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Source: Department of Economics, Yale Universtiy
Resulting in 6 citations.
1. Benjamin, Daniel J.
Shapiro, Jesse M.
Does Cognitive Ability Reduce Psychological Bias?
Working Paper, Department of Economics, Yale University, February 2005.
Also: http://www.econ.yale.edu/seminars/apmicro/am05/benjamin-050414.pdf
Cohort(s): NLSY79
Publisher: Department of Economics, Yale University
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Cognitive Ability; Human Capital Theory; I.Q.; Modeling, Fixed Effects; School Quality; Siblings

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

A burgeoning literature in economics argues that bounded cognition can explain many observed empirical deviations from rationality. Consistent with this hypothesis, we show that individuals with greater cognitive ability behave more closely in accordance with economic decision theory. However, even the most cognitively skilled individuals display significant biases. In two laboratory studies, one conducted with Harvard undergraduates and one with Chilean high school students, we find that individuals with greater cognitive ability are more patient over short-term trade-offs and less risk-averse over small-stakes gambles. In both studies, mathematical ability seems to be more predictive of normative decision-making than verbal ability. In the sample of Chilean students, achievement in elementary school is strongly predictive of decisions made at the end of secondary school. Drawing on the National Longitudinal Survey of Youth, we show that, even after controlling carefully for labor income, more cognitively skilled individuals are more likely to participate in financial markets, are more knowledgeable about their pension plans, accumulate more assets, and are more likely to have tax-deferred savings. These findings persist when we use sibling relationships to identify models using within-family variation in cognitive ability. Finally, various institutional measures of school quality are predictive of sophisticated decision-making, suggesting a possible role for human capital policy in reducing the impact of psychological biases.
Bibliography Citation
Benjamin, Daniel J. and Jesse M. Shapiro. "Does Cognitive Ability Reduce Psychological Bias?." Working Paper, Department of Economics, Yale University, February 2005.
2. Fang, Hanming
Silverman, Daniel Susman
Measuring Time-inconsistency: Evidence from Work-Welfare Decisions in NLSY
Working Paper, Department of Economics, Yale University, February 2001.
Also: http://www.econ.yale.edu/seminars/apmicro/am01/fang-010213.pdf
Cohort(s): NLSY79
Publisher: Department of Economics, Yale University
Keyword(s): Aid for Families with Dependent Children (AFDC); Labor Supply; Maternal Employment; Time Inconsistency; Time Preference; Welfare

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

This paper applies a model of potentially time-inconsistent preferences to the problem of dynamic labor supply and welfare program participation. From panel data on the choices of single women with children, we provide estimates of the degree of time-inconsistency. With these estimates we can quantify the utility loss stemming from the inability to commit to future decisions, and the potential value of commitment mechanisms such as welfare time limits.
Bibliography Citation
Fang, Hanming and Daniel Susman Silverman. "Measuring Time-inconsistency: Evidence from Work-Welfare Decisions in NLSY." Working Paper, Department of Economics, Yale University, February 2001.
3. Lopes De Melo, Rafael
Sorting in the Labor Market: Theory and Measurement
Ph.D. Dissertation, Department of Economics, Yale University, 2009
Cohort(s): NLSY79
Publisher: Department of Economics, Yale University
Keyword(s): Brazil, Brazilian; Cross-national Analysis; Educational Attainment; Firms; Heterogeneity; Job Productivity; Job Turnover; RAIS - Relação Anual de Informações Sociais; Skilled Workers; Survey of Income and Program Participation (SIPP); Transition, Job to Job; Wage Theory; Wages

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

Are more skilled workers employed by more productive firms? Are complementarities important in production? I analyze the assortative matchup between heterogeneous firms and workers in the labor market. Sorting patterns are important for two reasons: inefficiency and inequality. First, if there are complementarities in production, the equilibrium allocation assigns the most skilled workers to the most productive firms, and vice-versa. If frictions perturb this assignment, the economy operates suboptimally. In this case, second, sorting can work as a mechanism to increase inequality and decrease mobility: the most skilled workers earn more because they are more skilled and also because they work for the most productive firms. In such an economy, low skilled workers have limited opportunities for career progress, since the top firms will not hire them.

In the first chapter, I provide four contributions to the measurement of sorting. First, I introduce a frictional sorting model to show that the standard empirical method used to measure sorting in the labor market can be biased in favor of not detecting sorting. My second contribution is to isolate the economic mechanism responsible for this bias. Thirdly, I propose an alternative method to detect sorting that is immune from this bias. Finally, I apply both methods to a novel Brazilian matched employer-employee dataset, RAIS. I confirm the absence of sorting when using the first method, whereas the second reveals strong sorting, which, according to the model, suggests that sorting is widespread in the labor market.

