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Jel Classification:I26 

Working Paper
Explaining Cross-Cohort Differences in Life Cycle Earnings

College-educated workers entering the labor market in 1940 experienced a 4-fold increase in their labor earnings between the ages of 25 and 55; in contrast, the increase was 2.6-fold for those entering the market in 1980. For workers without a college education these figures are 3.6-fold and 1.5-fold, respectively. Why are earnings profiles flatter for recent cohorts? We build a parsimonious model of schooling and human capital accumulation on the job and calibrate it to earnings statistics of workers from the 1940 cohort. The model accounts for 99 percent of the flattening of earnings ...
Working Papers , Paper 2015-35

Journal Article
Why Are Life-Cycle Earnings Profiles Getting Flatter?

The authors present a simple, two-period model of human capital accumulation on the job and through college attainment. They use a calibrated version of the model to explain the observed flattening of the life-cycle earnings profiles of two cohorts of workers. The model accounts for more than 55 percent of the observed flattening for high school-educated and for college-educated workers. Two channels generate the flattening in the model: selection (or higher college attainment) and a higher skill price for the more recent cohort. Absent selection, the model would have accounted for no ...
Review , Volume 99 , Issue 3 , Pages 245-57

Working Paper
Institution, Major, and Firm-Specific Premia: Evidence from Administrative Data

We examine how a student?s major and the institution attended contribute to the labor market outcomes of young graduates. Administrative panel data that combine student transcripts with matched employer-employee records allow us to provide the first decomposition of premia into individual and firm-specific components. We find that both major and institutional premia are more strongly related to the firm-specific component of wages than the individual-specific component of wages. On average, a student?s major is a more important predictor of future wages than the selectivity of the institution ...
Working Papers , Paper 19-24

Report
Financial aid, debt management, and socioeconomic outcomes: post-college effects of merit-based aid

Prior research has demonstrated that financial aid can influence both college enrollments and completions, but less is known about its post-college consequences. Even for students whose attainment is unaffected, financial aid may affect post-college outcomes via reductions in both time to degree and debt at graduation. We utilize two complementary quasi-experimental strategies to identify causal effects of the WV PROMISE scholarship, a broad-based state merit aid program, up to ten years post-college-entry. This study is the first to link college transcripts and financial aid information to ...
Staff Reports , Paper 791

Journal Article
The Unequal Responses to Pandemic-Induced Schooling Shocks

This article investigates the existence of socio-demographic gradients in the schooling shocks experienced by school-aged children and their ability to adjust to the disruptions induced by the containment measures imposed in response to the COVID-19 pandemic. It focuses on documenting racial, educational, and income disparities in these two essential components of children's human capital accumulation that could have significant implications in the medium and long run. The article finds that children in households from disadvantaged socio-demographic groups (i) were significantly more likely ...
Review , Volume 105 , Issue 1 , Pages 51-65

Working Paper
Is It Still an Econ Course? The Effect of a Standardized Personal Finance Test on the Learning of Economics

We study the implications of mixing economics and personal finance standardsin a high school course. Using administrative, survey, and testing data on collegestudents, we find evidence that personal finance instruction crowds out economicsinstruction. We find that students who received more instruction in economics scorealmost 5% higher on an economics test. Furthermore, we estimate the effect of beingassigned a certification test in personal finance as a part of this course. The effect ofthe certification test is not uniform across students. The test reduces the economicsscores of students ...
Working Paper , Paper 22-03

Working Paper
ivcrc: An Instrumental Variables Estimator for the Correlated Random Coefficients Model

We discuss the ivcrc module, which implements an instrumental variables (IV) estimator for the linear correlated random coefficients (CRC) model. The CRC model is a natural generalization of the standard linear IV model that allows for endogenous, multivalued treatments and unobserved heterogeneity in treatment effects. The estimator implemented by ivcrc uses recent semiparametric identification results that allow for flexible functional forms and permit instruments that may be binary, discrete, or continuous. The ivcrc module also allows for the estimation of varying coefficients ...
Finance and Economics Discussion Series , Paper 2020-046r1

Working Paper
Test Questions, Economic Outcomes, and Inequality

Standard achievement scales aggregate test questions without considering their relationship to economic outcomes. This paper uses question-level data to improve the measurement of achievement in two ways. First, the paper constructs alternative achievement scales by relating individual questions directly to school completion and labor market outcomes. Second, the paper leverages the question data to construct multiple such scales in order to correct for biases stemming from measurement error. These new achievement scales rank students differently than standard scales and typically yield ...
Finance and Economics Discussion Series , Paper 2019-013

Working Paper
ivcrc: An Instrumental Variables Estimator for the Correlated Random Coefficients Model

We present the ivcrc command, which implements an instrumental variables (IV) estimator for the linear correlated random coefficients (CRC) model. This model is a natural generalization of the standard linear IV model that allows for endogenous, multivalued treatments and unobserved heterogeneity in treatment effects. The proposed estimator uses recent semiparametric identification results that allow for flexible functional forms and permit instruments that may be binary, discrete, or continuous. The command also allows for the estimation of varying coefficients regressions, which are ...
Finance and Economics Discussion Series , Paper 2020-046

Journal Article
Is College Still Worth It? The New Calculus of Falling Returns

The college income premium is the extra income earned by a family whose head has a college degree over the income earned by an otherwise similar family whose head does not have a college degree. This premium remains positive but has declined for recent graduates. The college wealth premium (extra net worth) has declined more noticeably among all cohorts born after 1940. Among families whose head is White and born in the 1980s, the college wealth premium of a terminal four-year bachelor?s degree is at a historic low; among families whose head is any other race and ethnicity born in that ...
Review , Volume 101 , Issue 4 , Pages 297-329

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