Search Results

Author: Heckman, James J.
Resulting in 85 citations.
1. Borghans, Lex
Golsteyn, Bart H.H.
Heckman, James J.
Humphries, John Eric
Identification Problems in Personality Psychology
Personality and Individual Differences 51,3 (August 2011): 315-320:
Also: http://www.sciencedirect.com/science/article/pii/S0191886911001504
Cohort(s): NLSY79
Publisher: Elsevier
Keyword(s): Achievement; Armed Forces Qualifications Test (AFQT); Cross-national Analysis; I.Q.; Intelligence Tests; Rosenberg Self-Esteem Scale (RSES) (see Self-Esteem); Rotter Scale (see Locus of Control)

This paper discusses and illustrates identification problems in personality psychology. The measures used by psychologists to infer traits are based on behaviors, broadly defined. These behaviors are produced from multiple traits interacting with incentives in situations. In general, measures are determined by these multiple traits and do not identify any particular trait unless incentives and other traits are controlled for. Using two data sets, we show, that substantial portions of the variance in achievement test scores and grades, which are often used as measures of cognition, are explained by personality variables.
Bibliography Citation
Borghans, Lex, Bart H.H. Golsteyn, James J. Heckman and John Eric Humphries. "Identification Problems in Personality Psychology ." Personality and Individual Differences 51,3 (August 2011): 315-320:.
2. Borghans, Lex
Golsteyn, Bart H.H.
Heckman, James J.
Humphries, John Eric
What Grades and Achievement Tests Measure
IZA Discussion Paper No. 10356, Institute for the Study of Labor (IZA), November 2016.
Also: http://www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=10356
Cohort(s): NLSY79
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Armed Forces Qualifications Test (AFQT); British Cohort Study (BCS); CESD (Depression Scale); Cross-national Analysis; Grade Point Average (GPA)/Grades; Health/Health Status/SF-12 Scale; I.Q.; Mid-Life in the United States (MIDUS); Test Scores/Test theory/IRT; Voting Behavior

Permission to reprint the abstract has not been received from the publisher.

Intelligence quotient (IQ), grades, and scores on achievement tests are widely used as measures of cognition, yet the correlations among them are far from perfect. This paper uses a variety of data sets to show that personality and IQ predict grades and scores on achievement tests. Personality is relatively more important in predicting grades than scores on achievement tests. IQ is relatively more important in predicting scores on achievement tests. Personality is generally more predictive than IQ of a variety of important life outcomes. Both grades and achievement tests are substantially better predictors of important life outcomes than IQ. The reason is that both capture personality traits that have independent predictive power beyond that of IQ.
Bibliography Citation
Borghans, Lex, Bart H.H. Golsteyn, James J. Heckman and John Eric Humphries. "What Grades and Achievement Tests Measure." IZA Discussion Paper No. 10356, Institute for the Study of Labor (IZA), November 2016.
3. Cameron, Stephen V.
Heckman, James J.
Determinants of Young Males' Schooling and Training Choices
In: Training in the Private Sector. Lisa Lynch, ed. Chicago, IL: University of Chicago Press, 1994: pp. 201-231
Cohort(s): NLSY79
Publisher: University of Chicago Press
Keyword(s): Armed Forces Qualifications Test (AFQT); Dropouts; GED/General Educational Diploma/General Equivalency Degree/General Educational Development; School Dropouts; Schooling, Post-secondary; Training; Training, Post-School

This paper examines the determinants of high school graduation, GED certification, and postsecondary participation in academic and vocational training programs.
Bibliography Citation
Cameron, Stephen V. and James J. Heckman. "Determinants of Young Males' Schooling and Training Choices" In: Training in the Private Sector. Lisa Lynch, ed. Chicago, IL: University of Chicago Press, 1994: pp. 201-231
4. Cameron, Stephen V.
Heckman, James J.
Dynamics of Educational Attainment for Blacks, Whites and Hispanics
Working Paper, University of Chicago, April 1992
Cohort(s): NLSY79
Publisher: Author
Keyword(s): Black Studies; College Enrollment; Current Population Survey (CPS) / CPS-Fertility Supplement; Educational Attainment; Ethnic Groups/Ethnicity; Ethnic Studies; Family Background and Culture; Family Income; Hispanics; Parental Influences; Tuition

Permission to reprint the abstract has not been received from the publisher.

[First draft: September 1991]
This paper examines the role of family background, family income, labor market opportunities and college tuition in accounting for differences in educational attainment by age among black, white and Hispanic males. This study differs from the previous literature in two important ways. (1) Previous influential work by Hauser (1991), Kane (1990) and others is based on Current Population Survey (CPS) data. These data suffer from major limitations of special importance to analyses of the role of family background on educational choices. The CPS data report parental family characteristics of persons only if they are living in the parental home, or, for those attending college, for those living in group quarters. Parental background and income information is not available for nonstudents not living with parents or for students not living in group quarters. Virtually all of the evidence on the importance of family background and family income on schooling choices is derived from samples of "dependents" i.e. persons living in the parental home or students in college living in group quarters. Using the NLSY (National Longitudinal Survey of Youth) data we demonstrate that as a consequence of this data generation process previous studies tend to underestimate the contribution of family income and financial resources to schooling decisions. (2) The NLSY data contain richer background information than does the CPS data. We demonstrate the value of access to such information in accounting for schooling decisions. Exploiting the longitudinal structure of the NLSY data, we model educational choices as decisions made sequentially at each age. Unlike previous cross-sectional studies that focus attention on explaining years of schooling completed, we consider the determinants of educational choices at each age.
Bibliography Citation
Cameron, Stephen V. and James J. Heckman. "Dynamics of Educational Attainment for Blacks, Whites and Hispanics." Working Paper, University of Chicago, April 1992.
5. Cameron, Stephen V.
Heckman, James J.
Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five
NBER Working Paper No. 6385, National Bureau of Economic Research, January 1998.
Also: http://www.nber.org/cgi-bin/wpsearch.pl?action=bibliography&paper=W6385&year=98
Cohort(s): Mature Women, NLSY79, Older Men, Young Men, Young Women
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); College Enrollment; Education; Educational Attainment; Family Background and Culture; Family Income; Family Influences; Family Resources; Heterogeneity; Income; Life Cycle Research; Transition, School to Work; Transitional Programs

This paper examines an empirical regularity found in many societies: that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education. We examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it. We show that the implicit economic model assumes myopia. The intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data. We produce an alternative choice-theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions.
Bibliography Citation
Cameron, Stephen V. and James J. Heckman. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five." NBER Working Paper No. 6385, National Bureau of Economic Research, January 1998.
6. Cameron, Stephen V.
Heckman, James J.
The Dynamics of Educational Attainment for Black, Hispanic, and White Males
Journal of Political Economy 109,3 (June 2001): 455-499.
Also: http://www.jstor.org/stable/10.1086/321014
Cohort(s): NLSY79
Publisher: University of Chicago Press
Keyword(s): College Education; College Enrollment; Educational Attainment; Ethnic Differences; Family Background and Culture; Family Environment; Hispanics; Income; Parental Influences; Racial Differences; Tuition

This paper estimates a dynamic model of schooling attainment to investigate the sources of racial and ethnic disparity in college attendance. Parental income in the child's adolescent years is a strong predictor of this disparity. This is widely interpreted to mean that credit constraints facing families during the college-going years are important. Using NLSY data, we find that it is the long-run factors associated with parental background and family environment, and not credit constraints facing prospective students in the college-going years, that account for most of the racial-ethnic college-going differential. Policies aimed at improving these long-term family and environmental factors are more likely to be successful in eliminating college attendance differentials than short-term tuition reduction and family income supplement policies aimed at families with college age children.
Bibliography Citation
Cameron, Stephen V. and James J. Heckman. "The Dynamics of Educational Attainment for Black, Hispanic, and White Males ." Journal of Political Economy 109,3 (June 2001): 455-499.
7. Cameron, Stephen V.
Heckman, James J.
The Dynamics of Educational Attainment for Blacks, Hispanics, and Whites
NBER Working Paper No. 7249, National Bureau of Economic Research, July 1999.
Also: http://nber.nber.org/papers/W7249
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): College Education; College Enrollment; Educational Attainment; Ethnic Differences; Ethnic Groups/Ethnicity; Hispanics; Income; Racial Differences; Schooling; Skilled Workers; Tuition

This paper estimates a dynamic model of schooling attainment to investigate the sources of discrepancy by race and ethnicity in college attendance. When the returns to college education rose, college enrollment of whites responded much more quickly than that of minorities. Parental income is a strong predictor of this response. However, using NLSY data, we find that it is the long-run factors associated with parental background and income and not short-term credit constraints facing college students that account for the differential response by race and ethnicity to the new labor market for skilled labor. Policies aimed at improving these long-term factors are far more likely to be successful in eliminating college attendance differentials than are short-term tuition reduction policies.
Bibliography Citation
Cameron, Stephen V. and James J. Heckman. "The Dynamics of Educational Attainment for Blacks, Hispanics, and Whites." NBER Working Paper No. 7249, National Bureau of Economic Research, July 1999.
8. Cameron, Stephen V.
Heckman, James J.
The Nonequivalence of High School Equivalents
Journal of Labor Economics 11,1 (January 1993): 1-47.
Also: http://www.jstor.org/stable/2535183
Cohort(s): NLSY79
Publisher: University of Chicago Press
Keyword(s): High School Completion/Graduates; High School Diploma; High School Dropouts; High School Students; School Completion; School Dropouts; Schooling, Post-secondary; Test Scores/Test theory/IRT; Training

This article analyzes the causes and consequences of the growing proportion of high-school-certified persons who achieve that status by exam certification rather than through high school graduation. Exam-certified high school equivalents are statistically indistinguishable from high school dropouts. Whatever differences are found among examcertified equivalents, high school dropouts and high school graduates are accounted for by their years of schooling completed. There is no cheap substitute for schooling. The only payoff to exam certification arises from its value in opening postsecondary schooling and training opportunities, but completion rates for exam-certified graduates are much lower in these activities than they are for ordinary graduates.
Bibliography Citation
Cameron, Stephen V. and James J. Heckman. "The Nonequivalence of High School Equivalents." Journal of Labor Economics 11,1 (January 1993): 1-47.
9. Carneiro, Pedro M.
Cunha, Flavio
Heckman, James J.
Technology of Skill Formation
Presented: Florence, Italy, Society for Economic Dynamics Annual Meeting, Villa La Pietra, July 1-3, 2004
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Society for Economic Dynamics
Keyword(s): Child Development; Human Capital; I.Q.; Life Cycle Research; Skill Formation

Permission to reprint the abstract has not been received from the publisher.

This paper presents formal models of child development that capture the essence of recent findings from the empirical literature on child development. The goal is to provide theoretical frameworks for interpreting the evidence from a vast empirical literature, for guiding the next generation of empirical studies and for formulating policy. We start from the premise that skill formation is a life-cycle process. It starts in the womb and goes on throughout most of the adult life. Families and firms have a role in this process that is at least as important as the role of schools. There are multiple skills and multiple abilities that are important for adult success. Abilities are both inherited and created, and the traditional debate of nature versus nurture is outdated and scientifically obsolete. The technology of skill formation has two additional important characteristics. The first one is that IQ and behavior are more plastic at early ages than at later ages. Furthermore, behavior is much more malleable than IQ as individuals age. The second is that human capital investments are complementary over time. Early investments increase the productivity of later investments. Early investments are not productive if they are not followed up by later investments. The returns to investing early in the life cycle are high. Remediation of inadequate early investments is difficult and very costly.
Bibliography Citation
Carneiro, Pedro M., Flavio Cunha and James J. Heckman. "Technology of Skill Formation." Presented: Florence, Italy, Society for Economic Dynamics Annual Meeting, Villa La Pietra, July 1-3, 2004.
10. Carneiro, Pedro M.
Hansen, Karsten T.
Heckman, James J.
Removing the Veil of Ignorance in Assessing the Distributional Impacts of Social Policies
IZA Discussion Paper No. 453, Institute for the Study of Labor (IZA), March 2002.
Also: ftp://ftp.iza.org/dps/dp453.pdf
Cohort(s): NLSY79
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Educational Attainment; Educational Returns; Modeling; Welfare

Permission to reprint the abstract has not been received from the publisher.

This paper summarizes our recent research on evaluating the distributional consequences of social programs. This research advances the economic policy evaluation literature beyond estimating assorted mean impacts to estimate distributions of outcomes generated by different policies and determine how those policies shift persons across the distributions of potential outcomes produced by them. Our approach enables analysts to evaluate the distributional effects of social programs without invoking the "Veil of Ignorance" assumption often used in the literature in applied welfare economics. Our methods determine which persons are affected by a given policy, where they come from in the ex-ante outcome distribution and what their gains are. We apply our methods to analyze two proposed policy reforms in American education. These reforms benefit the middle class and not the poor.
Bibliography Citation
Carneiro, Pedro M., Karsten T. Hansen and James J. Heckman. "Removing the Veil of Ignorance in Assessing the Distributional Impacts of Social Policies." IZA Discussion Paper No. 453, Institute for the Study of Labor (IZA), March 2002.
11. Carneiro, Pedro M.
Heckman, James J.
Human Capital Policy
In: Inequality in America: What Role for Human Capital Policies? J. Heckman and A. Krueger, eds., Cambridge, MA: MIT Press, 2003: 77-240
Cohort(s): Children of the NLSY79, NLSY79
Publisher: MIT Press
Keyword(s): Armed Forces Qualifications Test (AFQT); Behavior Problems Index (BPI); College Education; College Enrollment; Family Background and Culture; Family Income; Human Capital; Job Training; Life Cycle Research; Peabody Individual Achievement Test (PIAT- Math); Racial Equality/Inequality; School Quality; Skill Formation; Tuition

This paper considers alternative policies for promoting skill formation that are targetted to different stages of the life cycle. We demonstrate the importance of both cognitive and noncognitive skills that are formed early in the life cycle in accounting for racial, ethnic and family background gaps in schooling and other dimensions of socioeconomic success. Most of the gaps in college attendance and delay are determined by early family factors. Children from better families and with high ability earn higher returns to schooling. We find only a limited role for tuition policy or family income supplements in eliminating schooling and college attendance gaps. At most 8% of American youth are credit constrained in the traditional usage of that term. The evidence points to a high return to early interventions and a low return to remedial or compensatory interventions later in the life cycle. Skill and ability beget future skill and ability. At current levels of funding, traditional policies like tuition subsidies, improvements in school quality, job training and tax rebates are unlikely to be effective in closing gaps.

Introduction / Benjamin M. Friedman -- Inequality, too much of a good thing / Alan B. Krueger -- Human capital policy / Pedro Carneiro and James J. Heckman -- Comments / George Borjas, Eric Hanushek, Lawrence Katz, Lisa Lynch, Lawrence H. Summers -- Responses / Alan B. Krueger, Pedro Carneiro and James J. Heckman -- Rejoinders / Alan B. Krueger, Pedro Carneiro and James J. Heckman.

