-35 percent as large, in variance terms, as teachers’ causal effects. Long-run results are sensitive to controls and cannot support strong conclusions.
RSF: The Russell Sage Foundation Journal of the Social Sciences 3(3).
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- Type: Published Papers
The years since the 2009 end of the Great Recession have been disastrous for many workers, particularly those with low human capital or other disadvantages. One explanation attributes this to deficient aggregate labor demand, to which marginal workers are more sensitive. A second attributes it to structural changes. Cyclical explanations imply that if aggregate labor demand is increased then many of the post-2009 patterns will revert to their pre-recession trends. Structural explanations suggest recent experience is the “new normal.” This paper reviews data since 2007 for evidence. I examine wage trends to measure the relative importance of supply and demand. I find little wage pressure before 2015, pointing to demand as the binding constraint. The most recent data show some signs of tightness, but still substantial slack.
In The Economics of Tax Policy, Alan J. Auerbach and Kent Smetters, eds., Oxford University Press.
- Type: Published Papers
In this paper, we review the most prominent provision of the federal income tax code that targets low-income tax filers, the Earned Income Tax Credit (EITC), as well as the structurally similar Child Tax Credit (CTC). We frame the paper around what we see as the programs’ goals: distributional, promoting work, and limiting administrative and compliance costs. We review what is known about program impacts and distributional consequences under current law, drawing on simulations from the Tax Policy Center. We conclude that the EITC is quite successful in meeting its three goals. In contrast, most of the benefits of the CTC go to higher income households. In addition to analyzing current law, we assess possible reforms that would reach groups – for the EITC, those without children; for the CTC, those with very low earnings – who are largely missed under current policy.
In Handbook of Field Experiments, vol. 2, Abhijit Banerjee and Esther Duflo, eds. North Holland.
- Type: Published Papers
Large-scale social experiments were pioneered in labor economics, and are the basis for much of what we know about topics ranging from the effect of job training to incentives for job search to labor supply responses to taxation. Random assignment has provided a powerful solution to selection problems that bedevil nonexperimental research. Nevertheless, many important questions about these topics require going beyond random assignment. This applies to questions pertaining to both internal and external validity, and includes effects on endogenously observed outcomes, such as wages and hours; spillover effects; site effects; heterogeneity in treatment effects; multiple and hidden treatments; and the mechanisms producing treatment effects. In this Chapter, we review the value and limitations of randomized social experiments in the labor market, with an emphasis on these design issues and approaches to addressing them. These approaches expand the range of questions that can be answered using experiments by combining experimental variation with econometric or theoretical assumptions. We also discuss efforts to build the means of answering these types of questions into the ex ante design of experiments. Our discussion yields an overview of the expanding toolkit available to experimental researchers.
- 2016, Summer
Journal of Economic Perspectives 30(3).
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- Type: Published Papers
Journal of Labor Economics 34 (S1, pt. 2).
Read the Appendix, journal site, or NBER digest summary. Access the replication materials.
- Type: Published Papers
Social Security Disability Insurance (SSDI) awards rise during recessions. If marginal applicants are able to work but unable to find jobs, countercyclical Unemployment Insurance (UI) benefit extensions may reduce SSDI uptake. Exploiting UI extensions in the Great Recession as a source of variation, we find no indication that expiration of UI benefits causes SSDI applications and can rule out effects of meaningful magnitude. A supplementary analysis finds little overlap between the two programs’ recipient populations: only 28% of SSDI awardees had any labor force attachment in the prior calendar year, and of those, only 4% received UI.
In Economics of Means-Tested Transfer Programs in the United States, Volume I, Robert A. Moffitt, ed. Chicago: University of Chicago Press.
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- Type: Published Papers
American Economic Review: Papers & Proceedings 105(5).
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- Type: Published Papers
American Economic Review 105(1).
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- Type: Published Papers
Teacher contracts that condition pay and retention on demonstrated performance can improve selection into and out of teaching. I study alternative contracts in a simulated teacher labor market that incorporates dynamic self-selection and Bayesian learning. Bonus policies create only modest incentives and thus have small effects on selection. Reductions in tenure rates can have larger effects, but must be accompanied by substantial salary increases; elimination of tenure confers little additional benefit unless firing rates are extremely high. Benefits of both bonus and tenure policies exceed costs, though optimal policies are sensitive to labor market parameters about which little is known.
