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Source: Department of Economics, University of Chicago
Resulting in 7 citations.
1. Asoni, Andrea
What Drives Entrepreneurship?
Working Paper, Department of Economics, University of Chicago, November 2010
Cohort(s): NLSY79
Publisher: Department of Economics, University of Chicago
Keyword(s): College Education; Entrepreneurship; Intelligence

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

I study the effect of college education, intelligence, and self-confidence on entrepreneurship using the National Longitudinal Survey of Youth- 979. Controlling for intelligence and self- confidence I find that college education has no effect on business survival, but increases the probability of becoming an entrepreneur. Intelligence boosts business survival, even accounting for selection. Moreover smarter individuals are more likely to start incorporated firms but less likely to found unincorporated ones. Self-confidence increases the likelihood of starting a firm and has a weak positive effect on business survival. These results suggest that existing conflicting evidence on this topic is driven by the failure to effectively control for unobserved characteristics.
Bibliography Citation
Asoni, Andrea. "What Drives Entrepreneurship?" Working Paper, Department of Economics, University of Chicago, November 2010.
2. Cunha, Flavio
A Time to Plant and a Time to Reap
Working Paper, Department of Economics, University of Chicago, January 2007
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Department of Economics, University of Chicago
Keyword(s): Armed Forces Qualifications Test (AFQT); Child Development; Family Income; Home Observation for Measurement of Environment (HOME); I.Q.; Intergenerational Patterns/Transmission; Panel Study of Income Dynamics (PSID); Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Peabody Picture Vocabulary Test (PPVT); Skill Formation; Skills; Welfare

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

This paper formulates, identifies, and estimates a multistage model of the production of ability in childhood. The model is based on two features. First, Investments made at different ages of the child are not forced to be perfect substitutes as has been assumed in the previous literature. In the model and in the estimation, I allow the technology to vary according to childhood developmental stages so I can capture the notion of critical and sensitive periods found in the literature of animal and human development. I find evidence for sensitive periods. Second, Parents are subject to lifetime credit constraints. They cannot leave debts to their children. They also face uninsurable productivity shocks in labor income. These market failures distort the equilibrium allocation of investments in the cognitive development of their children. The model's empirically grounded steady-state equilibrium explains a variety of facts about cognitive ability, education, and child development. It correctly predicts selection into college by quartiles of family income and terciles of ability measured at adolescent years. It is consistent with gaps in cognitive ability that are present at very early ages. It reproduces the pattern of selection into college based on cognitive ability. I use the model to evaluate the impact of different remediation policies on the stationary distribution of cognitive ability and welfare. I analyze the effects of a 50% tuition subsidy, a targeted early investment subsidy, and a targeted early and late investment subsidy that is contingent on parental resources. I show that the policy that subsidizes early and late childhood investments dominates the other policies in welfare, since it is the one that generates the highest equivalent variation across all deciles of permanent income. It also generates a stationary distribution of cognitive ability that first-order stochastically dominates the ones generated by the baseline economy and the other remediation policies.
Bibliography Citation
Cunha, Flavio. "A Time to Plant and a Time to Reap." Working Paper, Department of Economics, University of Chicago, January 2007.
3. 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..
4. Dahl, Gordon B.
Lochner, Lance John
The Impact of Family Income on Child Achievement
Presented: Chicago, IL, The Chicago Workshop on Black-White Inequality, Department of Economics, University of Chicago, April 21, 2006.
Also: http://economics.uchicago.edu/Inequality_Workshop/papers/Dahl_Lochner_2006_income.pdf
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Department of Economics, University of Chicago
Keyword(s): Academic Development; Achievement; Children, Academic Development; Children, Well-Being; Earned Income Tax Credit (EITC); Family Income; Modeling, Fixed Effects; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading)

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

Understanding the consequences of growing up poor for a child's well-being is an important research question, but one that is difficult to answer due to the potential endogeneity of family income. Past estimates of the effect of family income on child development have often been plagued by omitted variable bias and measurement error. In this paper, we use a fixed effect instrumental variables strategy to estimate the causal effect of income on children's math and reading achievement. Our primary source of identification comes from the large, non-linear changes in the Earned Income Tax Credit (EITC) over the last two decades. The largest of these changes increased family income by as much as 20%, or approximately $2,100. Using a panel of over 6,000 children matched to their mothers from National Longitudinal Survey of Youth datasets allows us to address problems associated with unobserved heterogeneity and endogenous transitory income shocks as well as measurement error in income. Our baseline estimates imply that a $1,000 increase in income raises math test scores by 2.1% and reading test scores by 3.6% of a standard deviation. The results are even stronger when looking at children from disadvantaged families who are affected most by the large changes in the EITC, and are robust to a variety of alternative specifications.
Bibliography Citation
Dahl, Gordon B. and Lance John Lochner. "The Impact of Family Income on Child Achievement." Presented: Chicago, IL, The Chicago Workshop on Black-White Inequality, Department of Economics, University of Chicago, April 21, 2006.
5. Neal, Derek A.
Johnson, William R.
The Role of Pre-Market Factors in Black-White Wage Differences
Working Paper, Department of Economics, University of Chicago, March 23, 1994
Cohort(s): NLSY79
Publisher: Department of Economics, University of Chicago
Keyword(s): Armed Forces Qualifications Test (AFQT); Discrimination, Job; Family Background; Minorities; Racial Differences; School Progress; Wage Differentials; Wage Effects; Wage Equations