Bibliography Citation
Carneiro, Pedro M. and James J. Heckman. "Human Capital Policy" In: Inequality in America: What Role for Human Capital Policies? J. Heckman and A. Krueger, eds., Cambridge, MA: MIT Press, 2003: 77-240
12. Carneiro, Pedro M.
Heckman, James J.
The Evidence on Credit Constraints in Post-Secondary Schooling
NBER Working Paper No. 9055, National Bureau of Economic Research, July 2002.
Also: http://www.nber.org/papers/w9055
Cohort(s): Children of the NLSY79, NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Cognitive Ability; College Enrollment; Credit/Credit Constraint; Debt/Borrowing; Educational Returns; Family Income; Income; Peabody Individual Achievement Test (PIAT- Math); Schooling; Schooling, Post-secondary

This paper examines the family income--college enrollment relationship and the evidence on credit constraints in post-secondary schooling. We distinguish short-run liquidity constraints from the long-term factors that promote cognitive and noncognitive ability. Long-run factors crystallized in ability are the major determinants of the family income--schooling relationship, although there is some evidence that up to 4% of the total U.S. population is credit constrained in a short-run sense. Evidence that IV estimates of the returns to schooling exceed OLS estimates is sometimes claimed to support the existence of substantial credit constraints. This argument is critically examined.
Bibliography Citation
Carneiro, Pedro M. and James J. Heckman. "The Evidence on Credit Constraints in Post-Secondary Schooling." NBER Working Paper No. 9055, National Bureau of Economic Research, July 2002.
13. Carneiro, Pedro M.
Heckman, James J.
The Evidence on Credit Constraints in Post-Secondary Schooling
The Economic Journal 112, 482 (October 2002): 705-734
Also: http://netec.mcc.ac.uk/BibEc/data/Articles/ecjeconjlv:112:y:2002:i:482:p:705-734.html
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Royal Economic Society (RES)
Keyword(s): Armed Forces Qualifications Test (AFQT); Cognitive Ability; College Enrollment; Credit/Credit Constraint; Debt/Borrowing; Educational Returns; Family Income; Income; Peabody Individual Achievement Test (PIAT- Math); Schooling; Schooling, Post-secondary

Permission to reprint the abstract has not been received from the publisher.

This paper examines the family income--college enrollment relationship and the evidence on credit constraints in post-secondary schooling. We distinguish short-run liquidity constraints from the long-term factors that promote cognitive and noncognitive ability. Long-run factors crystallized in ability are the major determinants of the family income--schooling relationship, although there is some evidence that up to 4% of the total U.S. population is credit constrained in a short-run sense. Evidence that IV estimates of the returns to schooling exceed OLS estimates is sometimes claimed to support the existence of substantial credit constraints. This argument is critically examined. This article draws on both the NLSY79 and the Children of the NLSY79, utilizing PIAT Math scores from the latter dataset.
Bibliography Citation
Carneiro, Pedro M. and James J. Heckman. "The Evidence on Credit Constraints in Post-Secondary Schooling." The Economic Journal 112, 482 (October 2002): 705-734.
14. Carneiro, Pedro M.
Heckman, James J.
Hansen, Karsten T.
Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College Choice
IZA Discussion Paper No. 767, Institute for the Study of Labor (IZA), April 2003
Cohort(s): NLSY79
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Armed Services Vocational Aptitude Battery (ASVAB); College Enrollment; Colleges; Educational Returns; LISREL; Modeling; Panel Study of Income Dynamics (PSID)

Permission to reprint the abstract has not been received from the publisher.

Also: NBER Working Paper No. 9546, National Bureau of Economic Research, March 2003. http://nber.nber.org/papers/w9546

This paper uses factor models to identify and estimate distributions of counterfactuals. We extend LISREL frameworks to a dynamic treatment effect setting, extending matching to account for unobserved conditioning variables. Using these models, we can identify all pairwise and joint treatment effects. We apply these methods to a model of schooling and determine the intrinsic uncertainty facing agents at the time they make their decisions about enrollment in school. Reducing uncertainty in returns raises college enrollment. We go beyond the "Veil of Ignorance" in evaluating educational policies and determine who benefits and who loses from commonly proposed educational reforms. We consider the information on these individuals from age 19 to age 35. For our analysis, we use the random sample of the NLSY and restrict the sample to 1161 white males for whom we have information on schooling, several parental background variables, test scores and behavior.

Bibliography Citation
Carneiro, Pedro M., James J. Heckman and Karsten T. Hansen. "Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College Choice." IZA Discussion Paper No. 767, Institute for the Study of Labor (IZA), April 2003.
15. Carneiro, Pedro M.
Heckman, James J.
Masterov, Dimitriy V.
Labor Market Discrimination and Racial Differences in Premarket Factors
NBER Working Paper No. 10068, National Bureau of Economic Research, October 2003.
Also: http://papers.nber.org/papers/w10068.pdf
Cohort(s): Children of the NLSY79, NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Children, Academic Development; Educational Aspirations/Expectations; Educational Attainment; Family Influences; Hispanics; Home Environment; Home Observation for Measurement of Environment (HOME); Labor Market Outcomes; Peabody Individual Achievement Test (PIAT- Math); Racial Differences; Skill Formation; Wage Gap

This paper examines minority-white wage gaps. Neal and Johnson (1996) show that controlling for ability measured in the teenage years eliminates young adult wage gaps for all groups except for black males, for whom they eliminate 70% of the gap. Their study has been faulted because minority children and their parents may have pessimistic expectations about receiving fair rewards for their skills and so they may invest less in skill formation. If this is the case, discrimination may still affect wages, albeit indirectly, though it would appear that any racial differences in wages are due to differences in acquired traits. We find that gaps in ability across racial and ethnic groups open up at very early ages, long before child expectations are likely to become established. These gaps widen with age and schooling for Blacks, but not for Hispanics which indicates that poor schools and neighborhoods cannot be the principal factors affecting the slow black test score growth rate. Test scores depend on schooling attained at the time of the test. Adjusting for racial and ethnic differences in schooling attainment at the age the test is taken reduces the power of measured ability to shrink wage gaps for blacks, but not for other minorities. The evidence from expectations data are mixed. Although all groups are quite optimistic about future schooling outcomes, minority parents and children have more pessimistic expectations about child schooling relative to white children and their parents when their children are young. At later ages, expectations are more uniform across racial and ethnic groups. However, we also present some evidence that expectations data are unreliable and ambiguous. We also document the presence of disparities in noncognitive traits across racial and ethnic groups. These characteristics have been shown elsewhere to be important for explaining the labor market outcomes of adults.

This evidence points to the importance of early (preschool) family factors and environments in explaining both cognitive and noncognitive ability differentials by ethnicity and race. Policies that foster both types of ability are far more likely to be effective in promoting racial and ethnic equality for most groups than are additional civil rights and affirmative action policies targeted at the workplace.
Bibliography Citation
Carneiro, Pedro M., James J. Heckman and Dimitriy V. Masterov. "Labor Market Discrimination and Racial Differences in Premarket Factors." NBER Working Paper No. 10068, National Bureau of Economic Research, October 2003.
16. Carneiro, Pedro M.
Heckman, James J.
Masterov, Dimitriy V.
Labor Market Discrimination and Racial Differences in Premarket Factors
Journal of Law and Economics 48,1 (April 2005): 1-40.
Also: http://www.jstor.org/stable/10.1086/426878
Cohort(s): Children of the NLSY79, NLSY79
Publisher: University of Chicago Press
Keyword(s): Armed Forces Qualifications Test (AFQT); Children, Academic Development; Educational Aspirations/Expectations; Educational Attainment; Family Influences; Home Environment; Home Observation for Measurement of Environment (HOME); Peabody Individual Achievement Test (PIAT- Math)

This paper investigates the relative significance of differences in cognitive skills and discrimination in explaining racial/ethnic wage gaps. We show that cognitive test scores for exams taken prior to entering the labor market are influenced by schooling. Adjusting the scores for racial/ethnic differences in education at the time the test is taken reduces their role in accounting for the wage gaps. We also consider evidence on parental and child expectations about education and on stereotype threat effects. We find both factors to be implausible alternative explanations for the gaps we observe. We argue that policies need to address the sources of early skill gaps and to seek to influence the more malleable behavioral abilities in addition to their cognitive counterparts. Such policies are far more likely to be effective in promoting racial and ethnic equality for most groups than are additional civil rights and affirmative action policies targeted at the workplace.
Bibliography Citation
Carneiro, Pedro M., James J. Heckman and Dimitriy V. Masterov. "Labor Market Discrimination and Racial Differences in Premarket Factors." Journal of Law and Economics 48,1 (April 2005): 1-40.
17. Carneiro, Pedro
Heckman, James J.
Vytlacil, Edward
Estimating Marginal Returns to Education
NBER Working Paper No. 16474, National Bureau of Economic Research, October 2010.
Also: http://www.nber.org/papers/w16474
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): College Enrollment; Educational Returns; Variables, Instrumental

This paper estimates the marginal returns to college for individuals induced to enroll in college by different marginal policy changes. The recent instrumental variables literature seeks to estimate this parameter, but in general it does so only under strong assumptions that are tested and found wanting. We show how to utilize economic theory and local instrumental variables estimators to estimate the effect of marginal policy changes. Our empirical analysis shows that returns are higher for individuals with values of unobservables that make them more likely to attend college. We contrast the returns to well-defined marginal policy changes with IV estimates of the return to schooling. Some marginal policy changes inducing students into college produce very low returns.
Bibliography Citation
Carneiro, Pedro, James J. Heckman and Edward Vytlacil. "Estimating Marginal Returns to Education." NBER Working Paper No. 16474, National Bureau of Economic Research, October 2010.
18. Carneiro, Pedro
Heckman, James J.
Vytlacil, Edward
Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin
Econometrica 78,1 (January 2010): 377–394.
Also: http://www.ucl.ac.uk/~uctppca/chv_econometrica.pdf
Cohort(s): NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Average Marginal Treatment Effect; Effects of Marginal Policy Changes; Marginal Policy Relevant Treatment Effect; Marginal Treatment Effect

This paper develops methods for evaluating marginal policy changes. We characterize how the effects of marginal policy changes depend on the direction of the policy change, and show that marginal policy effects are fundamentally easier to identify and to estimate than conventional treatment parameters. We develop the connection between marginal policy effects and the average effect of treatment for persons on the margin of indifference between participation in treatment and nonparticipation, and use this connection to analyze both parameters. We apply our analysis to estimate the effect of marginal changes in tuition on the return to going to college.
Bibliography Citation
Carneiro, Pedro, James J. Heckman and Edward Vytlacil. "Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin." Econometrica 78,1 (January 2010): 377–394. A.
19. Cawley, John
Conneely, Karen
Heckman, James J.
Vytlacil, Edward
Cognitive Ability, Wages, and Meritocracy
In: Intelligence, Genes, and Success: Scientists Respond to THE BELL CURVE. B. Devlin, et al, eds., New York, NY: Springer Verlag, 1997.
Cohort(s): NLSY79
Publisher: Springer
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Cognitive Ability; Demography; Education; Gender Differences; Genetics; I.Q.; Intelligence; Racial Differences; Statistical Analysis; Test Scores/Test theory/IRT; Wages

Permission to reprint the abstract has not been received from the publisher.

Previously issued as: NBER Working Paper No. W5645, Issued in July 1996. A scientific response to the best-selling The Bell Curve which set off a hailstorm of controversy upon its publication in 1994. Much of the public reaction to the book was polemic and failed to analyse the details of the science and validity of the statistical arguments underlying the book conclusion. Here, at last, social scientists and statisticians reply to The Bell Curve and its conclusions about IQ, genetics and social outcomes. Contents: Part I Overview: 1 Reexamining The Bell Curve, Stephen E. Fienberg and Daniel Resnick: 2 A Synopsis of The Bell Curve, Terry W. Belke: Part II The Genetics-Intelligence Link: 3 Of Genes and IQ, Michael Daniels, Bernie Devlin,and Kathryn Roeder: 4 The Malleability of Intelligence is Not Constrained by Heritabiligy, Douglas Waslsten: 5 Racial and Ethnic Inequalities in Health: Environmental, Psychosocial,and Physiological Pathways, Burton Singer and Carol Ryff: Part III Intelligence and the Measurement of IQ: 6 Theoretical and Technical Issues in Identifying a Factor of General Intelligence: 7 The Concept and Utility of Intelligence, Earl Hunt: 8 Is There a Cognitive Elite in America?, Nicholas Lemann: Part IV Intelligence and Success: Reanalyses of Data From the NLSY: 9 Cognitive Ability, Wages,and Meritocracy, John Cawley, Karen Conneely, James Heckman,and Edward Vytacil: 10 The Hidden Gender Restriction: The Need for Proper Controls When Testing for Racial Discrimination, Alexander Cavallo, Hazem El-Abbadi,and Randal Heeb: 11 Does Staying in School Make You Smarter? The Effect of Education on IQ in The Bell Curve, Christoper Winship and Sanders Korenman: 12 Cognitive Ability, Environmental.
Bibliography Citation
Cawley, John, Karen Conneely, James J. Heckman and Edward Vytlacil. "Cognitive Ability, Wages, and Meritocracy" In: Intelligence, Genes, and Success: Scientists Respond to THE BELL CURVE. B. Devlin, et al, eds., New York, NY: Springer Verlag, 1997.
20. Cawley, John
Conneely, Karen
Heckman, James J.
Vytlacil, Edward
Measuring the Effects of Cognitive Ability
NBER Working Paper No. 5645, National Bureau of Economic Research, July 1996.
Also: http://nber.nber.org/papers/W5645
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Cognitive Ability; Demography; Gender Differences; Intelligence; Occupational Choice; Racial Differences; Test Scores/Test theory/IRT; Wage Differentials; Wage Rates

This paper presents new evidence from the NLSY on the importance of meritocracy in American society. In it, we find that general intelligence, or "g"--a measure of cognitive ability--is dominant in explaining test score variance. The weights assigned to tests by "g" are similar for all major demographic groups. These results support Spearman's theory of "g." We also find that "g" and other measures of ability are not rewarded equally across race and gender, evidence against the view that the labor market is organized on meritocratic principles. Additional factors beyond "g" are required to explain wages and occupational choice. However, both blue collar and white collar wages are poorly predicted by "g" or even multiple measures of ability. Observed cognitive ability is only a minor predictor of social performance. White collar wages are more "g" loaded than blue collar wages. Many noncognitive factors determine blue collar wages. Full-text available on-line: http://nber.nber.org/papers/W5645. See also, "Cognitive Ability, Wages, and Meritocracy" published in: Intelligence, Genes, and Success. Devlin, Bernie etal. ed.
Bibliography Citation
Cawley, John, Karen Conneely, James J. Heckman and Edward Vytlacil. "Measuring the Effects of Cognitive Ability." NBER Working Paper No. 5645, National Bureau of Economic Research, July 1996.
21. Cawley, John
Heckman, James J.
Vytlacil, Edward
Cognitive Ability and the Rising Return to Education
NBER Working Paper No. 6388, National Bureau of Economic Research, January 1998.
Also: http://papers.nber.org/papers/W6388
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Cognitive Ability; Gender Differences; I.Q.; Intelligence; Racial Differences; Test Scores/Test theory/IRT; Wage Differentials; Wage Rates

This paper examines the contribution of the rise in the return to ability to the rise in the economic return to education. All of the evidence on this question comes from panel data sets in which a small collection of adjacent birth cohorts is followed over time. The structure of the data creates an identification problem that makes it impossible to identify main age and time effects and to isolate all possible age-time interactions. In addition, many education-ability cells are empty due to the stratification of ability with educational attainment. These empty cells or identification problems are literature and produce a variety of different estimates. We test and reject widely used linearity assumptions invoked to identify the contribution of the return to ability on the return to schooling. Using nonparametric methods find little evidence that the rise in the return to education is centered among the most able.
Bibliography Citation
Cawley, John, James J. Heckman and Edward Vytlacil. "Cognitive Ability and the Rising Return to Education." NBER Working Paper No. 6388, National Bureau of Economic Research, January 1998.
22. Cawley, John
Heckman, James J.
Vytlacil, Edward
Meritocracy in America: Wages Within and Across Occupations
NBER Working Paper No. 6446, National Bureau of Economic Research, March 1998.
Also: http://www.nber.org/papers/w6446
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Cognitive Ability; Gender Differences; Modeling; Occupational Choice; Racial Differences; Simultaneity; Wage Determination; Wages

In The Bell Curve, Hermstein and Murray argue that the U.S. economy is a meritocracy in which differences in wages (including differences across race and gender) are explained by differences in cognitive ability. In this paper we test their claim for wages conditional on occupation using a simultaneous model of occupation choice and wage determination. Our results contradict Herrnstein and Murray's claim that the U.S. labor market operates only on meritocratic principles. Full-text available on-line: http://nberws.nber.org/papers/W6446
Bibliography Citation
Cawley, John, James J. Heckman and Edward Vytlacil. "Meritocracy in America: Wages Within and Across Occupations." NBER Working Paper No. 6446, National Bureau of Economic Research, March 1998.
23. Cawley, John
Heckman, James J.
Vytlacil, Edward
Notes: On Policies to Reward the Value Added by Educators
The Review of Economics and Statistics 81,4 (November 1999): 720-727.
Also: http://www.jstor.org/stable/2646720
Cohort(s): NLSY79
Publisher: Harvard University Press
Keyword(s): Socioeconomic Factors; Teachers/Faculty; Test Scores/Test theory/IRT

Permission to reprint the abstract has not been received from the publisher.