- 2013, Summer
Journal of Human Resources 48(3).
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- Type: Published Papers
Analysts often examine the black-white test score gap conditional on current family income. We describe a method for identifying the gap conditional on the family’s permanent income. Current income explains only about half as much of the black-white test gap as does permanent income, and the gap among families with the same permanent income is only 0.2 to 0.3 standard deviations in two commonly used samples. When we add permanent income to the controls used by Fryer and Levitt (2006), the unexplained gap in third grade shrinks below 0.15 SDs, less than half of what is found with their controls.
Think Tank Review, National Education Policy Center, Boulder, Colorado.
- Type: Published Papers
Industrial and Labor Relations Review 65(3).
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- Type: Published Papers
Four years after the beginning of the Great Recession, the labor market remains historically weak. Many observers have concluded that “structural” impediments to recovery bear some of the blame. The author reviews such structural explanations, but after analyzing U.S. data on unemployment and productivity, he finds there is little evidence supporting these hypotheses. He finds that the bulk of the evidence is more consistent with the hypothesis that continued poor performance is primarily attributable to shortfalls in the aggregate demand for labor.
Phi Delta Kappan 93(6).
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- Type: Published Papers
- 2011, Fall
Brookings Papers on Economic Activity.
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- Type: Published Papers
More than 2 years after the official end of the Great Recession, the labor market remains historically weak. One candidate explanation is supply-side effects driven by dramatic expansions of unemployment insurance (UI) benefit durations, to as long as 99 weeks. This paper investigates the effect of these extensions on job search and reemployment. I use the longitudinal structure of the Current Population Survey to construct unemployment exit hazards that vary across states, over time, and between individuals with differing unemployment durations. I then use these hazards to explore a variety of comparisons intended to distinguish the effects of UI extensions from other determinants of employment outcomes. The various specifications yield quite similar results. UI extensions had significant but small negative effects on the probability that the eligible unemployed would exit unemployment. These effects are concentrated among the long-term unemployed. The estimates imply that UI extensions raised the unemployment rate in early 2011 by only about 0.1 to 0.5 percentage point, much less than implied by previous analyses, with at least half of this effect attributable to reduced labor force exit among the unemployed rather than to the changes in reemployment rates that are of greater policy concern.
In Harriet Newburger, Eugenie Birch, and Susan Wachter, editors, Neighborhood and Life Chances: How Place Matters in Modern America. 2011. Philadelphia: University of Pennsylvania Press.
- Type: Published Papers
Journal of Public Economics 95(1-2).
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- Type: Published Papers
In the early 2000s, a highly selective university introduced a “no-loans” policy under which the loan component of financial aid awards was replaced with grants. We use this natural experiment to identify the causal effect of student debt on employment outcomes. In the standard life-cycle model, young people make optimal educational investment decisions if they are able to finance these investments by borrowing against future earnings; the presence of debt has only income effects on investment decisions. We find that debt causes graduates to choose substantially higher-salary jobs and reduces the probability that students choose low-paid “public interest” jobs. We also find some evidence that debt affects students’ academic decisions during college. Our estimates suggest that recent college graduates are not life-cycle agents. Two potential explanations are that young workers are credit constrained or that they are averse to holding debt. We find suggestive evidence that debt reduces students’ donations to the institution in the years after they graduate and increases the likelihood that a graduate will default on a pledge made during her senior year; we argue this result is more likely consistent with credit constraints than with debt aversion.
Think Tank Review, National Education Policy Center, Boulder, Colorado.
- Type: Published Papers
Quarterly Journal of Economics. 125 (1).
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- Type: Published Papers
Despite extensive public infrastructure spending, surprisingly little is known about its economic return. In this paper, we estimate the value of school facility investments using housing markets: standard models of local public goods imply that school districts should spend up to the point where marginal increases would have zero effect on local housing prices. Our research design isolates exogenous variation in investments by comparing school districts where referenda on bond issues targeted to fund capital expenditures passed and failed by narrow margins. We extend this traditional regression discontinuity approach to identify the dynamic treatment effects of bond authorization on local housing prices, student achievement, and district composition. Our results indicate that California school districts underinvest in school facilities: passing a referendum causes immediate, sizable increases in home prices, implying a willingness to pay on the part of marginal homebuyers of $1.50 or more for each $1 of capital spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners, and the impact on test scores appears to explain only a small portion of the total housing price effect.
