Intergenerational mobility: Empirics · Contexts with quasi-random assignment Wider range of...
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Intergenerational mobility: Empirics
Heidi L. Williams
MIT 14.662
Spring 2015
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Where we left off last time
Theory: � Human capital approach: Becker and Tomes (1979) � Goldberger (1989) critique
Measurement: � Multi-year averages: Solon (1992), Mazumder (2005) � Lifecycle bias: Haider and Solon (2006)
Empirics: � Adoption studies: Sacerdote (2007) and Bjorkland et al. (2006) � Natural experiment/IV approaches: Black et al. (2005) � Within-US geography: Chetty et al. (2014)
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1 Regression analysis using adoptees Sacerdote (2007) Bjorkland, Lindahl, and Plug (2006)
Natural experiment/IV estimates Black, Devereux, and Salvanes (2005) Parental education and infant health
Within-US geography of intergenerational mobility: Chetty et al. (2014)
Looking ahead
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Regression analysis using adoptees
Many psychology/sociology analyses of adoptions to estimate effects of family environments (e.g. heritability of IQ). If:
Adopted children are randomly assigned to families as infants and adopted and biological children are treated equally
then adoption is a quasi-experiment randomly assigning children to families ⇒ can be used to investigate effects of family environment
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Main contributions of recent economics papers
What have economists added? Much larger sample sizes Contexts with quasi-random assignment Wider range of outcome variables “Treatment effects” framework that relies on fewer assumptions than traditional behavioral genetics framework
Key papers: Sacerdote (2007) and Bjorkland et al. (2006)
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Three types of empirical approaches
Black and Devereux (2011) distinguish three types of empirical approaches have been applied to adoptee data:
Bivariate regression approach (“transmission coefficients”) Multivariate regression approach Combining information on biological and adoptive parents
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Bivariate regression approach (“transmission coefficients”)
y1 = α + λy0 + ε y1, y0: child and parent outcomes (e.g. log earnings) Estimate separately for adoptees, non-adopted siblings
Compare λ for adoptees and non-adoptees If nurture doesn’t matter: λ = 0 for adoptees (e.g. height) If genes don’t matter: similar λ’s (e.g. purely social outcomes) Relative value of λ for adoptees, non-adoptees gives an indication of the importance of nature versus nurture
Do not have a direct causal interpretation
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Multivariate regression approach
0 + λ3Z + ε Estimate on a sample of adoptees 0 , S0 : education of adoptive mother and father
f
fm
m= α + λ1S + λ2Sy1 0
SZ : other family characteristics (income, family size)
Do not have a direct causal interpretation: not possible to hold “all else” equal and isolate the causal effect of, say, mother’s education Can offer suggestive evidence of factors that appear important
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Combining information on biological and adoptive parents
y1 = α + λay0a + λby0b + ε Estimate on a sample of adoptees Requires data on both biological (b) and adoptive (a) parents
Model allows a direct comparison of the influence of the characteristics of biological and adoptive parents Do not have a direct causal interpretation
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1 Regression analysis using adoptees Sacerdote (2007) Bjorkland, Lindahl, and Plug (2006)
Natural experiment/IV estimates Black, Devereux, and Salvanes (2005) Parental education and infant health
Within-US geography of intergenerational mobility: Chetty et al. (2014)
Looking ahead
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Sacerdote (2007)
New data to analyze a unique quasi-experiment Holt International Children’s Services, 1964-1985 Korean-American adoptees Quasi-random assignment of children to adoptive families
Conditional on family being certified by Holt to adopt First-come, first-served policy (useful to keep in mind) Effective randomization cond’l on adoptee’s cohort, gender Randomization looks valid based on pre-treatment observables