One current educational reform seeks to reward the "value added" by teachers and schools based on the average change in pupil test scores over time. In this paper, we outline the conditions under which the average change in scores is sufficient to rank schools in terms of value added. A key condition is that socioeconomic outcomes be a linear function of test scores. Absent this condition, one can still derive the optimal value-added policy if one knows the relationship between test scores and socioeconomic outcomes, and the distribution of test scores both before and after the intervention. Using the National Longitudinal Survey of Youth, we find a nonlinear relationship between test scores and one important outcome: log wages. We find no consistent pattern in the curvature of log wage returns to test scores (whether percentiles, scaled, or raw scores). This implies that, used alone, the average gain in test scores is an inadequate measure of school performance and current value-added methodology may misdirect school resources. [ABI/Inform]
Bibliography Citation
Cawley, John, James J. Heckman and Edward Vytlacil. "Notes: On Policies to Reward the Value Added by Educators." The Review of Economics and Statistics 81,4 (November 1999): 720-727.
24. Cawley, John
Heckman, James J.
Vytlacil, Edward
On Policies to Reward the Value Added by Educators
Review of Economics and Statistics 81,4 (November 1999): 720-727.
Also: http://www.jstor.org/stable/2646720
Cohort(s): NLSY79
Publisher: Harvard University Press
Keyword(s): Education; Socioeconomic Factors; Test Scores/Test theory/IRT; Wages

Permission to reprint the abstract has not been received from the publisher.

One current educational reform seeks to reward the value added by teachers and schools based on the average change in pupil test scores over time. The conditions under which the average change in scores is sufficient to rank schools in terms of value added are outlined. A key condition is that socioeconomic outcomes be a linear function of test scores. Absent this condition, one can still derive the optimal value-added policy if one knows the relationship between test scores and socioeconomic outcomes, and the distribution of test scores both before and after the intervention. Using the National Longitudinal Survey of Youth, a nonlinear relationship is found between test scores and one important outcome: log wages.
Bibliography Citation
Cawley, John, James J. Heckman and Edward Vytlacil. "On Policies to Reward the Value Added by Educators." Review of Economics and Statistics 81,4 (November 1999): 720-727.
25. Cawley, John
Heckman, James J.
Vytlacil, Edward
Understanding the Role of Cognitive Ability in Accounting for the Recent Rise in the Economic Return to Education
In: Meritocracy and Economic Inequality. K. Arrow, S. Bowles, and S. Durlauf, eds. Princeton, NJ: Princeton University Press, 2000
Cohort(s): NLSY79
Publisher: Princeton University Press
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Cognitive Ability; Educational Returns; Gender Differences; I.Q.; Intelligence; Occupational Choice; Racial Differences; Test Scores/Test theory/IRT; Wage Differentials; Wage Rates; Wages

Permission to reprint the abstract has not been received from the publisher.

Previously issued as "Cognitive Ability and the Rising Return to Education", Working Paper No. 6388, National Bureau of Economic Research, January 1998. This chapter examines the contribution of the rise in the return to ability to the rise in the economic return to education. All of the evidence on this question comes from panel data sets in which a small collection of adjacent birth cohorts is followed over time. The structure of the data creates an identification problem that makes it impossible to identify main age and time effects and to isolate all possible age-time interactions. In addition, many education-ability cells are empty due to the stratification of ability with educational attainment. These empty cells or identification problems are literature and produce a variety of different estimates. We test and reject widely used linearity assumptions invoked to identify the contribution of the return to ability on the return to schooling. Using nonparametric methods find little evidence that the rise in the return to education is centered among the most able.
Bibliography Citation
Cawley, John, James J. Heckman and Edward Vytlacil. "Understanding the Role of Cognitive Ability in Accounting for the Recent Rise in the Economic Return to Education" In: Meritocracy and Economic Inequality. K. Arrow, S. Bowles, and S. Durlauf, eds. Princeton, NJ: Princeton University Press, 2000
26. Cunha, Flavio
Heckman, James J.
Decomposing Trends in Inequality in Earnings into Forecastable and Uncertain Components
Journal of Labor Economics 34,S2 (April 2016): S31–S65.
Also: http://www.journals.uchicago.edu/doi/abs/10.1086/684121
Cohort(s): NLSY79, Young Men
Publisher: University of Chicago Press
Keyword(s): Armed Services Vocational Aptitude Battery (ASVAB); Earnings; Educational Attainment; Skilled Workers; Test Scores/Test theory/IRT; Wage Differentials

A substantial empirical literature documents the rise in wage inequality in the American economy. It is silent on whether the increase in inequality is due to components of earnings that are predictable by agents or whether it is due to greater uncertainty facing them. These two sources of variability have different consequences for both aggregate and individual welfare. Using data on two cohorts of American males, we find that a large component of the rise in inequality for less skilled workers is due to uncertainty. For skilled workers, the rise is less pronounced.
Bibliography Citation
Cunha, Flavio and James J. Heckman. "Decomposing Trends in Inequality in Earnings into Forecastable and Uncertain Components." Journal of Labor Economics 34,S2 (April 2016): S31–S65. A.
27. Cunha, Flavio
Heckman, James J.
Economics and Psychology of Inequality and Human Development
NBER Working Paper No. 14695, National Bureau of Economic Research, January 2009.
Cohort(s): Children of the NLSY79, NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Achievement; Cognitive Development; Family Influences; Mothers, Education; Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Skill Formation

Recent research on the economics of human development deepens understanding of the origins of inequality and excellence. It draws on and contributes to personality psychology and the psychology of human development. Inequalities in family environments and investments in children are substantial. They causally affect the development of capabilities. Both cognitive and noncognitive capabilities determine success in life but to varying degrees for different outcomes. An empirically determined technology of capability formation reveals that capabilities are self-productive and cross-fertilizing and can be enhanced by investment. Investments in capabilities are relatively more productive at some stages of a child's life cycle than others. Optimal child investment strategies differ depending on target outcomes of interest and on the nature of adversity in a child's early years. For some configurations of early disadvantage and for some desired outcomes, it is efficient to invest relatively more in the later years of childhood than in the early years.
Bibliography Citation
Cunha, Flavio and James J. Heckman. "Economics and Psychology of Inequality and Human Development." NBER Working Paper No. 14695, National Bureau of Economic Research, January 2009.
28. Cunha, Flavio
Heckman, James J.
Economics and Psychology of Inequality and Human Development
Journal of the European Economic Association 7,2-3 (April 2009): 320-364
Cohort(s): Children of the NLSY79, NLSY79
Publisher: MIT Press
Keyword(s): Achievement; Cognitive Development; Family Influences; Mothers, Education; Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Skill Formation

Recent research on the economics of human development deepens understanding of the origins of inequality and excellence. It draws on and contributes to personality psychology and the psychology of human development. Inequalities in family environments and investments in children are substantial. They causally affect the development of capabilities. Both cognitive and noncognitive capabilities determine success in life but to varying degrees for different outcomes. An empirically determined technology of capability formation reveals that capabilities are self-productive and cross-fertilizing and can be enhanced by investment. Investments in capabilities are relatively more productive at some stages of a child's life cycle than others. Optimal child investment strategies differ depending on target outcomes of interest and on the nature of adversity in a child's early years. For some configurations of early disadvantage and for some desired outcomes, it is efficient to invest relatively more in the later years of childhood than in the early years.
Bibliography Citation
Cunha, Flavio and James J. Heckman. "Economics and Psychology of Inequality and Human Development." Journal of the European Economic Association 7,2-3 (April 2009): 320-364 .
29. Cunha, Flavio
Heckman, James J.
Formulating, Identifying and Estimating the Technology of Cognitive and Noncognitive Skill Formation
Working Paper, University of Chicago, April 30, 2006.
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Department of Economics, University of Chicago
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Behavior Problems Index (BPI); Child Development; Home Observation for Measurement of Environment (HOME); Human Capital; I.Q.; Intergenerational Patterns/Transmission; Life Cycle Research; Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Skill Formation; Skills

Permission to reprint the abstract has not been received from the publisher.

This paper formulates and estimates models of the evolution of cognitive and noncognitive skills over the life cycle of children and explores the role of family environments in shaping these skills at different stages of the life cycle. Central to this analysis is the identification of the technology of human skill formation. We estimate a dynamic factor model to solve the problem of endogeneity of inputs and multiplicity of inputs relative to instruments. We identify the scale of the factors by estimating their effects on adult earnings. In this fashion we avoid reliance on test scores and changes in test scores that have no natural metric. Parental investments are more effective in raising noncognitive skills. Noncognitive skills promote the formation of cognitive skills (but not vice versa). Parental inputs have different effects at different stages of the child's life cycle with cognitive skills affected more at early ages and noncognitive skills affected more at later ages.
Bibliography Citation
Cunha, Flavio and James J. Heckman. "Formulating, Identifying and Estimating the Technology of Cognitive and Noncognitive Skill Formation." Working Paper, University of Chicago, April 30, 2006..
30. Cunha, Flavio
Heckman, James J.
Formulating, Identifying and Estimating the Technology of Cognitive and Noncognitive Skill Formation
Presented: Ann Arbor, MI, The Long-Run Impact of Early Life Events, A Workshop Sponsored by the National Poverty Center, December 13-14, 2007
Cohort(s): Children of the NLSY79, NLSY79
Publisher: National Poverty Center
Keyword(s): Armed Services Vocational Aptitude Battery (ASVAB); Behavior Problems Index (BPI); Child Development; Home Observation for Measurement of Environment (HOME); Human Capital; I.Q.; Intergenerational Patterns/Transmission; Life Cycle Research; Mothers, Education; Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Skill Formation; Skills

Permission to reprint the abstract has not been received from the publisher.

This paper estimates models of the evolution of cognitive and noncognitive skills and explores the role of family environments in shaping these skills at different stages of the life cycle of the child. Central to this analysis is identification of the technology of skill formation. We estimate a dynamic factor model to solve the problem of endogeneity of inputs and multiplicity of inputs relative to instruments. We identify the scale of the factors by estimating their effects on adult outcomes. In this fashion we avoid reliance on test scores and changes in test scores that have no natural metric. Parental investments are generally more effective in raising noncognitive skills. Noncognitive skills promote the formation of cognitive skills but, in most specifications of our model, cognitive skills do not promote the formation of noncognitive skills. Parental inputs have different effects at different stages of the child's life cycle with cognitive skills affected more at early ages and noncognitive skills affected more at later ages.
Bibliography Citation
Cunha, Flavio and James J. Heckman. "Formulating, Identifying and Estimating the Technology of Cognitive and Noncognitive Skill Formation." Presented: Ann Arbor, MI, The Long-Run Impact of Early Life Events, A Workshop Sponsored by the National Poverty Center, December 13-14, 2007.
31. Cunha, Flavio
Heckman, James J.
Formulating, Identifying, and Estimating the Technology of Cognitive and Noncognitive Skill Formation
The Journal of Human Resources 43,4 (Fall 2008): 738-782.
Also: http://jhr.uwpress.org/content/43/4/738.abstract
Cohort(s): Children of the NLSY79, NLSY79
Publisher: University of Wisconsin Press
Keyword(s): Armed Services Vocational Aptitude Battery (ASVAB); Behavior Problems Index (BPI); Child Development; Family Income; Home Observation for Measurement of Environment (HOME); Human Capital; I.Q.; Intergenerational Patterns/Transmission; Life Cycle Research; Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Skill Formation; Skills

This paper estimates models of the evolution of cognitive and noncognitive skills and explores the role of family environments in shaping these skills at different stages of the life cycle of the child. Central to this analysis is identification of the technology of skill formation. We estimate a dynamic factor model to solve the problem of endogeneity of inputs and multiplicity of inputs relative to instruments. We identify the scale of the factors by estimating their effects on adult outcomes. In this fashion we avoid reliance on test scores and changes in test scores that have no natural metric. Parental investments are generally more effective in raising noncognitive skills. Noncognitive skills promote the formation of cognitive skills but, in most specifications of our model, cognitive skills do not promote the formation of noncognitive skills. Parental inputs have different effects at different stages of the child's life cycle with cognitive skills affected more at early ages and noncognitive skills affected more at later ages.
Bibliography Citation
Cunha, Flavio and James J. Heckman. "Formulating, Identifying, and Estimating the Technology of Cognitive and Noncognitive Skill Formation." The Journal of Human Resources 43,4 (Fall 2008): 738-782.
32. Cunha, Flavio
Heckman, James J.
The Evolution of Cognitive and Noncognitive Skills Over the Life Cycle of the Child
Presented: Chicago, IL, American Economic Association Meetings, January 2007.
Also: http://jenni.uchicago.edu/papers/Dugger/evo-cognon_ho_2007-01-03a_mms.pdf
Cohort(s): Children of the NLSY79
Publisher: American Economic Association
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Behavior Problems Index (BPI); Child Development; Home Observation for Measurement of Environment (HOME); Human Capital; I.Q.; Intergenerational Patterns/Transmission; Life Cycle Research; Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Pearlin Mastery Scale; Skill Formation; Skills

Permission to reprint the abstract has not been received from the publisher.

This paper uses simple economic models of skill formation to organize a large body of evidence on the development of skills in children in economics, psychology, education and neuroscience.