American Economic Journal: Economic Policy 2 (1)
Read the pre-publication version, appendix, journal page, or earlier working paper version, titled “The Unintended Consequences of Encouraging Work: Tax Incidence and the EITC.” Access the replication materials.
- Type: Published Papers
The EITC is intended to encourage work. But EITC-induced increases in labor supply may drive wages down. I simulate the economic incidence of the EITC. In each scenario that I consider, a large portion of low-income single mothers’ EITC payments is captured by employers through reduced wages. Workers who are EITC ineligible also see wage declines. By contrast, a traditional Negative Income Tax (NIT) discourages work, and so induces large transfers from employers to their workers. With my preferred parameters, $1 in EITC spending increases after-tax incomes by $0.73, while $1 spent on the NIT yields $1.39. (JEL H22, H23, H24, H31, J22)
Quarterly Journal of Economics 125(1).
Note: An early version of this paper circulated as “Do Value-Added Models Add Value?”
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- Type: Published Papers
Growing concerns over the inadequate achievement of U.S. students have led to proposals to reward good teachers and penalize (or fire) bad ones. The leading method for assessing teacher quality is “value added” modeling (YAM), which decomposes students’ test scores into components attributed to student heterogeneity and to teacher quality. Implicit in the VAM approach are strong assumptions about the nature of the educational production function and the assignment of students to classrooms. In this paper, I develop falsification tests for three widely used VAM specifications, based on the idea that future teachers cannot influence students’ past achievement. In data from North Carolina, each of the VAMs’ exclusion restrictions is dramatically violated. In particular, these models indicate large “effects” of fifth grade teachers on fourth grade test score gains. I also find that conventional measures of individual teachers’ value added fade out very quickly and are at best weakly related to long-run effects. I discuss implications for the use of VAMs as personnel tools.
- 2009, Fall
Education Finance and Policy 4(4),
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- Type: Published Papers
Abstract Nonrandom assignment of students to teachers can bias value-added estimates of teachers’ causal effects. Rothstein (2008, 2010) shows that typical value-added models indicate large counterfactual effects of fifthgrade teachers on students’ fourth-grade learning, indicating that classroom assignments are far from random. This article quantifies the resulting biases in estimates of fifth-grade teachers’ causal effects from several valueadded models, under varying assumptions about the assignment process. If assignments are assumed to depend only on observables, the most commonly used specifications are subject to important bias, but other feasible specifications are nearly free of bias. I also consider the case in which assignments depend on unobserved variables. I use the across-classroom variance of observables to calibrate several models of the sorting process. Results indicate that even the best feasible value-added models may be substantially biased, with the magnitude of the bias depending on the amount of information available for use in classroom assignments.
Economics of Education Review 28(3).
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- Type: Published Papers
Data from college admissions tests can provide a valuable measure of student achievement, but the non-representativeness of test-takers is an important concern. We examine selectivity bias in both state-level and school-level SAT and ACT averages. The degree of selectivity may differ importantly across and within schools, and across and within states. To identify within-state selectivity, we use a control function approach that conditions on scores from a representative test. Estimates indicate strong selectivity of test-takers in “ACT states,” where most college-bound students take the ACT, and much less selectivity in SAT states. To identify within- and between-school selectivity, we take advantage of a policy reform in Illinois that made taking the ACT a graduation requirement. Estimates based on this policy change indicate substantial positive selection into test participation both across and within schools. Despite this, school-level averages of observed scores are extremely highly correlated with average latent scores, as across-school variation in sample selectivity is small relative to the underlying signal. As a result, in most contexts the use of observed school mean test scores in place of latent means understates the degree of between-school variation in achievement but is otherwise unlikely to lead to misleading conclusions.
- 2008, Spring
University of Chicago Law Review 75(2).
- Type: Published Papers
Quarterly Journal of Economics 123(1).
View the journal page. Access the replication materials.
- Type: Published Papers
Schelling (“Dynamic Models of Segregation,” Journal of Mathematical Sociology 1 (1971), 143–186) showed that extreme segregation can arise from social interactions in white preferences: once the minority share in a neighborhood exceeds a “tipping point,” all the whites leave. We use regression discontinuity methods and Census tract data from 1970 through 2000 to test for discontinuities in the dynamics of neighborhood racial composition. We find strong evidence that white population flows exhibit tipping-like behavior in most cities, with a distribution of tipping points ranging from 5% to 20% minority share. Tipping is prevalent both in the suburbs and near existing minority enclaves. In contrast to white population flows, there is little evidence of nonlinearities in rents or housing prices around the tipping point. Tipping points are higher in cities where whites have more tolerant racial attitudes.