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Sacerdote (2007): Data collection
Data collection was a major undertaking Collaborative effort by Sacerdote and Holt Survey administered to adoptees/families in 2004-05 Public-use version of the data now publicly available: http://www.dartmouth.edu/~bsacerdo/holt_adoption_ public_use2006.dta Very careful attention to detail on data collection:
Low response rate to initial survey of parents (34%): re-surveyed a sample of non-respondents; tested and found responses not significantly correlated with outcomes Directly surveyed smaller sample of children, found high degree of correspondence between their responses and parents’ reports
Looks at NLSY, Census to gauge external validity
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Sacerdote (2007): Empirical frameworks
Three empirical frameworks: Variance decomposition: Behavioral genetics framework Treatment effects framework Estimation of transmission coefficients
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Empirical framework #1: Variance decomposition
Standard behavioral genetics model
Y = G + F + S
Y : child outcomes (e.g. years of education) G : genetic inputs F : family environment S : unexplained factors (residual)
Strong assumptions: nature (G ) and family environment (F ) enter linearly and additively; no interactions
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Empirical framework #1: Variance decomposition Assume G , F , S not correlated. Taking variance of both sides:
σ2 σ2 + σ2 + σ2 SFGY
Divide both sides by variance in the outcome (σ2 Y
h2 σ2 G
σ2 Y
σ2 F
σ2 Y
σ2 S
σ2 Y
=
), and define:
= (heritability)
2c = (family environment)
2e = (error term)
Implies standard behavioral genetics equation:
1 = h2 + c 2 + e 2
Variance of child outcomes is the sum of the variance from genetic inputs, the variance from family environment, and the variance from non-shared environment (the residual)
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Empirical framework #2: Treatment effects
Less parametric analysis: What is the effect of being assigned to particular family “types” on adoptee outcomes?
Type one (27% of the sample): highly educated, small families (≤ 3 children, both parents have four years of college) Type three (12% of the sample): neither parent has four years of college, ≥ 4 children in family Type two (61% of the sample): families not in extreme groups
Why education, family size? Motivated by multivariate analysis
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Empirical framework #2: Treatment effects
Ei = α + β1T 1i + β2T 2i + β3Malei + γAi + ρCi + εi
Estimated on sample of adoptees Ei is educational attainment for child i β1: group 1 vs. group 3 β2: group 2 vs. group 3 Ai : age indicators (education varies with age) Ci : cohort indicators (needed for random assignment) Malei : gender indicator (needed for random assignment)
Education and family size not necessarily the relevant channels
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Empirical framework #3: Transmission coefficients
Ei = α + δ1EMi + β3Malei + γAi + ρCi + εi
Sample of adoptees EMi : adoptive mother’s years of education
Ej = α + δ2EMj + β3Malej + γAj + ρCj + εj
Sample of non-adoptees EMj : (biological) mother’s years of education
A comparison of δ1 and δ2 is an estimate of how much of the transmission of education (or other outcomes) works through nurture, as opposed to through nature and nurture combined
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Descriptive results
Raw means are fascinating (great characteristic of a paper)
Figure 1: Pr(college grad) by family size Both adoptees, non-adoptees show steep decline Either direct effect, or picking up unobservables
If you’re interested, see also Black-Devereux-Salvanes (QJE 2005) on effects of family size and birth order
Use twin births as variation in family size
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Descriptive results: Figure 1
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Descriptive results
Figure 2: Child’s education by mother’s education Strong transmission of education from mothers to children Upward sloping line steeper for non-adoptees
To me, this was very surprising; importance of pre-birth factors?