Summary:

  • Cognitive and noncognitive skills evolve over the life cycle of the child. The correlation across these skills increases with age.
  • Noncognitive skills foster the accumulation of cognitive skills.
  • Family environments and investments causally affect both cognitive and noncognitive skills.
  • Investments are more effective for cognitive skills in the early years.
  • They are more effective in the later years for noncognitive skills.
  • Strong evidence of self-productivity and cross self-productivity.
Bibliography Citation
Cunha, Flavio and James J. Heckman. "The Evolution of Cognitive and Noncognitive Skills Over the Life Cycle of the Child." Presented: Chicago, IL, American Economic Association Meetings, January 2007.
33. Cunha, Flavio
Heckman, James J.
Schennach, Susanne
Estimating the Technology of Cognitive and Noncognitive Skill Formation
NBER Working Paper No. 15664, National Bureau of Economic Research, February 2010.
Also: http://www.nber.org/papers/w15664
Cohort(s): Children of the NLSY79, NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Behavior Problems Index (BPI); Home Observation for Measurement of Environment (HOME); Motor and Social Development (MSD); Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Peabody Picture Vocabulary Test (PPVT); Rosenberg Self-Esteem Scale (RSES) (see Self-Esteem); Rotter Scale (see Locus of Control); Temperament

This paper formulates and estimates multistage production functions for children's cognitive and noncognitive skills. Skills are determined by parental environments and investments at different stages of childhood. We estimate the elasticity of substitution between investments in one period and stocks of skills in that period to assess the benefits of early investment in children compared to later remediation. We establish nonparametric identification of a general class of production technologies based on nonlinear factor models with endogenous inputs. A by-product of our approach is a framework for evaluating childhood and schooling interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of the same bundle of skills in different tasks. Using the estimated technology, we determine optimal targeting of interventions to children with different parental and personal birth endowments. Substitutability decreases in later stages of the life cycle in the production of cognitive skills. It is roughly constant across stages of the life cycle in the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For most configurations of disadvantage, our estimates imply that it is optimal to invest relatively more in the early stages of childhood than in later stages.
Bibliography Citation
Cunha, Flavio, James J. Heckman and Susanne Schennach. "Estimating the Technology of Cognitive and Noncognitive Skill Formation." NBER Working Paper No. 15664, National Bureau of Economic Research, February 2010.
34. Cunha, Flavio
Heckman, James J.
Schennach, Susanne
Estimating the Technology of Cognitive and Noncognitive Skill Formation
Econometrica 78,3 (1 May 2010): 883–931.
Also: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2885826/
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Behavior Problems Index (BPI); Home Observation for Measurement of Environment (HOME); Life Cycle Research; Motor and Social Development (MSD); Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Peabody Picture Vocabulary Test (PPVT); Rosenberg Self-Esteem Scale (RSES) (see Self-Esteem); Rotter Scale (see Locus of Control); Skill Depreciation; Skill Formation; Temperament

This paper formulates and estimates multistage production functions for child cognitive and noncognitive skills. Output is determined by parental environments and investments at different stages of childhood. We estimate the elasticity of substitution between investments in one period and stocks of skills in that period to assess the benefits of early investment in children compared to later remediation. We establish nonparametric identification of a general class of nonlinear factor models. A by-product of our approach is a framework for evaluating childhood interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of skills in different tasks. Using the estimated technology, we determine optimal targeting of interventions to children with different parental and personal birth endowments. Substitutability decreases in later stages of the life cycle for the production of cognitive skills. It increases in later stages of the life cycle for the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For some configurations of disadvantage and outcomes, it is optimal to invest relatively more in the later stages of childhood.
Bibliography Citation
Cunha, Flavio, James J. Heckman and Susanne Schennach. "Estimating the Technology of Cognitive and Noncognitive Skill Formation." Econometrica 78,3 (1 May 2010): 883–931. A.
35. Eisenhauer, Philipp
Heckman, James J.
Vytlacil, Edward
The Generalized Roy Model and the Cost-Benefit Analysis of Social Programs
Journal of Political Economy 123,2 (April 2015): 413-443.
Also: http://www.jstor.org/stable/10.1086/679509
Cohort(s): NLSY79
Publisher: University of Chicago Press
Keyword(s): College Education; Educational Returns; Heterogeneity; Modeling

The literature on treatment effects focuses on gross benefits from program participation. We extend this literature by developing conditions under which it is possible to identify parameters measuring the cost and net surplus from program participation. Using the generalized Roy model, we nonparametrically identify the cost, benefit, and net surplus of selection into treatment without requiring the analyst to have direct information on costs. We apply our methodology to estimate the gross benefit and net surplus of attending college.
Bibliography Citation
Eisenhauer, Philipp, James J. Heckman and Edward Vytlacil. "The Generalized Roy Model and the Cost-Benefit Analysis of Social Programs." Journal of Political Economy 123,2 (April 2015): 413-443.
36. Flinn, Christopher Jay
Heckman, James J.
Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?
Journal of Labor Economics 1,1 (January 1983): 28-42.
Also: http://www.jstor.org/stable/2534929
Cohort(s): Young Men
Publisher: University of Chicago Press
Keyword(s): Job Search; Mobility, Job; Unemployment; Work History

This paper tests the hypothesis that the classifications "unemployed" and "out of the labor force" are behaviorally meaningless distinctions. This hypothesis is rejected. Distinct behavioral equations govern transitions from out of the labor force to employment and from unemployment to employment. The evidence reported in this paper is broadly consistent with versions of search theory in which unemployment is a state that facilitates the job search process. In an appendix, the authors demonstrate that log concavity of the wage-offer distribution implies that the exit rate from unemployment is an increasing function of the rate of arrival of job offers.
Bibliography Citation
Flinn, Christopher Jay and James J. Heckman. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?" Journal of Labor Economics 1,1 (January 1983): 28-42.
37. Flinn, Christopher Jay
Heckman, James J.
Models for the Analysis of Labor Force Dynamics
In: Advances in Econometrics 1. R. Basemann and G. Rhodes, eds., Greenwich, CT: JAI Press, 1982
Cohort(s): Young Men
Publisher: JAI Press, Inc.
Keyword(s): Behavioral Differences; Heterogeneity; Job Search; Job Turnover; Labor Force Participation; Labor Turnover; Markov chain / Markov model; Work Histories

This article presents new econometric methods for the empirical analysis of individual labor market histories. The techniques developed here extend previous work on continuous time models in four ways: (1) a structural economic interpretation of these models is presented; (2) time varying explanatory variables are introduced into the analysis in a general way; (3) unobserved heterogeneity components are permitted to be correlated across spells; and (4) a flexible model of duration dependence is presented that accommodates many previous models as a special case and that permits tests among competing specifications within a unified framework. In addition, longer range types of state dependence can be introduced into the model and their empirical importance tested. Two sets of empirical results are presented. The first set is an analysis of employment and nonemployment data using both regression and maximum likelihood procedures. Standard regression methods are shown to perform rather poorly and to produce estimates wildly at variance with the estimates from our maximum likelihood procedure. The maximum likelihood estimates are more in accord with a priori theoretical notions. A major conclusion of this analysis is that the discrete time Markov model widely used in labor market analysis is inconsistent with the data. The second set of empirical results is a test of the hypothesis that "unemployment" and "out of the labor force" are behaviorally different labor market states. Contrary to recent claims, the authors find that they are separate states for the sample of young men utilized.
Bibliography Citation
Flinn, Christopher Jay and James J. Heckman. "Models for the Analysis of Labor Force Dynamics" In: Advances in Econometrics 1. R. Basemann and G. Rhodes, eds., Greenwich, CT: JAI Press, 1982
38. Flinn, Christopher Jay
Heckman, James J.
New Methods for Analyzing Structural Models of Labor Force Dynamics
Journal of Econometrics 18,1 (January 1982): 115-168.
Also: http://www.sciencedirect.com/science/article/pii/0304407682900975
Cohort(s): Young Men
Publisher: Elsevier
Keyword(s): Labor Force Participation; Labor Turnover; Unemployment; Work Histories

New econometric methods are presented for the analysis of labor force dynamics. The economic models discussed assume that rational agents make choices about their employment and labor force activity in the presence of uncertainty about fundamental aspects of their labor market environment. The economic theory of decision-making under uncertainty is used to produce three econometric models of dynamic discrete choice: 1. for a single spell of unemployment, 2. for an equilibrium 2-state model of employment and non-employment, and 3. for a general 3-state model with a non-market sector. A fundamental condition required in this analysis is a recoverability condition that is implicit in all econometric analyses of truncated data. This condition must be fulfilled in order to recover an untruncated distribution from a truncated distribution with a known point of truncation. A recoverability condition will be fulfilled only if the untruncated distribution is assumed to belong to a parametric family. Most econometric models for the analysis of truncated data are non-parametrically underidentified, and the structural estimators often violate standard regularity conditions. The standard asymptotic theory is altered to explain this crucial characteristic of many structural models of labor force dynamics. [ABI/Inform]
Bibliography Citation
Flinn, Christopher Jay and James J. Heckman. "New Methods for Analyzing Structural Models of Labor Force Dynamics." Journal of Econometrics 18,1 (January 1982): 115-168.
39. Hai, Rong
Heckman, James J.
Inequality in Human Capital and Endogenous Credit Constraints
Review of Economic Dynamics 25 (April 2017): 4-36.
Also: http://www.sciencedirect.com/science/article/pii/S1094202517300029
Cohort(s): NLSY97
Publisher: Society for Economic Dynamics
Keyword(s): Age at First Intercourse; Armed Services Vocational Aptitude Battery (ASVAB); Behavior, Violent; Cognitive Ability; Credit/Credit Constraint; Debt/Borrowing; Educational Attainment; Human Capital; Net Worth; Parental Investments; Wealth

Permission to reprint the abstract has not been received from the publisher.

This paper investigates the determinants of inequality in human capital with an emphasis on the role of the credit constraints. We develop and estimate a model in which individuals face uninsured human capital risks and invest in education, acquire work experience, accumulate assets and smooth consumption. Agents can borrow from the private lending market and from government student loan programs. The private market credit limit is explicitly derived by extending the natural borrowing limit of Aiyagari (1994) to incorporate endogenous labor supply, human capital accumulation, psychic costs of working, and age. We quantify the effects of cognitive ability, noncognitive ability, parental education, and parental wealth on educational attainment, wages, and consumption. We conduct counterfactual experiments with respect to tuition subsidies and enhanced student loan limits and evaluate their effects on educational attainment and inequality. We compare the performance of our model with an influential ad hoc model in the literature with education-specific fixed loan limits. We find evidence of substantial life cycle credit constraints that affect human capital accumulation and inequality. The constrained fall into two groups: those who are permanently poor over their lifetimes and a group of well-endowed individuals with rising high levels of acquired skills who are constrained early in their life cycles. Equalizing cognitive and noncognitive ability has dramatic effects on inequality. Equalizing parental backgrounds has much weaker effects. Tuition costs have weak effects on inequality. Note: Previously published as NBER Working Paper No. 22999, December 2016.
Bibliography Citation
Hai, Rong and James J. Heckman. "Inequality in Human Capital and Endogenous Credit Constraints." Review of Economic Dynamics 25 (April 2017): 4-36.
40. Hansen, Karsten T.
Heckman, James J.
Mullen, Kathleen J.
The Effect of Schooling and Ability on Achievement Test Scores
IZA Discussion Papers 826, Institute for the Study of Labor (IZA), July 2003.
Also: ftp://repec.iza.org/RePEc/Discussionpaper/dp826.pdf
Cohort(s): NLSY79
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Armed Forces Qualifications Test (AFQT); Bayesian; Cognitive Ability; Education; Endogeneity; I.Q.; Schooling; Test Scores/Test theory/IRT

Permission to reprint the abstract has not been received from the publisher.

This paper develops two methods for estimating the effect of schooling on achievement test scores that control for the endogeneity of schooling by postulating that both schooling and test scores are generated by a common unobserved latent ability. These methods are applied to data on schooling and test scores. Estimates from the two methods are in close agreement. We find that the effects of schooling on test scores are roughly linear across schooling levels. The effects of schooling on measured test scores are slightly larger for lower latent ability levels. We find that schooling increases the AFQT score on average between 2 and 4 percentage points, roughly twice as large as the effect claimed by Herrnstein and Murray (1994) but in agreement with estimates produced by Neal and Johnson (1996) and Winship and Korenman (1997). We extend the previous literature by estimating the impact of schooling on measured test scores at various quantiles of the latent ability distribution.

Also available as:
NBER Working Papers 9881, National Bureau of Economic Research, Inc.
Working Paper Series 2003:13, IFAU - Institute for Labour Market Policy Evaluation.

Bibliography Citation
Hansen, Karsten T., James J. Heckman and Kathleen J. Mullen. "The Effect of Schooling and Ability on Achievement Test Scores." IZA Discussion Papers 826, Institute for the Study of Labor (IZA), July 2003.
41. Heckman, James J.
Economics of Health and Mortality Special Feature: Economics, Technology, and Neuroscience of Human Capability Formation
Proceedings of the National Academy of Sciences of the USA 104,33 (August 14, 2007 ): 13250-13255
Also: http://www.pnas.org/content/104/33/13250.full.pdf+htm
Cohort(s): Children of the NLSY79
Publisher: National Academy of Sciences (NAS), United States
Keyword(s): Birthweight; Health/Health Status/SF-12 Scale; Human Capital; Infants; Life Cycle Research; Nutritional Status/Nutrition/Consumption Behaviors; Peabody Individual Achievement Test (PIAT- Math); Pre-natal Care/Exposure; Pre/post Natal Health Care; Skill Formation

Permission to reprint the abstract has not been received from the publisher.

This article begins the synthesis of two currently unrelated literatures: the human capital approach to health economics and the economics of cognitive and noncognitive skill formation. A lifecycle investment framework is the foundation for understanding the origins of human inequality and for devising policies to reduce it.

Two currently unrelated bodies of research in economics point to the importance of the early years of childhood in shaping many adult outcomes. The "fetal programming" literature surveyed by Gluckman and Hanson demonstrates that in utero environments affect adult health (1, 2). Robert Fogel demonstrates an important empirical relationship between early nutrition and adult health (3, 4). Barker demonstrates the predictive power of environmental insults in utero and in infancy for the onset of adult coronary disease, stroke, diabetes, and hypertension (5). Birthweight, fetal and maternal nutrition, growth by 1 year of age, etc. are all predictive of later adult health.

Bibliography Citation
Heckman, James J. "Economics of Health and Mortality Special Feature: Economics, Technology, and Neuroscience of Human Capability Formation." Proceedings of the National Academy of Sciences of the USA 104,33 (August 14, 2007 ): 13250-13255.
42. Heckman, James J.
Effects of Child-Care Programs on Women's Effort
Journal of Political Economy 82,2,Part 2 (March-April 1974): S136-S163.
Also: http://www.jstor.org/stable/1829997
Cohort(s): Mature Women
Publisher: University of Chicago Press
Keyword(s): Behavior; Child Care; Household Income; Leisure; Life Cycle Research; Welfare; Wives

The economics of tied work payments and methods for estimating the effect of such payments on labor supply are discussed. It is important to distinguish the conceptually easier problem of modeling the response to tied offers from the more demanding problem of providing reliable estimates of the appropriate behavioral functions. It has been shown that knowledge of consumer preferences is necessary to estimate program effects, and methods have been suggested for determining these preferences. By directly estimating indifference curves, hours of work and work- participation equations have been derived from a common set of parameters. The separation of preferences from constraints allows us to estimate the labor-supply parameters of individuals from data generated by nonstandard constraints, such as the broken-line budget constraints resulting from the tax system, where a tractable labor- supply function does not exist. At the cost of estimating a savings function, we can embed the traditional one- period model of labor supply into a life-cycle model. Both the distribution of tastes for work and distribution of market wage rates for the population at large are estimated. The estimates suggest that wage rates are strongly correlated with preferences for work so that simple "reduced-form" labor-supply functions obtained by regressing hours worked on wage rates give biased estimates. In forming estimates, a statistical procedure is employed which avoids both this bias and censoring bias.
Bibliography Citation
Heckman, James J. "Effects of Child-Care Programs on Women's Effort." Journal of Political Economy 82,2,Part 2 (March-April 1974): S136-S163.
43. Heckman, James J.
Investing in Disadvantaged Young Children is an Economically Efficient Policy
Presented: New York, NY, Committee for Economic Development/The Pew Charitable Trusts/PNC Financial Services Group Forum on "Building the Economic Case for Investments in Preschool", January 10, 2006.
Also: http://www.ced.org/docs/report/report_2006prek_heckman.pdf
Cohort(s): Children of the NLSY79
Publisher: Committee for Economic Development
Keyword(s): Behavior Problems Index (BPI); Childhood Education, Early; Cognitive Ability; Disadvantaged, Economically; I.Q.; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Skill Formation

Permission to reprint the abstract has not been received from the publisher.

