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Source: Harvard Business School
Resulting in 2 citations.
1. Gelber, Alexander
Weinzierl, Matthew C.
Equalizing Outcomes and Equalizing Opportunities: Optimal Taxation when Children's Abilities Depend on Parents' Resources
Working Paper 13-014, Harvard Business School, Harvard University, April 2014
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Harvard Business School
Keyword(s): Achievement; Armed Forces Qualifications Test (AFQT); Children, Academic Development; Earned Income Tax Credit (EITC); Family Income; Family Resources; Intergenerational Patterns/Transmission; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Taxes

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

Empirical research suggests that parents' economic resources affect their children's future earnings abilities. Optimal tax policy therefore treats future ability distributions as endogenous to current taxes. We model this endogeneity, calibrate the model to match estimates of the intergenerational transmission of earnings ability in the United States, and use the model to simulate such an optimal policy numerically. The optimal policy in this context is more redistributive toward low-income parents than existing U.S. tax policy. It also increases the probability that low-income children move up the economic ladder, generating a present-value welfare gain of one and three-quarters percent of consumption in our baseline case.
Bibliography Citation
Gelber, Alexander and Matthew C. Weinzierl. "Equalizing Outcomes and Equalizing Opportunities: Optimal Taxation when Children's Abilities Depend on Parents' Resources." Working Paper 13-014, Harvard Business School, Harvard University, April 2014.
2. Segal, Carmit
Motivation, Test Scores, and Economic Success
Working Paper, Harvard Business School, November 2006.
Cohort(s): NLSY79
Publisher: Harvard Business School
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Earnings; Income; Motivation; Noncognitive Skills; Test Scores/Test theory/IRT

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

In this paper I investigate through which channels low-stakes test scores relate to economic success. The inferences in the economic literature regarding test scores and their association with economic outcomes are mostly based on tests without performance-based incentives, administered to survey participants. I argue that the lack of performance-based incentives allows for the possibility that higher test scores are caused by non-cognitive skills associated with test-taking motivation, and not necessarily by cognitive skills alone. I suggest that the coding speed test, which is a short and very simple test available for participants in the National Longitudinal Survey of Youth 1979 (NLSY), may serve as a proxy for test-taking motivation. To gather more definite evidence on the motivational component in the coding speed test I conduct a controlled experiment, in which I induce motivation via the provision of incentives. In the experiment, the average performance improved substantially and significantly once incentives were provided. More importantly, I find heterogeneous responses to incentives. Roughly a third of the participants improved their performance significantly in response to performance-based incentives, while the others did not. These two groups have the same test score distributions when incentives were provided, suggesting that some participants are less motivated and invest less effort when no performance-based incentives are provided. These participants however are not less able. I then explore to what extent coding speed test scores relate to economic success. Focusing on male NLSY participants, I show that the coding speed scores are highly correlated with earnings 23 years after NLSY participants took the test even after controlling for usual measures of cognitive skills like the Armed Forces Qualification Test (AFQT) scores. Moreover, I find that while for highly educated workers the association between AFQT scores and earnings i s significantly larger that the one between coding speed scores and earnings, for less educated workers these associations are of similar size.
Bibliography Citation
Segal, Carmit. "Motivation, Test Scores, and Economic Success." Working Paper, Harvard Business School, November 2006.