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Descriptive results: Figure 2
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Descriptive results
Figure 3: Child’s income by family income Almost non-existent for adoptees Strongly positive for non-adoptees
Again, to me this was very surprising (although perhaps this is the same “fact” as the education fact)
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Descriptive results: Figure 3
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Variance decomposition
Bivariate regressions: Table 4, Figure 4 Behavioral genetics decomposition: Table 5
Correlations in outcomes among sibling pairs after removing age, cohort, and gender effects Education: biological siblings have a correlation of 0.34 - 2.4 times larger than the correlation of 0.14 for adoptive siblings Drinking: essentially same correlation Note income has “usual” problems (single year, life cycle bias)
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Bivariate regressions
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Bivariate regressions
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Behavioral genetics decomposition
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Multivariate regressions
Caveat: impossible to definitely separate causal mechanisms Table 6: multiple regression estimates Mother’s education, family size
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Multivariate regressions
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Treatment effects
Table 7 shows treatment effect estimates
Assignment to a small, highly educated family relative to a lesser educated, large family:
Increases educational attainment by 0.75 years Raises Pr(graduate from college) by 16.1 pp Raises Pr(graduate from US News college) by 23.1 pp
These are very large estimated effects of family environment
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Treatment effects
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Transmission coefficients
Table 8: Mother’s education: 0.09 years for adoptees, 0.32 years for non-adoptees ⇒ 28% nurture No adoptee transmission for BMI, height Drinking transmissions nearly equal
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Transmission coefficients
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Useful point of interpretation
One interpretation: US black-white gap in years of schooling and college completion could - based on his results - be produced by a one standard deviation change in family environment
Is the black-white family gap one standard deviation? If so, could suffice to explain b-w educational attainment gap
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1 Regression analysis using adoptees Sacerdote (2007) Bjorkland, Lindahl, and Plug (2006)
2 Natural experiment/IV estimates Black, Devereux, and Salvanes (2005) Parental education and infant health
3 Within-US geography of intergenerational mobility: Chetty et al. (2014)
4 Looking ahead
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Bjorkland, Lindahl, and Plug (2006)
Administrative data from Statistics Sweden Large sample of adoptees Unique aspect: data on both biological, adoptive parents Do not have random assignment
Matching via geography? Cross-checks with Sacerdote helpful here
Argue you can separate genetics and prenatal environment: Genetics: fathers/mothers equally important Prenatal conditions: father’s behavior doesn’t matter (?) Father’s characteristic measure importance of genetics Father/mother difference measures importance of prenatal Important b/c argue prenatal looks small/unimportant
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Linear models
Y ac bp + α2Y ap ac i = α0 + α1Y + vij i
j subscripts family in which the child is born i subscripts family in which the child is adopted and raised Interpreting α1 and α2 requires random assignment Table 2 presents estimates
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Linear models
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Linear models
The authors draw four conclusions from these results: Biological parents matter Adoptive parents matter Comparing biological and adoptive parent:
Mother matters mostly pre-birth Fathers matter equally pre- and post-birth
Total impact of adoptive, biological parents’ resources on outcomes of adoptive children is remarkably similar to impact of biological parent’s outcomes for biological children
Where available, estimates line up well with Sacerdote’s estimates
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Non-linear models
Y ac bp + α2Y ap bpY ap ac = α0 + α1Y α3Y + vi j i j i i
α3 positive if birth/adoptive family backgrounds complements Non-adoptees: squared parental characteristics Table 4 presents estimates
Positive, strong quadratic terms (slight convexity) Some evidence of interactions
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Non-linear models
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1 Regression analysis using adoptees Sacerdote (2007) Bjorkland, Lindahl, and Plug (2006)
Natural experiment/IV estimates Black, Devereux, and Salvanes (2005) Parental education and infant health
Within-US geography of intergenerational mobility: Chetty et al. (2014)
Looking ahead
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Natural experiment/IV estimates
Estimating causal effects of specific channels Identify variation in e.g. parental education or income that is plausibly unrelated to other parental characteristics Almond and Currie (2011): income from welfare programs Education: Black, Devereux, and Salvanes (2005) Black and Devereux (2011) review other education papers
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1 Regression analysis using adoptees Sacerdote (2007) Bjorkland, Lindahl, and Plug (2006)
Natural experiment/IV estimates Black, Devereux, and Salvanes (2005) Parental education and infant health
3 Within-US geography of intergenerational mobility: Chetty et al. (2014)
4 Looking ahead
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Black, Devereux, and Salvanes (2005)
Parents with higher levels of education have children with higher levels of education. Why is this?