This paper presents an efficiency argument for publicly funded investment in disadvantaged young children.

Why should society invest in disadvantaged young children? The traditional argument for doing so is made on the grounds of fairness and social justice. It is an argument founded on equity considerations.

There is another argument that can be made. It is based on economic efficiency. It is more powerful than the equity argument, in part because the gains from such investment can be quantified and they are large. There are many reasons why investing in disadvantaged young children has a high economic return.

It is a rare public policy initiative that promotes fairness and social justice and at the same time promotes productivity in the economy and in society at large. Investing in disadvantaged young children is such a policy.

Early interventions for disadvantaged children promote schooling, raise the quality of the workforce, enhance the productivity of schools and reduce crime, teenage pregnancy and welfare dependency. They raise earnings and promote social attachment. Focusing solely on earnings gains, returns to dollars invested are as high as 15-17%.

Bibliography Citation
Heckman, James J. "Investing in Disadvantaged Young Children is an Economically Efficient Policy." Presented: New York, NY, Committee for Economic Development/The Pew Charitable Trusts/PNC Financial Services Group Forum on "Building the Economic Case for Investments in Preschool", January 10, 2006.
44. Heckman, James J.
Lessons from the Technology of Skill Formation
NBER Working Paper No. 11142, National Bureau of Economic Research, February 2005
Also: http://www.mineduc.cl/biblio/documento/w11142.pdf
Cohort(s): Children of the NLSY79, NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Behavior Problems Index (BPI); Children, Academic Development; Children, Behavioral Development; Family Income; Peabody Individual Achievement Test (PIAT- Math); Skill Formation

This paper discusses recent advances in our understanding of differences in human abilities and skills, their sources, and their evolution over the lifecycle....The study of human skill formation is no longer handicapped by the taboo that once made it impermissible to talk about differences among people. It is now well documented that people are very diverse on a large array of abilities, that these abilities account for a substantial amount of the variation found among people in terms of their socioeconomic success, and that gaps among children from various socioeconomic groups open up at early ages, and, if anything, widen as children become adults. The family plays a powerful role in shaping these abilities. From a variety of intervention studies, we know that these gaps can be partially remedied if the remediation is attempted at early enough ages. The remediation efforts that appear to be most effective are those that supplement family resources for young children from disadvantaged environments. Since the family is the fundamental source of human inequality, programs that target young children from disadvantaged families have the greatest economic and social returns. I make this case through a series of arguments, bolstered by graphs and tables extracted from Heckman and Masterov (2004), Cunha and Heckman (2003) and Carneiro and Heckman (2003).
Bibliography Citation
Heckman, James J. "Lessons from the Technology of Skill Formation." NBER Working Paper No. 11142, National Bureau of Economic Research, February 2005.
45. Heckman, James J.
Role of Income and Family Influence on Child Outcomes
Annals of the New York Academy of Sciences, Volume 1136, Reducing the Impact of Poverty on Health and Human Development: Scientific Approaches (June 2008), 307-323.
Also: http://onlinelibrary.wiley.com/doi/10.1196/annals.1425.031/full
Cohort(s): Children of the NLSY79
Publisher: New York Academy of Sciences
Keyword(s): Child Development; Family Income; Human Capital; I.Q.; Intergenerational Patterns/Transmission; Life Cycle Research; Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Skill Formation; Skills

Permission to reprint the abstract has not been received from the publisher.

This chapter examines the role of income and family background in models of capability formation that explains a variety of findings established in the child development and child intervention literatures.

It is well documented that people have diverse abilities, that these abilities account for a substantial portion of the variation across people in socioeconomic success, and that persistent and substantial ability gaps across children from different socioeconomic groups emerge before they start school. The family plays a powerful role in shaping these abilities through genetics, parental investments, and choice of child environments. From a variety of intervention studies, it is known that ability gaps in children from different socioeconomic groups can be reduced if remediation is attempted at early ages. The remediation efforts that appear to be most effective are those that supplement family environments for disadvantaged children. Cunha, Heckman, Lochner, and Masterov (CHLM) present a comprehensive survey and discussion of this literature.1

This chapter examines the evidence on the importance of income and early environments on child outcomes by using a simple economic model of skill formation to organize the evidence summarized here and the findings of related literatures in psychology, education, and neuroscience. The existing economic models of child development treat childhood as a single period.2–4 The implicit assumption in this approach is that inputs into the production of skills at different stages of childhood are perfect substitutes. To account for a large body of evidence, it is necessary to build models of skill formation with multiple stages of childhood, where inputs at different stages are complements and where there is self-productivity of investment.

There are three distinct constraints operating on the family and its children. The first constraint is the inability of a child to choose his or her parents—the fundamental constraint imposed by the accident of birth. The second constraint is the inability of parents to borrow against their children's future income to finance investments in them. The third constraint is the inability of parents to borrow against their own income to finance investments in their children.

This report summarizes findings from the recent literature on child development and presents a model that explains them. A model that is faithful to the evidence must recognize that (1) parental influences are key factors governing child development; (2) early childhood investments must be distinguished from late childhood investments; (3) an equity–efficiency tradeoff exists for late investments, but not for early investments; (4) abilities are created, not solely inherited, and are multiple in variety; (5) the traditional ability–skill dichotomy is misleading. Both skills and abilities are created; and (6) the “nature versus nurture” distinction is obsolete. These insights change how analysts should interpret evidence and design policy about investing in children. Point 1 is emphasized in many reports. Point 2 is ignored in the many models in the social science literature that consider only one period of childhood in building models of investment. Points 3–5 have received scant attention in the literature on child investment. Point 6 is ignored in the large and misleading literature that partitions the variance of child outcomes into additive components due to nature and components due to nurture.

Bibliography Citation
Heckman, James J. "Role of Income and Family Influence on Child Outcomes." Annals of the New York Academy of Sciences, Volume 1136, Reducing the Impact of Poverty on Health and Human Development: Scientific Approaches (June 2008), 307-323.
46. Heckman, James J.
Sample Selection Bias as a Specification Error with an Application to the Estimation of Labor Supply Functions
In: Female Labor Supply: Theory and Estimation. JP Smith, ed. Princeton, NJ: Princeton University Press, 1980: pp. 206-248
Cohort(s): Mature Women
Publisher: Princeton University Press
Keyword(s): Behavior; Husbands, Income; Research Methodology; Sample Selection; Wages

Permission to reprint the abstract has not been received from the publisher.

The author discusses the bias that results from using non-randomly selected data within the specification error framework of Griliches and Theil and presents a method that enables economists to use simple regression techniques to estimate behavioral functions free of selection bias. A model of female labor supply and wage rates is estimated with this technique. The empirical results suggest that selection bias is an important problem in estimating labor supply functions, but is less important in estimating wage functions. Very high estimates of the elasticity of female labor supply are derived, but these are shown to be consistent with conventional estimates that ignore selection bias.
Bibliography Citation
Heckman, James J. "Sample Selection Bias as a Specification Error with an Application to the Estimation of Labor Supply Functions" In: Female Labor Supply: Theory and Estimation. JP Smith, ed. Princeton, NJ: Princeton University Press, 1980: pp. 206-248
47. Heckman, James J.
Schools, Skills, and Synapses
IZA Discussion Paper No. 3515, The Institute for the Study of Labor (IZA), May 2008
Cohort(s): Children of the NLSY79
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Behavior Problems Index (BPI); Child Development; Home Observation for Measurement of Environment (HOME); Human Capital; I.Q.; Intergenerational Patterns/Transmission; Life Cycle Research; Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Pearlin Mastery Scale; Skill Formation; Skills

Permission to reprint the abstract has not been received from the publisher.

Also an NBER Working Paper No. w14064, National Bureau of Economic Research, June 2008.

This paper discusses (a) the role of cognitive and noncognitive ability in shaping adult outcomes, (b) the early emergence of differentials in abilities between children of advantaged families and children of disadvantaged families, (c) the role of families in creating these abilities, (d) adverse trends in American families, and (e) the effectiveness of early interventions in offsetting these trends. Practical issues in the design and implementation of early childhood programs are discussed.

Bibliography Citation
Heckman, James J. "Schools, Skills, and Synapses." IZA Discussion Paper No. 3515, The Institute for the Study of Labor (IZA), May 2008.
48. Heckman, James J.
Shadow Prices, Market Wages, and Labor Supply
Econometrica 42,4 (July 1974): 679-694.
Also: http://www.jstor.org/stable/1913937
Cohort(s): Mature Women
Publisher: Department of Economics, Northwestern University
Keyword(s): Children; Husbands, Income; Schooling; Wages; Wages, Reservation; Wives; Work History

Permission to reprint the abstract has not been received from the publisher.

This paper develops a model which generates the probability that a woman works, her hours of work, her asking wage, and her offered wage from a common set of parameters. These parameters allow for estimation of the value of time for non-working women, and the wage rates they would face in the market. A method of estimating these parameters is proposed and applied.
Bibliography Citation
Heckman, James J. "Shadow Prices, Market Wages, and Labor Supply." Econometrica 42,4 (July 1974): 679-694.
49. Heckman, James J.
Skill Formation and the Economics of Investing in Disadvantaged Children
Science 312,5782 (30 June 2006): 1900-1902
Cohort(s): Children of the NLSY79, NLSY79
Publisher: American Association for the Advancement of Science (AAAS)
Keyword(s): Children, Academic Development; Children, Behavioral Development; Family Income; Human Capital; Life Cycle Research; Peabody Individual Achievement Test (PIAT- Math); Skill Formation

Permission to reprint the abstract has not been received from the publisher.

This paper summarizes evidence on the effects of early environments on child, adolescent, and adult achievement. Life cycle skill formation is a dynamic process in which early inputs strongly affect the productivity of later inputs.
Bibliography Citation
Heckman, James J. "Skill Formation and the Economics of Investing in Disadvantaged Children ." Science 312,5782 (30 June 2006): 1900-1902.
50. Heckman, James J.
The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models
Annals of Economic and Social Measurement 5 (Fall 1976): 475-492.
Also: http://www.nber.org/chapters/c10491.pdf
Cohort(s): Mature Women
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Modeling, OLS; Modeling, Probit; Research Methodology; Sample Selection

This study analyzes the bias that arises from sample selection, truncation and limited dependent variables within the familiar specification error framework of Griliches and Theil. The author discusses a simple estimator for censored samples to reestimate female labor supply, wages and labor force participation. In an empirical example, the estimator yields estimates close to the maximum likelihood estimates.
    "This paper presents a unified treatment of statistical models for truncation, sample selection and limited dependent variables. A simple estimator is proposed that permits estimation of those models by least squares, and probit analysts. In an empirical example, it is shown that the estimator yields estimates close to the maximum likelihood estimates."
Bibliography Citation
Heckman, James J. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models." Annals of Economic and Social Measurement 5 (Fall 1976): 475-492.
51. Heckman, James J.
The Skills Problem
Presented: Stanford CA, Stanford Institute for Economic Policy Research (SIEPR) Economic Summit, March 2012
Cohort(s): NLSY79
Publisher: Stanford Institute of Economic Policy Research (SIEPR)
Keyword(s): Academic Development; Adolescent Behavior; Cognitive Ability; Cognitive Development; Crime; Educational Attainment; Employment; Labor Market Outcomes; Noncognitive Skills; Schooling; Skills

Permission to reprint the abstract has not been received from the publisher.

Bibliography Citation
Heckman, James J. "The Skills Problem." Presented: Stanford CA, Stanford Institute for Economic Policy Research (SIEPR) Economic Summit, March 2012.
52. Heckman, James J.
The Technology and Neuroscience of Skill Formation
Presented: Chicago, IL, Invest in Kids Working Group, Center for Economic Development, July 17, 2006.
Also: http://www.ced.org/docs/ivk/iikmeeting_slides200607heckman.pdf
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Committee for Economic Development
Keyword(s): Armed Forces Qualifications Test (AFQT); Behavior Problems Index (BPI); Behavioral Problems; Child Development; Intergenerational Patterns/Transmission; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Skill Formation

Permission to reprint the abstract has not been received from the publisher.