American Economic Review 97(5).
Read the pre-publication version; appendix; journal page; additional material (including replication materials, prior versions, and media coverage); or a rejoinder to Professor Hoxby’s Reply.
- Type: Published Papers
Journal of Public Economics 91(11-12).
Read the pre-publication version, data appendix, or NBER digest summary.
- Type: Published Papers
Racial segregation is often blamed for some of the achievement gap between blacks and whites. We study the effects of school and neighborhood segregation on the relative SAT scores of black students across different metropolitan areas, using large microdata samples for the 1998–2001 test cohorts. Our models include detailed controls for the family background of individual test-takers, school-level controls for selective participation in the test, and city-level controls for racial composition, income, and region. We find robust evidence that the black–white test score gap is higher in more segregated cities. Holding constant family background and other factors, a shift from a highly segregated city to a nearly integrated city closes about one-quarter of the raw black–white gap in SAT scores. Specifications that distinguish between school and neighborhood segregation suggest that neighborhood segregation has a consistently negative impact while school segregation has no independent effect, though we cannot reject equality of the two effects. Additional tests indicate that much of the effect of neighborhood segregation operates through neighbors’ incomes, not through race per se. Data on enrollment in honors courses suggest that within-school segregation increases when schools are more highly integrated, potentially offsetting the benefits of school desegregation and accounting for our findings.
American Economic Review 96(4).
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- Type: Published Papers
In a multicommunity model, high-income families cluster together in any equilibrium, and cluster near effective schools if effectiveness is an important component of community desirability. Governmental fragmentation facilitates this residential sorting. Thus, if parents prefer effective schools, income correlates with effectiveness in high-choice-market equilibrium. I examine the distribution of student background and test scores across schools within metropolitan areas that differ in the structure of educational governance. I find little indication of the “effectiveness sorting” that is predicted if parents choose neighborhoods for the efficacy of the local schools. This suggests caution about the productivity implications of school choice policies.
- 2006, Summer
American Law and Economics Review 8(2).
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- Type: Published Papers
In Grutter v. Bollinger, Justice O’Connor conjectured that in 25 years affirmative action in college admissions will be unnecessary. We project the test score distribution of black and white college applicants 25 years from now, focusing on the role of black–white family income gaps. Economic progress alone is unlikely to narrow the achievement gap enough in 25 years to produce today’s racial diversity levels with race-blind admissions. A return to the rapid black–white test score convergence of the 1980s could plausibly cause black representation to approach current levels at moderately selective schools, but not at the most selective schools.
In College Access: Opportunity or Privilege, Michael McPherson and Morton Schapiro, eds, New York: The College Board, pp. 35-46.
- Type: Published Papers
- 2004, July-August
Journal of Econometrics 121(1-2).
Read the pre-publication version or the policy brief.
- Type: Published Papers
The methods used in most SAT validity studies cannot be justified by any sample selection assumptions and are uninformative about the source of the SAT’s predictive power. A new omitted variables estimator is proposed; plausibly consistent estimates of the SAT’s contribution to predictions of University of California freshman grade point averages are about 20% smaller than the usual methods imply. Moreover, much of the SAT’s predictive power is found to derive from its correlation with high school demographic characteristics: The orthogonal portion of SAT scores is notably less predictive of future performance than is the unadjusted score.
Resting Papers
- Type: Resting Papers
An important criticism of race-based higher education admission preferences is that they may hurt minority students who attend more selective schools than they would in the absence of such preferences. We categorize the non-experimental research designs available for the study of so-called “mismatch” effects and evaluate the likely biases in each. We select two comparisons and use them to examine mismatch effects in law school. We find no evidence of mismatch effects on any students’ employment outcomes or on the graduation or bar passage rates of black students with moderate or strong entering credentials. What evidence there is for mismatch is concentrated among lessqualified black students who typically attend second- or third-tier schools. Many of these students would not have been admitted to any law school without preferences, however, and the resulting sample selection prevents strong conclusions.