Selection: ‘type’ of parent has ‘type’ of child Causation: obtaining more education changes parent ‘type’
Black et al. examine this question in the context of a (drastic) change in compulsory schooling laws in Norway in the 1960s
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Empirical strategy
Pre-reform: 7th grade required Post-reform: 9th grade required Timing of reform staggered across municipalities Norway register data 2SLS using reform as an instrument (used in prior papers)
S1 = β0 + β1S0 + β2AGE1 + β3AGE0 + β4M0 + ε S0 = α0 + α1REFORM0 + α2AGE1 + α3AGE0 + α4M0 + ν
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First stage: Table 2
Courtesy of Sandra Black, Paul Devereux, Kjell Salvanes, andthe American Economic Association. Used with permission.
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First stage: Table 3a
Courtesy of Sandra Black, Paul Devereux, Kjell Salvanes, andthe American Economic Association. Used with permission.
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OLS and IV
As expected, positive OLS of parents’, childrens’ education First stage weak in full sample: focus on restricted sample
Similar OLS, 2SLS estimates 2SLS estimates more precise
IV suggests weak evidence of a causal effect
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OLS and IV: Table 3
Courtesy of Sandra Black, Paul Devereux, Kjell Salvanes, andthe American Economic Association. Used with permission.
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First stage and reduced form: Figure 1
Courtesy of Sandra Black, Paul Devereux, Kjell Salvanes, and the American Economic Association. Used with permission.
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Black, Devereux, and Salvanes (2005)
Authors conclude: limited support for intergenerational spillovers as a compelling argument for compulsory schooling laws
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1 Regression analysis using adoptees Sacerdote (2007) Bjorkland, Lindahl, and Plug (2006)
2 Natural experiment/IV estimates Black, Devereux, and Salvanes (2005) Parental education and infant health
3 Within-US geography of intergenerational mobility: Chetty et al. (2014)
4 Looking ahead
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Parental education and infant health
Effect of parental education on infant health Relevant to mobility because of evidence that infant health has a positive causal effect on later adult outcomes (next class)
McCrary-Royer (2011): RD on school entry start date No effect of education on fertility, age at first birth Small, statistically insignificant effects on birth weight
Currie-Moretti (2003): college openings Reduces fertility, increases birth weight With McCrary-Royer, suggests important heterogeneity
More on early life health next lecture
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1 Regression analysis using adoptees Sacerdote (2007) Bjorkland, Lindahl, and Plug (2006)
2 Natural experiment/IV estimates Black, Devereux, and Salvanes (2005) Parental education and infant health
3
4
Within-US geography of intergenerational mobility: Chetty et al. (2014)
Looking ahead
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Within-US geography of intergenerational mobility
1980-1982 birth cohorts Parental and child income data measured by tax records Log-log specification for intergenerational income elasticity discards many families with zero income; alternative rank-rank measure
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Rank-rank: Figure 2 Roughly linear: 10 pctile increase in parent income rank ⇒ 3.4 pctile increase in child income rank
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Spatial variation
Commuting zones at age 16 (ZIP on parents’ tax return) Two measures:
Relative mobility: difference in outcomes between children from top vs. bottom income families within a CZ Absolute mobility: expected rank of children with parents at percentile p in CZ c
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Absolute mobility: Figure 6 Large regional variation + within region variation
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Univariate correlations: Figure 8
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2
3
4
Regression analysis using adoptees Sacerdote (2007) Bjorkland, Lindahl, and Plug (2006)
Natural experiment/IV estimates Black, Devereux, and Salvanes (2005) Parental education and infant health
Within-US geography of intergenerational mobility: Chetty et al. (2014)
Looking ahead
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Looking ahead
Early life determinants of long-run outcomes Prenatal environments Early childhood environments Policy responses
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14.662 Labor Economics IISpring 2015
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