Introduction
  • The success of modern economies depends in part on well-educated and
    adaptable workers who are capable of learning new skills so that
    they remain competitive in a continually changing global market.
  • Families are major producers of the skills that promote schooling
    and adaptability.
  • Behavioral research confirms that the early years are foundational
    for a full range of human competencies and are a period of
    heightened sensitivity to the effects of both positive and negative
    experiences.
Bibliography Citation
Heckman, James J. "The Technology and Neuroscience of Skill Formation." Presented: Chicago, IL, Invest in Kids Working Group, Center for Economic Development, July 17, 2006.
53. Heckman, James J.
Borjas, George J.
Does Unemployment Cause Future Unemployment? Definitions, Questions and Answers from a Continuous Time Model of Heterogeneity and State Dependence
Economica 47,187 (August 1980): 247-283.
Also: http://www.jstor.org/stable/2553150
Cohort(s): Young Men
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Heterogeneity; Job Search; Markov chain / Markov model; Mobility, Job; Research Methodology; Statistical Analysis; Unemployment; Work History

This paper presents statistical methods for testing for the presence of true state dependence. Methods used are based on extensions of existing models for continuous-time discrete-state Markov processes. For this paper a new model with general forms of state dependence is developed. Four main types of structural dependence are examined: Markov dependence, occurrence dependence, duration dependence, and lagged duration dependence.
Bibliography Citation
Heckman, James J. and George J. Borjas. "Does Unemployment Cause Future Unemployment? Definitions, Questions and Answers from a Continuous Time Model of Heterogeneity and State Dependence." Economica 47,187 (August 1980): 247-283.
54. Heckman, James J.
Cameron, Stephen V.
Schochet, Peter Zygmunt
Determinants and Consequences of Public Sector and Private Sector Training
NLS Discussion Paper No. 92-15, Washington DC: U.S. Bureau of Labor Statistics, 1992.
Also: http://www.bls.gov/ore/abstract/nl/nl920040.htm
Cohort(s): NLSY79
Publisher: U.S. Department of Labor
Keyword(s): Earnings; Human Capital; Job Training; Job Turnover; Labor Force Participation; Labor Market Outcomes; Life Cycle Research; Private Sector; Public Sector; Training

This in-progress research will use data from the NLSY to estimate the determinants and consequences of participation in private and public training programs. Data from the NLSY contain unusually rich longitudinal information on training and labor market activities. For both national representative samples and subsamples of disadvantaged youth, this research will seek answers to the following questions: (1) What are the determinants of participation in private and public sector training programs? (2) What are the determinants of the amount of time spent in training? (3) What are the impacts of different types of training programs on earnings, wage rates, employment, unemployment, job turnover, and subsequent training? (4) To what extent are public and private training programs comparable in affecting wages, employment, job attachment, and unemployment? These issues will be addressed using explicit life cycle dynamic models to control for the bias that potentially plagues naive regression analysis. Selection bias may arise if persons are not randomly selected into training. Two strategies for addressing selection bias problems are proposed. The emphasis in this project will be on the estimation of robust empirical relationships. This project will provide new information on the labor market dynamics of youth and the role of training in generating those dynamics. The analysis will also shed light on the importance of training in accounting for life cycle wage growth and the empirical importance of training complementarity that is featured in the human capital literature. By estimating the importance of family background and resources as determinants of participation in training, and the substitutability of governmental and private training, it is hoped that more will be learned about the efficacy of alternative strategies for affecting labor market outcomes.
Bibliography Citation
Heckman, James J., Stephen V. Cameron and Peter Zygmunt Schochet. "Determinants and Consequences of Public Sector and Private Sector Training." NLS Discussion Paper No. 92-15, Washington DC: U.S. Bureau of Labor Statistics, 1992.
55. Heckman, James J.
Carneiro, Pedro M.
Human Capital Policy
NBER Working Paper No. 9495, National Bureau of Economic Research, February 2003.
Also: http://papers.nber.org/papers/W9495
Cohort(s): Children of the NLSY79, NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Behavior Problems Index (BPI); Behavioral Problems; Family Background and Culture; Family Income; Job Training; Life Cycle Research; Peabody Individual Achievement Test (PIAT- Math); Racial Equality/Inequality; School Quality; Skill Formation; Skills; Tuition

This paper considers alternative policies for promoting skill formation that are targetted to different stages of the life cycle. We demonstrate the importance of both cognitive and noncognitive skills that are formed early in the life cycle in accounting for racial, ethnic and family background gaps in schooling and other dimensions of socioeconomic success. Most of the gaps in college attendance and delay are determined by early family factors. Children from better families and with high ability earn higher returns to schooling. We find only a limited role for tuition policy or family income supplements in eliminating schooling and college attendance gaps. At most 8% of American youth are credit constrained in the traditional usage of that term. The evidence points to a high return to early interventions and a low return to remedial or compensatory interventions later in the life cycle. Skill and ability beget future skill and ability. At current levels of funding, traditional policies like tuition subsidies, improvements in school quality, job training and tax rebates are unlikely to be effective in closing gaps.
Bibliography Citation
Heckman, James J. and Pedro M. Carneiro. "Human Capital Policy." NBER Working Paper No. 9495, National Bureau of Economic Research, February 2003.
56. Heckman, James J.
Cunha, Flavio
Investing in Our Young People
Working Paper, University of Chicago, November 2006.
Also: http://www-news.uchicago.edu/releases/06/061115.education.pdf
Cohort(s): Children of the NLSY79
Publisher: University of Chicago
Keyword(s): Behavior Problems Index (BPI); Cognitive Development; Family Influences; Family Resources; Family Studies; Home Observation for Measurement of Environment (HOME); Motor and Social Development (MSD); Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Racial Differences; Temperament

Permission to reprint the abstract has not been received from the publisher.

An econometric analysis of data from the landmark National Longitudinal Study of Youth, 1979 (NLSY79) to determine the most effective way to invest in our young people. Heckman and Cunha identified low-achieving white girls from the 1979 study who later became mothers of boys. Then they examined in detail the "investments" in cognitive and non-cognitive skills that the mothers' children had received, particularly family investments.

This paper develops econometric models of skill formation that distill the essence of recent empirical findings from the literature on child development. The goal is to provide a theoretical framework for interpreting the evidence from a large empirical literature, for guiding the next generation of empirical studies, and for formulating factually based policy.

Bibliography Citation
Heckman, James J. and Flavio Cunha. "Investing in Our Young People." Working Paper, University of Chicago, November 2006.
57. Heckman, James J.
Fontaine, Paul A.
Bias-Corrected Estimates of GED Returns
Journal of Labor Economics 24,3 (July 2006): 661-700.
Also: http://www.jstor.org/stable/10.1086/504278
Cohort(s): NLSY79
Publisher: University of Chicago Press
Keyword(s): Armed Forces Qualifications Test (AFQT); Current Population Survey (CPS) / CPS-Fertility Supplement; Education; GED/General Educational Diploma/General Equivalency Degree/General Educational Development; High School Dropouts; Minorities; Nonresponse

Using three sources of data, this article examines the direct economic return to General Educational Development (GED) certification for both native and immigrant high school dropouts. One data source—the Current Population Survey (CPS)—is plagued by nonresponse and allocation bias from the hot deck procedure that biases the estimated return to the GED upward. Correcting for allocation bias and ability bias, there is no direct economic return to GED certification. An apparent return to GED certification with age found in the raw CPS data is due to dropouts becoming more skilled over time. These results apply to both native-born and immigrant populations.
Bibliography Citation
Heckman, James J. and Paul A. Fontaine. "Bias-Corrected Estimates of GED Returns." Journal of Labor Economics 24,3 (July 2006): 661-700.
58. Heckman, James J.
Humphries, John Eric
Mader, Nicholas S.
The GED
IZA Discussion Paper No. 4975, Institute for the Study of Labor (IZA), May 2010.
Also: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1631110&
Cohort(s): NLSY79, NLSY97
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Dropouts; Educational Returns; GED/General Educational Diploma/General Equivalency Degree/General Educational Development; High School Dropouts; Labor Market Outcomes; Schooling, Post-secondary; Tests and Testing; Wage Growth

Permission to reprint the abstract has not been received from the publisher.

The General Educational Development (GED) credential is issued on the basis of an eight hour subject-based test. The test claims to establish equivalence between dropouts and traditional high school graduates, opening the door to college and positions in the labor market. In 2008 alone, almost 500,000 dropouts passed the test, amounting to 12% of all high school credentials issued in that year. This chapter reviews the academic literature on the GED, which finds minimal value of the certificate in terms of labor market outcomes and that only a few individuals successfully use it as a path to obtain post-secondary credentials. Although the GED establishes cognitive equivalence on one measure of scholastic aptitude, recipients still face limited opportunity due to deficits in noncognitive skills such as persistence, motivation and reliability. The literature finds that the GED testing program distorts social statistics on high school completion rates, minority graduation gaps, and sources of wage growth. Recent work demonstrates that, through its availability and low cost, the GED also induces some students to drop out of school. The GED program is unique to the United States and Canada, but provides policy insight relevant to any nation's educational context.
Bibliography Citation
Heckman, James J., John Eric Humphries and Nicholas S. Mader. "The GED." IZA Discussion Paper No. 4975, Institute for the Study of Labor (IZA), May 2010.
59. Heckman, James J.
Humphries, John Eric
Mader, Nicholas S.
The GED
NBER Working Paper No. 16064, National Bureau of Economic Research, June 2010.
Also: http://www.nber.org/papers/w16064.pdf
Cohort(s): NLSY79, NLSY97
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Dropouts; Educational Returns; GED/General Educational Diploma/General Equivalency Degree/General Educational Development; High School Dropouts; Labor Market Outcomes; Wage Growth

The General Educational Development (GED) credential is issued on the basis of an eight hour subject-based test. The test claims to establish equivalence between dropouts and traditional high school graduates, opening the door to college and positions in the labor market. In 2008 alone, almost 500,000 dropouts passed the test, amounting to 12% of all high school credentials issued in that year. This chapter reviews the academic literature on the GED, which finds minimal value of the certificate in terms of labor market outcomes and that only a few individuals successfully use it as a path to obtain post-secondary credentials. Although the GED establishes cognitive equivalence on one measure of scholastic aptitude, recipients still face limited opportunity due to deficits in noncognitive skills such as persistence, motivation and reliability. The literature finds that the GED testing program distorts social statistics on high school completion rates, minority graduation gaps, and sources of wage growth. Recent work demonstrates that, through its availability and low cost, the GED also induces some students to drop out of school. The GED program is unique to the United States and Canada, but provides policy insight relevant to any nation's educational context.
Bibliography Citation
Heckman, James J., John Eric Humphries and Nicholas S. Mader. "The GED." NBER Working Paper No. 16064, National Bureau of Economic Research, June 2010.
60. Heckman, James J.
Humphries, John Eric
Urzua, Sergio
Veramendi, Gregory
The Effects of Educational Choices on Labor Market, Health, and Social Outcomes
Working Paper No. 2011-002, Human Capital and Ecnomic Opportunity Working Group, Economic Research Center, University of Chicago, October 2011
Cohort(s): NLSY79
Publisher: University of Chicago
Keyword(s): Adolescent Behavior; Armed Services Vocational Aptitude Battery (ASVAB); Behavior, Antisocial; Body Mass Index (BMI); CESD (Depression Scale); Cognitive Ability; Divorce; Educational Aspirations/Expectations; Educational Attainment; Health, Mental; Health/Health Status/SF-12 Scale; Labor Market Outcomes; Pearlin Mastery Scale; Rosenberg Self-Esteem Scale (RSES) (see Self-Esteem); School Performance; Welfare

Permission to reprint the abstract has not been received from the publisher.

Using a sequential model of educational choices, we investigate the effect of educational choices on labor market, health, and social outcomes. Unobserved endowments drive the correlations in unobservables across choice and outcome equations. We proxy these endowments with numerous measurements and account for measurement error in the proxies. For each schooling level, we estimate outcomes for labor market, health, and social outcome. This allows us to generate counter-factual outcomes for dynamic choices and a variety of policy and treatment effects. In our framework, responses to treatment vary among observationally identical persons and agents may select into the treatment on the basis of their responses. We find important effects of early cognitive and socio-emotional abilities on schooling choices, labor market outcomes, adult health, and social outcomes. Education at most levels causally produces gains on labor market, health, and social outcomes. We estimate the distribution of responses to education and find substantial heterogeneity on which agents act.
Bibliography Citation
Heckman, James J., John Eric Humphries, Sergio Urzua and Gregory Veramendi. "The Effects of Educational Choices on Labor Market, Health, and Social Outcomes." Working Paper No. 2011-002, Human Capital and Ecnomic Opportunity Working Group, Economic Research Center, University of Chicago, October 2011.
61. Heckman, James J.
Humphries, John Eric
Veramendi, Gregory
Returns to Education: The Causal Effects of Education on Earnings, Health and Smoking
IZA Discussion Paper No. 9957, Institute for the Study of Labor (IZA), May 2016.
Also: http://ftp.iza.org/dp9957.pdf
Cohort(s): NLSY79
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Earnings; Educational Returns; Health/Health Status/SF-12 Scale; Skills; Smoking (see Cigarette Use)

Permission to reprint the abstract has not been received from the publisher.

This paper estimates returns to education using a dynamic model of educational choice that synthesizes approaches in the structural dynamic discrete choice literature with approaches used in the reduced form treatment effect literature. It is an empirically robust middle ground between the two approaches which estimates economically interpretable and policy-relevant dynamic treatment effects that account for heterogeneity in cognitive and non-cognitive skills and the continuation values of educational choices. Graduating college is not a wise choice for all. Ability bias is a major component of observed educational differentials. For some, there are substantial causal effects of education at all stages of schooling.
Bibliography Citation
Heckman, James J., John Eric Humphries and Gregory Veramendi. "Returns to Education: The Causal Effects of Education on Earnings, Health and Smoking." IZA Discussion Paper No. 9957, Institute for the Study of Labor (IZA), May 2016.
62. Heckman, James J.
Humphries, John Eric
Veramendi, Gregory
The Non-Market Benefits of Education and Ability
NBER Working Paper No. 23896, National Bureau of Economic Research, October 2017.
Also: http://www.nber.org/papers/w23896
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Cognitive Ability; Depression (see also CESD); Educational Returns; Incarceration/Jail; Self-Esteem; Trust; Voting Behavior; Welfare

This paper analyzes the non-market benefits of education and ability. Using a dynamic model of educational choice we estimate returns to education that account for selection bias and sorting on gains. We investigate a range of non-market outcomes including incarceration, mental health, voter participation, trust, and participation in welfare. We find distinct patterns of returns that depend on the levels of schooling and ability. Unlike the monetary benefits of education, the benefits to education for many non-market outcomes are greater for low-ability persons. College graduation decreases welfare use, lowers depression, and raises self-esteem more for less-able individuals.
Bibliography Citation
Heckman, James J., John Eric Humphries and Gregory Veramendi. "The Non-Market Benefits of Education and Ability." NBER Working Paper No. 23896, National Bureau of Economic Research, October 2017.
63. Heckman, James J.
Kautz, Tim
Hard Evidence on Soft Skills
IZA Discussion Paper No. 6580, May 2012.
Also: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2080324
Cohort(s): NLSY79
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Achievement; Armed Forces Qualifications Test (AFQT); Cognitive Ability; I.Q.; Illegal Activities; Locus of Control (see Rotter Scale); Rosenberg Self-Esteem Scale (RSES) (see Self-Esteem)

Permission to reprint the abstract has not been received from the publisher.

This paper summarizes recent evidence on what achievement tests measure; how achievement tests relate to other measures of “cognitive ability” like IQ and grades; the important skills that achievement tests miss or mismeasure, and how much these skills matter in life. Achievement tests miss, or perhaps more accurately, do not adequately capture, soft skills – personality traits, goals, motivations, and preferences that are valued in the labor market, in school, and in many other domains. The larger message of this paper is that soft skills predict success in life, that they causally produce that success, and that programs that enhance soft skills have an important place in an effective portfolio of public policies.
Bibliography Citation
Heckman, James J. and Tim Kautz. "Hard Evidence on Soft Skills." IZA Discussion Paper No. 6580, May 2012.
64. Heckman, James J.
LaFontaine, Paul A.
Bias Corrected Estimates of GED Returns
NBER Working Paper No. 12018, National Bureau of Economic Research, January 2006.
Also: http://www.nber.org/papers/w12018
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Current Population Survey (CPS) / CPS-Fertility Supplement; Education; GED/General Educational Diploma/General Equivalency Degree/General Educational Development; High School Completion/Graduates; High School Dropouts; Minorities; Nonresponse

Using three sources of data, this paper examines the direct economic return to GED certification for both native and immigrant high school dropouts. One data source – the CPS – is plagued by nonresponse and allocation bias from the hot-deck procedure that biases upward the estimated return to the GED. Correcting for allocation bias and ability bias, there is no direct economic return to GED certification. An apparent return to GED certification with age found in the raw CPS data is due to dropouts becoming more skilled over time. These results apply to native born as well as immigrant populations.
Bibliography Citation
Heckman, James J. and Paul A. LaFontaine. "Bias Corrected Estimates of GED Returns." NBER Working Paper No. 12018, National Bureau of Economic Research, January 2006.
65. Heckman, James J.
LaFontaine, Paul A.
The American High School Graduation Rate: Trends and Levels
NBER Working Paper 13670, National Bureau of Economic Research, December 2007.
Also: http://www.nber.org/papers/w13670
Cohort(s): NLSY79, NLSY97, Young Men, Young Women
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Educational Aspirations/Expectations; Gender Differences; High School Completion/Graduates; Methods/Methodology

This paper uses multiple data sources and a unified methodology to estimate the trends and levels of the U.S. high school graduation rate. Correcting for important biases that plague previous calculations, we establish that (a) the true high school graduation rate is substantially lower than the official rate issued by the National Center for Educational Statistics; (b) it has been declining over the past 40 years; (c) majority/minority graduation rate differentials are substantial and have not converged over the past 35 years; (d) the decline in high school graduation rates occurs among native populations and is not solely a consequence of increasing proportions of immigrants and minorities in American society; (e) the decline in high school graduation explains part of the recent slowdown in college attendance; and (f) the pattern of the decline of high school graduation rates by gender helps to explain the recent increase in male-female college attendance gaps.
Bibliography Citation
Heckman, James J. and Paul A. LaFontaine. "The American High School Graduation Rate: Trends and Levels." NBER Working Paper 13670, National Bureau of Economic Research, December 2007.
66. Heckman, James J.
LaFontaine, Paul A.
The American High School Graduation Rate: Trends and Levels
IZA Discussion Paper No. 3216, Institute for the Study of Labor (IZA), December 2007
Cohort(s): NLSY79, NLSY97, Young Men, Young Women
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Educational Aspirations/Expectations; GED/General Educational Diploma/General Equivalency Degree/General Educational Development; Gender Differences; High School and Beyond (HSB); High School Completion/Graduates; High School Diploma; National Education Longitudinal Survey (NELS); National Longitudinal Study of Adolescent Health (AddHealth)

Permission to reprint the abstract has not been received from the publisher.