In the remaining chapters, I investigate the dynamic relationship between wages and turnover in the equilibrium of frictional economies. In the second chapter, I evaluate the ability of several models in the job-search literature to explain a robust and pervasive fact that, I document from SIPP data: real wage cuts upon job-to-job transitions are more frequent that for those remaining in one job. The results suggest that, highly educated workers accept wage cuts in exchange for better prospects on the new job, while for low-educated these cuts reflect preemptive quits. In the third chapter, I structurally estimate a model of match-specific learning, using data from the NLSY-79, in order to jointly explain the dynamics and inequality of wages.

Bibliography Citation
Lopes De Melo, Rafael. Sorting in the Labor Market: Theory and Measurement. Ph.D. Dissertation, Department of Economics, Yale University, 2009.
4. Moscarini, Giuseppe
Vella, Francis
Occupational Mobility and Employment Reallocation: Evidence from the NLSY79
Working Paper, Department of Economics, Yale University, September 2003.
Also: http://www.econ.yale.edu/~mosca/mobility.pdf
Cohort(s): NLSY79
Publisher: Department of Economics, Yale University
Keyword(s): Education; Human Capital; Mobility, Job; Work Experience

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

We estimate an empirical model of individual occupational mobility over the period 1984 to 1992 for a sample of youth from the NLSY79. We define occupational mobility at the 3-digit level, a finer disaggregation than typically employed, as we believe this more directly corresponds to a career. We focus on isolating the impact of two measures of human capital, formal education and work experience, on the occupational mobility of young workers who have only fairly recently entered the labor market. We employ a semi-parametric double index based estimator for discrete choice models, which allows a flexible relationship between the human capital variables and occupational mobility. We find statistically, and economically, strong negative effects from both formal education and work experience on occupational mobility. Most strikingly, we find that both effects appear to be of a similar magnitude, illustrating the occupation-specific nature of post high school education.
Bibliography Citation
Moscarini, Giuseppe and Francis Vella. "Occupational Mobility and Employment Reallocation: Evidence from the NLSY79." Working Paper, Department of Economics, Yale University, September 2003.
5. Russo, Anna
A Head Start for the Whole Family: Assessing the Labor Supply Response of Mothers of Head Start Participants
Senior Essay, Department of Economics, Yale University, 2017
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Department of Economics, Yale University
Keyword(s): Geocoded Data; Head Start; Labor Force Participation; Maternal Employment

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

Childcare programs have the potential to benefit both children, through cognitive development, and parents, by lessening the burden of childcare. This paper is one of the first to study the impact of Head Start, a preschool program serving nearly one million low-income children in the United States, on the parents of participants. Using discontinuities in the eligibility requirements of Head Start, I provide the first evidence that Head Start has a positive causal effect on the labor market participation of the mothers of Head Start children. I find that Head Start increases mothers' hours worked per week, probability of employment, and probability of an income increase. These effects are large in magnitude and particularly strong for black families who exhibit greater take-up rates of the program.
Bibliography Citation
Russo, Anna. "A Head Start for the Whole Family: Assessing the Labor Supply Response of Mothers of Head Start Participants." Senior Essay, Department of Economics, Yale University, 2017.
6. Tartari, Melissa
Divorce and the Cognitive Achievement of Children
Working Paper, Department of Economics, Yale University, November 2006.
Also: http://www.wesleyan.edu/econ/seminar/2009s/tartari.pdf
Cohort(s): Children of the NLSY79
Publisher: Department of Economics, Yale University
Keyword(s): Child Self-Administered Supplement (CSAS); Child Support; Cognitive Development; Divorce; Educational Attainment; Marital Conflict; Marital Status; Maternal Employment; Parent-Child Relationship/Closeness; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Test Scores/Test theory/IRT

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

It is commonly thought that divorce adversely affects child outcomes. Children of divorced parents exhibit lower test scores and lower educational attainment. A fundamental question is whether these correlations have a causal interpretation. Parents who divorce may also be less likely to invest in their children while together. Alternatively, they may choose to divorce to shield their children from the effects of marital conflict. The goal of this paper is to understand what generates the observed differences in children's cognitive achievement by their parents' marital status. I study the relationship between marital status and a child's cognitive achievement within a dynamic framework in which partners decide on whether to remain married, how to interact (with or without conflict), fertility, labor supply, time spent with their children, and child support transfers. Using the estimated behavioral model, I assess whether a child whose parents divorced would have been better off had divorce not been an option. I also consider the effects of pro-marriage policies, such as a bonus paid to low income married couples. Finally, I evaluate how better enforcement of existing child support guidelines would affect a child's cognitive achievement, taking into account induced changes in within-marriage behavior.
Bibliography Citation
Tartari, Melissa. "Divorce and the Cognitive Achievement of Children." Working Paper, Department of Economics, Yale University, November 2006.