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

Many attempts to measure the wage effects of current labor market discrimination against minorities include controls for worker productivity that (1) could themselves be affected by discrimination and (2) are very imprecise measures of worker skill. The resulting estimates of residual wage gaps may be biased. Our approach is a parsimoniously specified wage equation which controls for skill with the score of a test administered as teenagers prepared to leave high school and embark on work careers or postsecondary education. This test score is a racially unbiased measure of the skills and abilities these teenagers were about to bring to the labor market. This research finds that this one test score explains all of the black-white gap for young women and much of the gap for young men, a bigger share than has been found by many other studies. For today's young adults, the black-white wage gap is primarily due to a skill gap, which in turn can be traced, at least in part, to observable differences in children's family backgrounds and local environments. We have suggestive evidence that school quality contributes to the skill gap for males. While the results do not deny the existence of labor market discrimination, skill gaps play such a large role that we believe future research should focus on the obstacles black children face in acquiring productive skill.
Bibliography Citation
Neal, Derek A. and William R. Johnson. "The Role of Pre-Market Factors in Black-White Wage Differences." Working Paper, Department of Economics, University of Chicago, March 23, 1994.
6. Schmierer, Daniel A.
Home Investment in Children in Anticipation of Divorce
Working Paper, Department of Economics, University of Chicago, December 8, 2010
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Department of Economics, University of Chicago
Keyword(s): Armed Forces Qualifications Test (AFQT); Behavior Problems Index (BPI); Divorce; Home Observation for Measurement of Environment (HOME); Marital Conflict; Marital Satisfaction/Quality; Panel Study of Income Dynamics (PSID); Parental Investments; Pregnancy, Adolescent; State-Level Data/Policy

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

In families that end up divorcing or separating, the spouses invest less in their children during marriage. In addition, investment in these children declines starting about two years prior to the divorce itself, primarily due to lower investments by fathers. This new finding suggests that the anticipation of divorce may be detrimental to children through its impact on parental investment. In order to understand these results, I develop a model of a married couple learning about their match quality and engaging in match-specific investment in their children. The model shows that it is match quality, and not merely divorce, that affects children. I use two implications of the model to establish that the prospect of divorce impacts home investment in children during marriage. First, by using variation over time in the probability of divorce within a given marriage, I show that the probability of divorce is negatively related to parental investment in children during marriage. Second, I use information on marital conflict to show that the home investment levels of families near the margin of divorce respond to differences in the costs and benefits of divorce whereas in families far from the margin of divorce they do not. This finding implies that it is the possibility of divorce that is driving some of the differences in investment levels between families. My results establish a new pathway by which divorce may harm children: the anticipation of divorce decreases investment in children during marriage. This effect can explain a small but significant portion of the gap in investment levels between families that divorce and those that do not; roughly the same amount as is explained by the mother's cognitive ability or father's education.
Bibliography Citation
Schmierer, Daniel A. "Home Investment in Children in Anticipation of Divorce." Working Paper, Department of Economics, University of Chicago, December 8, 2010.
7. Staiger, Douglas
Wilwerding, Jonathan
An Economic Model of Teen Motherhood: Opportunity Costs, Biological Constraints and the Timing of First Birth
Working Paper April 2001, Department of Economics, University of Chicago, Revised, April 2002.
Also: http://economics.uchicago.edu/download/staiger.pdf
Cohort(s): NLSY79
Publisher: Department of Economics, University of Chicago
Keyword(s): Adolescent Fertility; Age at First Birth; Armed Forces Qualifications Test (AFQT); Childbearing, Premarital/Nonmarital; Self-Reporting

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

This paper uses data from the National Longitudinal Survey of Youth to evaluate an economic model of the timing of first birth. We estimate a Tobit-type model, in which a woman chooses her age of first birth based on economic factors subject to the biological constraint that the birth must occur after physical maturity. This model fits the empirical distribution of first birth across a wide range of women. Biological constraints are important, with late maturity associated with low birth rates by age 17 and high birth rates in the later teen years. School achievement, as measured by the Armed Forces Qualification Test (AFQT), accounts for all of the racial differences in timing of first birth and predicts a 10-fold difference in teen-motherhood between top and bottom deciles of achievement. Finally, we find that the model is consistent with self-reports about expected age of first birth and whether a pregnancy was wanted.

In this paper, we use data on births between the ages of 14 and 37 from the National Longitudinal Survey of Youth (NLSY) to directly investigate the role of economic and other factors in determining the timing of first births. We develop, estimate and evaluate a reduced form economic model in which a woman chooses a target age for first birth based on economic factors (such as benefits of having a child, and opportunity costs in terms of foregone labor market opportunities), and then gives birth at that age subject to biological constraints (e.g., physical maturity). This simple structure implies that the age of first birth can be estimated with a Tobit-type model (with random and unobserved truncation), where both the target age and the truncation point depend on observable variables and unobserved error terms. In our estimation, we allow unobserved heterogeneity in the error terms using a discrete factor approximation (Heckman and Singer, 1984; Goldman, Leibowitz and Buchanan, 1998; Mroz, 1999).

Bibliography Citation
Staiger, Douglas and Jonathan Wilwerding. "An Economic Model of Teen Motherhood: Opportunity Costs, Biological Constraints and the Timing of First Birth." Working Paper April 2001, Department of Economics, University of Chicago, Revised, April 2002.