This paper uses multiple data sources and a unified methodology to estimate the trends and levels of the U.S. high school graduation rate. Correcting for important biases that plague previous calculations, we establish that (a) the true high school graduation rate is substantially lower than the official rate issued by the National Center for Educational Statistics; (b) it has been declining over the past 40 years; (c) majority/minority graduation rate differentials are substantial and have not converged over the past 35 years; (d) the decline in high school graduation rates occurs among native populations and is not solely a consequence of increasing proportions of immigrants and minorities in American society; (e) the decline in high school graduation explains part of the recent slowdown in college attendance; and (f) the pattern of the decline of high school graduation rates by gender helps to explain the recent increase in male-female college attendance gaps.
Bibliography Citation
Heckman, James J. and Paul A. LaFontaine. "The American High School Graduation Rate: Trends and Levels." IZA Discussion Paper No. 3216, Institute for the Study of Labor (IZA), December 2007.
67. Heckman, James J.
Lochner, Lance John
Taber, Christopher Robert
Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents
NBER Working Paper No. 6384, National Bureau of Economic Research, January 1998.
Also: http://www.nber.org/cgi-bin/wpsearch.pl?action=bibliography&paper=W6384&year=98
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); College Enrollment; College Graduates; Earnings; Human Capital; Modeling; Schooling; Skill Formation; Skills; Training, On-the-Job; Training, Post-School; Transition, School to Work; Wage Differentials; Wage Equations

This paper develops and estimates an overlapping generations general equilibrium model of labor earnings, skill formation and physical capital accumulation with heterogeneous human capital. The model analyzes both schooling choices and post-school on-the-job investment in skills in a framework in which different schooling levels index different skills. A key insight in the model is that accounting for the distinction between skill prices and measured wages is important for analyzing the changing wage structure, as they often move in different directions. New methods are developed and applied to estimate the demand for unobserved human capital and to determine the substitution relationships in aggregate technology among skills and capital. We estimate skill-specific human capital accumulation equations that are consistent with the general equilibrium predictions of the model. Using our estimates, we find that a model of skill-biased technical change with a trend estimated from our aggregate technology is consistent with the central feature of rising wage equality measured by the college-high school wage differential and by the standard deviation of log earnings over the past 15 years. Immigration of low skill workers contributes little to rising wage inequality. When the model is extended to account for the enlarged cohorts of the Baby Boom, we find that the same parameter estimates of the supply functions for human capital that are used the explain the wage history of the last 15 years also explain the last 35 years of wage inequality as documented by Katz and Murphy (1992).
Bibliography Citation
Heckman, James J., Lance John Lochner and Christopher Robert Taber. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents." NBER Working Paper No. 6384, National Bureau of Economic Research, January 1998.
68. Heckman, James J.
Lochner, Lance John
Taber, Christopher Robert
General Equilibrium Cost Benefit Analysis of Education and Tax Policies
NBER Working Paper No. 6881, National Bureau of Economic Research, January 1999.
Also: http://nber.nber.org/papers/W6881
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Cost-Benefit Studies; Endogeneity; Heterogeneity; Human Capital; Modeling; Schooling; Skill Formation; Taxes; Training, On-the-Job; Tuition

This paper formulates and estimates an open-economy overlapping generation general-equilibrium model of endogenous heterogeneous human capital in the form of schooling and on-the-job training. Physical capital accumulation is also analyzed. We use the model to explain rising wage inequality in the past two decades due to skill-biased technical change and to estimate investment responses. We compare an open economy version with a closed economy version. Using our empirically grounded general equilibrium model that explains rising wage inequality, we evaluate two policies often suggested as solutions to the problem of rising wage inequality: (a) tuition subsidies to promote skill formation and (b) tax policies. We establish that conventional partial equilibrium policy evaluation methods widely used in labor economics and public finance give substantially misleading estimates of the impact of national tax and tuition policies on skill formation. Conventional microeconomic methods for estimating the schooling response to tuition overestimate the response by an order of magnitude. Simulations of our model also reveal that move to a flat consumption tax raises capital accumulation and the real wages of all skill groups and barely affects overall measures of income inequality.
Bibliography Citation
Heckman, James J., Lance John Lochner and Christopher Robert Taber. "General Equilibrium Cost Benefit Analysis of Education and Tax Policies." NBER Working Paper No. 6881, National Bureau of Economic Research, January 1999.
69. Heckman, James J.
Masterov, Dimitriy V.
The Productivity Argument for Investing in Young Children
Working Paper 5, Invest in Kids Working Group, October 2004.
Also: http://www.ced.org/docs/report/report_ivk_heckman_2004.pdf
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Committee for Economic Development
Keyword(s): Armed Forces Qualifications Test (AFQT); Behavior Problems Index (BPI); Children, Academic Development; Educational Aspirations/Expectations; Educational Attainment; Family Influences; Home Observation for Measurement of Environment (HOME); Labor Market Outcomes; Peabody Individual Achievement Test (PIAT- Math)

Permission to reprint the abstract has not been received from the publisher.

Introduction
Education, perseverance and motivation are all major factors determining productivity, both in the workplace and beyond it. The family is a major producer of these skills, which are indispensable for successful students and workers. Unfortunately, many families have failed to perform this task well in recent years. This retards the growth in the quality of the labor force. Dysfunctional families are also a major determinant of child participation in crime and other costly pathological behaviors. On productivity grounds alone, it appears to make sound business sense to invest in young children from disadvantaged environments. An accumulating body of evidence suggests that early childhood interventions are much more effective than remedies that attempt to compensate for early neglect later in life. Enriched pre-kindergarten programs available to disadvantaged children on a voluntary basis, coupled with home visitation programs, have a strong track record of promoting achievement for disadvantaged children, improving their labor market outcomes and reducing involvement with crime. Such programs are likely to generate substantial savings to society and to promote higher economic growth by improving the skills of the workforce...This paper presents a case for investing more in young American children who grow up in disadvantaged environments. Figure 1 presents time series of alternative measures of disadvantaged families. The percentage of children born into or living in nontraditional families has increased tremendously in the last 30 years.1,2 The percentage of children living in poverty has fallen recently, as has the percentage of all children born into poor families, though this number is still high, especially among certain subgroups. The percentage of children born into single parent homes is now 25%. These environments place children at risk for failure in social and economic life. Many have commented on this phenomenon, and most analyses have cast the issue of assisting the children of these
Bibliography Citation
Heckman, James J. and Dimitriy V. Masterov. "The Productivity Argument for Investing in Young Children." Working Paper 5, Invest in Kids Working Group, October 2004.
70. Heckman, James J.
Masterov, Dimitriy V.
The Productivity Argument for Investing in Young Children
Presented: Chicago, IL, T.W. Schultz Award Lecture at the Allied Social Sciences Association Annual Meeting, January 2007.
Also: http://jenni.uchicago.edu/Invest/FILES/dugger_2004-12-02_dvm.pdf
Cohort(s): Children of the NLSY79, NLSY79
Publisher: American Society for Nutrition (ASN)
Keyword(s): Behavior Problems Index (BPI); Behavioral Problems; Childbearing, Adolescent; Children, Academic Development; Children, Behavioral Development; Children, Home Environment; Crime; Disadvantaged, Economically; Education; Family Environment; Family Structure; Home Observation for Measurement of Environment (HOME); Human Capital; I.Q.; International Adult Literacy Survey (IALS); Labor Market Demographics; Literacy; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Skill Formation

Permission to reprint the abstract has not been received from the publisher.

Education, perseverance and motivation are all major factors determining productivity, both in the workplace and beyond it. The family is a major producer of these skills, which are indispensable for successful students and workers. Unfortunately, many families have failed to perform this task well in recent years. This retards the growth in the quality of the labor force. Dysfunctional families are also a major determinant of child participation in crime and other costly pathological behaviors. On productivity grounds alone, it appears to make sound business sense to invest in young children from disadvantaged environments. An accumulating body of evidence suggests that early childhood interventions are much more effective than remedies that attempt to compensate for early neglect later in life. Enriched pre-kindergarten programs available to disadvantaged children on a voluntary basis, coupled with home visitation programs, have a strong track record of promoting achievement for disadvantaged children, improving their labor market outcomes and reducing involvement with crime. Such programs are likely to generate substantial savings to society and to promote higher economic growth by improving the skills of the workforce.
Bibliography Citation
Heckman, James J. and Dimitriy V. Masterov. "The Productivity Argument for Investing in Young Children." Presented: Chicago, IL, T.W. Schultz Award Lecture at the Allied Social Sciences Association Annual Meeting, January 2007.
71. Heckman, James J.
Masterov, Dimitriy V.
The Productivity Argument for Investing in Young Children
Review of Agricultural Economics 29,3 (Fall 2007): 446-493.
Also: http://www.jstor.org/stable/4624854
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Childbearing; Children, Academic Development; Children, Behavioral Development; Children, Home Environment; Crime; Family Structure; International Adult Literacy Survey (IALS); Skill Formation

This lecture was given as the T.W. Schultz Award Lecture at the Allied Social Sciences Association annual meeting, Chicago, January 5–7, 2007. This article was not subject to the journal's standard refereeing process. Copyright 2007 American Agricultural Economics Association.

[From pdf at: http://jenni.uchicago.edu/Invest/FILES/dugger_2004-12-02_dvm.pdf.] This paper presents a productivity argument for investing in disadvantaged young children. For such investment, there is no equity-efficiency tradeoff. The web appendix for this paper can be downloaded from http://jenni.uchicago.edu/Invest/.

Bibliography Citation
Heckman, James J. and Dimitriy V. Masterov. "The Productivity Argument for Investing in Young Children." Review of Agricultural Economics 29,3 (Fall 2007): 446-493.
72. Heckman, James J.
Masterov, Dimitriy V.
The Productivity Argument for Investing in Young Children
NBER Working Paper No. 13016, National Bureau of Economic Research, April 2007.
Also: http://papers.nber.org/papers/w13016
Cohort(s): Children of the NLSY79, NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Behavior Problems Index (BPI); Childbearing; Children, Academic Development; Children, Behavioral Development; Crime; Education; Family Structure; Peabody Individual Achievement Test (PIAT- Math); Skill Formation

This paper presents a productivity argument for investing in disadvantaged young children. For such investment, there is no equity-efficiency tradeoff. [It] graphs time series of alternative measures of the percentage of children in disadvantaged families. The percentage of children born into, or living in, nontraditional families has increased greatly in the last 30 years.1,2 Approximately 25% of children are now born into single parent homes. While the percentages of children living in poverty and born into poor families have fallen recently, they are still high, especially among certain subgroups.

Adverse environments place children at risk for social and economic failure. The accident of birth plays a powerful role in determining adult success.3 Many have commented on this phenomenon, and most analyses have cast the issue of assisting children from disadvantaged families as a question of fairness or social justice.

This paper makes a different argument.

Bibliography Citation
Heckman, James J. and Dimitriy V. Masterov. "The Productivity Argument for Investing in Young Children." NBER Working Paper No. 13016, National Bureau of Economic Research, April 2007.
73. Heckman, James J.
Moon, Seong Hyeok
Pinto, Rodrigo
Savelyev, Peter A.
Yavitz, Adam
The Rate of Return to the Highscope Perry Preschool Program
IZA Policy Paper No. 17, Institute for the Study of Labor (IZA) , July 2010.
Also: http://ftp.iza.org/pp17.pdf
Cohort(s): NLSY79
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Childhood Education, Early; Children, Academic Development; Cognitive Development; Comparison Group (Reference group); Current Population Survey (CPS) / CPS-Fertility Supplement; Disadvantaged, Economically; Family Studies; Food Stamps (see Supplemental Nutrition Assistance Program); I.Q.; Life Cycle Research; Panel Study of Income Dynamics (PSID); Socioeconomic Status (SES)

Permission to reprint the abstract has not been received from the publisher.

This paper summarizes our recent work on the rate of return and cost-benefit ratio of an influential early childhood program.

The Perry Preschool Program was an early childhood education program conducted at the Perry Elementary School in Ypsilanti, Michigan, during the early 1960s. The evidence from it is widely cited to support the economic argument for investing in early childhood programs.

Only disadvantaged children living in adverse circumstances who had low IQ scores and a low index of family socioeconomic status were eligible to participate in the Perry program. Actual participation was determined by a toss of a coin. Beginning at age 3 and lasting 2 years, treatment consisted of a 2.5-hour preschool program on weekdays during the school year, supplemented by weekly home visits by teachers. The curriculum was based on supporting children's cognitive and socio-emotional development through active learning in which both teachers and children had major roles in shaping children's learning. Children were encouraged to plan, carry out, and reflect on their own activities through a plan-do-review process. Follow-up interviews were conducted when participants were approximately 15, 19, 27, and 40 years old. At these interviews, participants provided detailed information about their life-cycle trajectories including schooling, economic activity, marital life, child rearing, and incarceration. In addition, Perry researchers collected administrative data in the form of school records, police and court records, and records on welfare participation. Schweinhart, Montie, Xiang, Barnett, Bel eld, and Nores (2005) describe the program and the available data.

Bibliography Citation
Heckman, James J., Seong Hyeok Moon, Rodrigo Pinto, Peter A. Savelyev and Adam Yavitz. "The Rate of Return to the Highscope Perry Preschool Program." IZA Policy Paper No. 17, Institute for the Study of Labor (IZA) , July 2010.
74. Heckman, James J.
Moon, Seong Hyeok
Pinto, Rodrigo
Savelyev, Peter A.
Yavitz, Adam
The Rate of Return to the Highscope Perry Preschool Program
Journal of Public Economics 94,1-2 (February 2010): 114-128.
Also: http://www.sciencedirect.com/science/article/pii/S0047272709001418
Cohort(s): NLSY79
Publisher: Elsevier
Keyword(s): Aid for Families with Dependent Children (AFDC); Armed Forces Qualifications Test (AFQT); Comparison Group (Reference group); Earnings; Food Stamps (see Supplemental Nutrition Assistance Program); Head Start; Panel Study of Income Dynamics (PSID); Preschool Children; Record Linkage (also see Data Linkage); Welfare

This paper estimates the rate of return to the HighScope Perry Preschool Program, an early intervention program targeted toward disadvantaged African-American youth. Estimates of the rate of return to the Perry program are widely cited to support the claim of substantial economic benefits from preschool education programs. Previous studies of the rate of return to this program ignore the compromises that occurred in the randomization protocol. They do not report standard errors. The rates of return estimated in this paper account for these factors. We conduct an extensive analysis of sensitivity to alternative plausible assumptions. Estimated annual social rates of return generally fall between 7 and 10%, with most estimates substantially lower than those previously reported in the literature. However, returns are generally statistically significantly different from zero for both males and females and are above the historical return on equity. Estimated benefit-to-cost ratios support this conclusion.
Bibliography Citation
Heckman, James J., Seong Hyeok Moon, Rodrigo Pinto, Peter A. Savelyev and Adam Yavitz. "The Rate of Return to the Highscope Perry Preschool Program ." Journal of Public Economics 94,1-2 (February 2010): 114-128.
75. Heckman, James J.
Raut, Lakshmi K.
Intergenerational Long Term Effects of Preschool--Structural Estimates from a Discrete Dynamic Programming Model
NBER Working Paper No. 19077, National Bureau of Economic Research, May 2013
Cohort(s): Children of the NLSY79, NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Children, Academic Development; Children, Behavioral Development; Earnings; Head Start; Intergenerational Patterns/Transmission; Mobility, Schools; Noncognitive Skills; Pearlin Mastery Scale; Preschool Children; Rosenberg Self-Esteem Scale (RSES) (see Self-Esteem); Sociability/Socialization/Social Interaction; Socioeconomic Status (SES)

This paper formulates a structural dynamic programming model of preschool investment choices of altruistic parents and then empirically estimates the structural parameters of the model using the NLSY79 data. The paper finds that preschool investment significantly boosts cognitive and non-cognitive skills, which enhance earnings and school outcomes. It also finds that a standard Mincer earnings function, by omitting measures of non-cognitive skills on the right hand side, overestimates the rate of return to schooling. From the estimated equilibrium Markov process, the paper studies the nature of within generation earnings distribution and intergenerational earnings and schooling mobility. The paper finds that a tax financed free preschool program for the children of poor socioeconomic status generates positive net gains to the society in terms of average earnings and higher intergenerational earnings and schooling mobility.
Bibliography Citation
Heckman, James J. and Lakshmi K. Raut. "Intergenerational Long Term Effects of Preschool--Structural Estimates from a Discrete Dynamic Programming Model." NBER Working Paper No. 19077, National Bureau of Economic Research, May 2013.
76. Heckman, James J.
Raut, Lakshmi K.
Intergenerational Long-term Effects of Preschool--Structural Estimates from a Discrete Dynamic Programming Model
Journal of Econometrics 191,1 (March 2016): 164-175.
Also: http://www.sciencedirect.com/science/article/pii/S0304407615002493
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Elsevier
Keyword(s): Armed Forces Qualifications Test (AFQT); Children, Academic Development; Children, Behavioral Development; Earnings; Head Start; Intergenerational Patterns/Transmission; Mobility, Schools; Noncognitive Skills; Pearlin Mastery Scale; Preschool Children; Rosenberg Self-Esteem Scale (RSES) (see Self-Esteem); Sociability/Socialization/Social Interaction; Socioeconomic Status (SES)

This paper formulates a structural dynamic programming model of preschool investment choices of altruistic parents and then empirically estimates the structural parameters of the model using the NLSY79 data. The paper finds that preschool investment significantly boosts cognitive and non-cognitive skills, which enhance earnings and school outcomes. It also finds that a standard Mincer earnings function, by omitting measures of non-cognitive skills on the right-hand side, overestimates the rate of return to schooling. From the estimated equilibrium Markov process, the paper studies the nature of within generation earnings distribution, intergenerational earnings mobility, and schooling mobility. The paper finds that a tax-financed free preschool program for the children of poor socioeconomic status generates positive net gains to the society in terms of average earnings, higher intergenerational earnings mobility, and schooling mobility.
Bibliography Citation
Heckman, James J. and Lakshmi K. Raut. "Intergenerational Long-term Effects of Preschool--Structural Estimates from a Discrete Dynamic Programming Model." Journal of Econometrics 191,1 (March 2016): 164-175.
77. Heckman, James J.
Schmierer, Daniel A.
Urzua, Sergio
Testing the Correlated Random Coefficient Model
Working Paper No. 15463. National Bureau of Economic Research, October 2009.
Also: http://www.nber.org/papers/w15463
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Heterogeneity; High School Completion/Graduates; Modeling; Schooling, Post-secondary; Variables, Instrumental; Wages

The recent literature on instrumental variables (IV) features models in which agents sort into treatment status on the basis of gains from treatment as well as on baseline-pretreatment levels. Components of the gains known to the agents and acted on by them may not be known by the observing economist. Such models are called correlated random coefficient models. Sorting on unobserved components of gains complicates the interpretation of what IV estimates. This paper examines testable implications of the hypothesis that agents do not sort into treatment based on gains. In it, we develop new tests to gauge the empirical relevance of the correlated random coefficient model to examine whether the additional complications associated with it are required. We examine the power of the proposed tests. We derive a new representation of the variance of the instrumental variable estimator for the correlated random coefficient model. We apply the methods in this paper to the prototypical empirical problem of estimating the return to schooling and ˝find evidence of sorting into schooling based on unobserved components of gains.
Bibliography Citation
Heckman, James J., Daniel A. Schmierer and Sergio Urzua. "Testing the Correlated Random Coefficient Model." Working Paper No. 15463. National Bureau of Economic Research, October 2009.
78. Heckman, James J.
Stixrud, Jora
Urzua, Sergio
The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior
Journal of Labor Economics 24,3 (July 2006): 411-482.
Also: http://www.jstor.org/stable/10.1086/504455
Cohort(s): Children of the NLSY79, NLSY79
Publisher: University of Chicago Press
Keyword(s): Academic Development; Adolescent Behavior; Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Cognitive Ability; Cognitive Development; Crime; Educational Returns; Employment; Labor Market Outcomes; Locus of Control (see Rotter Scale); Noncognitive Skills; Occupational Choice; Risk-Taking; Rosenberg Self-Esteem Scale (RSES) (see Self-Esteem); Rotter Scale (see Locus of Control); Schooling; Skills; Substance Use; Wages; Work Experience

This article establishes that a low-dimensional vector of cognitive and noncognitive skills explains a variety of labor market and behavioral outcomes. Our analysis addresses the problems of measurement error, imperfect proxies, and reverse causality that plague conventional studies. Noncognitive skills strongly influence schooling decisions and also affect wages, given schooling decisions. Schooling, employment, work experience, and choice of occupation are affected by latent noncognitive and cognitive skills. We show that the same low-dimensional vector of abilities that explains schooling choices, wages, employment, work experience, and choice of occupation explains a wide variety of risky behaviors.
Bibliography Citation
Heckman, James J., Jora Stixrud and Sergio Urzua. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior." Journal of Labor Economics 24,3 (July 2006): 411-482.
79. Heckman, James J.
Tobias, Justin L.
Vytlacil, Edward
Four Parameters of Interest in the Evaluation of Social Programs
Southern Economic Journal 68,2 (October 2001): 211-223.
Also: http://www.jstor.org/stable/1061591
Cohort(s): NLSY79
Publisher: Southern Economic Association
Keyword(s): College Education; Evaluations; Sociability/Socialization/Social Interaction

This paper reviews four treatment parameters that have become commonly used in the program evaluation literature: 1. the average treatment effect, 2. the effect of treatment on the treated, 3. the local average treatment effect, and 4. the marginal treatment effect. The paper derives simply computed closed-form expressions for these treatment parameters in a latent variable framework with Gaussian error terms. These parameters can be estimated using nothing more than output from a standard two-step procedure. It also briefly describes recent work that seeks to go beyond mean effects and estimate the distributions associated with various outcome gains. The techniques presented in the paper are applied to estimate the return to some form of college education for various populations using data from the National Longitudinal Survey of Youth.
Bibliography Citation
Heckman, James J., Justin L. Tobias and Edward Vytlacil. "Four Parameters of Interest in the Evaluation of Social Programs." Southern Economic Journal 68,2 (October 2001): 211-223.
80. Heckman, James J.
Tobias, Justin L.
Vytlacil, Edward
Simple Estimators for Treatment Parameters in a Latent Variable Framework with an Application to Estimating the Returns to Schooling
NBER Working Paper No. W7950, National Bureau of Economic Research, October 2000.
Also: http://nber.nber.org/papers/W7950
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Services Vocational Aptitude Battery (ASVAB); College Education; Earnings; Education; Educational Returns; Modeling; Schooling; Selectivity Bias/Selection Bias; Siblings

This paper derives simply computed closed-form expressions for the Average Treatment Effect (ATE), the effect of Treatment on the Treated (TT), Local Average Treatment Effect (LATE) and Marginal Treatment Effect (MTE) in a latent variable framework for both normal and non-normal models. The techniques presented in the paper are applied to estimating a variety of treatment parameters capturing the returns to a college education for various populations using data from the National Longitudinal Survey of Youth (NLSY).
Bibliography Citation
Heckman, James J., Justin L. Tobias and Edward Vytlacil. "Simple Estimators for Treatment Parameters in a Latent Variable Framework with an Application to Estimating the Returns to Schooling." NBER Working Paper No. W7950, National Bureau of Economic Research, October 2000.
81. Heckman, James J.
Urzua, Sergio
Vytlacil, Edward
Supplement to "Understanding Instrumental Variables in Models with Essential Heterogeneity"
Working Paper, Department of Economics, The University of Chicago, December 2004.
Also: http://jenni.uchicago.edu/underiv/appendixwebpage_all_16_12_04.pdf
Cohort(s): NLSY79
Publisher: Department of Economics, The University of Chicago
Keyword(s): Armed Services Vocational Aptitude Battery (ASVAB); GED/General Educational Diploma/General Equivalency Degree/General Educational Development; Heterogeneity; High School Dropouts; Modeling

Permission to reprint the abstract has not been received from the publisher.

Supplement available on-line at: http://jenni.uchicago.edu/underiv/appendixwebpage_all_16_12_04.pdf
Bibliography Citation
Heckman, James J., Sergio Urzua and Edward Vytlacil. "Supplement to "Understanding Instrumental Variables in Models with Essential Heterogeneity"." Working Paper, Department of Economics, The University of Chicago, December 2004.
82. Heckman, James J.
Vytlacil, Edward
Identifying the Role of Cognitive Ability in Explaining the Level of and Change in the Return to Schooling
NBER Working Paper No. 7820, National Bureau of Economic Research, August 2000
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Cognitive Ability; Education; Schooling

This paper considers two problems that arise in determining the role of ability in explaining the level of and change in the rate of return to schooling. (1) Ability and schooling are so strongly dependent that it is not possible, over a wide range of variation in schooling and ability, to independently vary these two variables and estimate their separate impacts. (2) The structure of panel data makes it difficult to identify main age and time effects or to isolate crucial education-ability-time interactions needed to assess the role of ability in explaining the rise in the return to education.
Bibliography Citation
Heckman, James J. and Edward Vytlacil. "Identifying the Role of Cognitive Ability in Explaining the Level of and Change in the Return to Schooling." NBER Working Paper No. 7820, National Bureau of Economic Research, August 2000.
83. Heckman, James J.
Vytlacil, Edward
Identifying the Role of Cognitive Ability in Explaining the Level of and Change in the Return to Schooling
Review of Economics and Statistics 83,1 (February 2001): 1-12.
Also: http://www.jstor.org/stable/2646685
Cohort(s): NLSY79
Publisher: Harvard University Press
Keyword(s): Cognitive Ability; Education; Educational Attainment; School Completion; School Dropouts; Schooling

Permission to reprint the abstract has not been received from the publisher.

This paper considers two problems that arise in determining the role of cognitive ability in explaining the level of and change in the rate of return to schooling. The first problem is that ability and schooling are so strongly dependent that it is not possible, over a wide range of variation in schooling and ability, to independently vary these two variables and estimate their separate impacts. The second problem is that the structure of panel data makes it difficult to identify main age and time effects or to isolate crucial education-ability-time interactions which are needed to assess the role of ability in explaining the rise in the return to education.
Bibliography Citation
Heckman, James J. and Edward Vytlacil. "Identifying the Role of Cognitive Ability in Explaining the Level of and Change in the Return to Schooling." Review of Economics and Statistics 83,1 (February 2001): 1-12.
84. Heckman, James J.
Vytlacil, Edward
Urzua, Sergio
Understanding Instrumental Variables in Models with Essential Heterogeneity
IZA Discussion Paper No. 2320, Institute for the Study of Labor (IZA), September 2006.
Also: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=936692
Cohort(s): NLSY79
Publisher: Institute for the Study of Labor (IZA)
Keyword(s): Heterogeneity; High School Completion/Graduates; Variables, Instrumental; Wages

Permission to reprint the abstract has not been received from the publisher.

This paper examines the properties of instrumental variables (IV) applied to models with essential heterogeneity, that is, models where responses to interventions are heterogeneous and agents adopt treatments (participate in programs) with at least partial knowledge of their idiosyncratic response. We analyze two-outcome and multiple-outcome models including ordered and unordered choice models. We allow for transition-specific and general instruments. We generalize previous analyses by developing weights for treatment effects for general instruments. We develop a simple test for the presence of essential heterogeneity. We note the asymmetry of the model of essential heterogeneity: outcomes of choices are heterogeneous in a general way; choices are not. When both choices and outcomes are permitted to be symmetrically heterogeneous, the method of IV breaks down for estimating treatment parameters.
Bibliography Citation
Heckman, James J., Edward Vytlacil and Sergio Urzua. "Understanding Instrumental Variables in Models with Essential Heterogeneity." IZA Discussion Paper No. 2320, Institute for the Study of Labor (IZA), September 2006.
85. Heckman, James J.
Willis, Robert J.
The Distribution of Lifetime Labor Force Participation of Married Women: Reply to Mincer and Ofek
Journal of Political Economy 87,1 (February 1979): 203-211.
Also: http://www.jstor.org/stable/1832219
Cohort(s): Mature Women
Publisher: University of Chicago Press
Keyword(s): Children; Marriage; Research Methodology; Work Experience

The authors defend and qualify their earlier article, "A Beta-Logistic Model" [JPE, 85, 1 (February l977): 27-58] which had been questioned by Mincer and Ofek. Heckman and Willis estimate the lifetime probabilities of labor force participation of married women, conditional not only upon marital status but also upon variables like children, income, and local labor market conditions. They summarize corrections in their statistical model, and suggest that assumptions both in their own earlier work and in that of Mincer and Ofek were incorrectly based.
Bibliography Citation
Heckman, James J. and Robert J. Willis. "The Distribution of Lifetime Labor Force Participation of Married Women: Reply to Mincer and Ofek." Journal of Political Economy 87,1 (February 1979): 203-211.