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The long-run benefits of public preschool

[Research Highlight]

December 15, 2021

Martha Bailey discusses the impact of Head Start on educational attainment and economic self-sufficiency in adulthood.

Prep School for Poor Kids: The Long-Run Impacts of Head Start on Human Capital and Economic Self-Sufficiency

By Martha J. Bailey, Shuqiao Sun, and Brenden Timpe

òòò½Íø Review, December 2021

This paper evaluates the long-run effects of Head Start using large-scale, restricted administrative data. Using the county roll-out of Head Start between 1965 and 1980 and age-eligibility cutoffs for school entry, we find that Head Start generated large ...

Front Matter

òòò½Íø Review, January 2022

College Tuition and Income Inequality

By Zhifeng Cai and Jonathan Heathcote

òòò½Íø Review, January 2022

This paper evaluates the role of rising income inequality in explaining observed growth in college tuition. We develop a competitive model of the college market, in which college quality depends on instructional expenditure and the average ability of admi...

Measuring the Welfare Effects of Shame and Pride

By Luigi Butera, Robert Metcalfe, William Morrison, and Dmitry Taubinsky

òòò½Íø Review, January 2022

Public recognition is frequently used to motivate desirable behavior, yet its welfare effects—such as costs of shame or gains from pride—are rarely measured. We develop a portable empirical methodology for measuring and monetizing social image utility...

Imperfect Competition, Compensating Differentials, and Rent Sharing in the US Labor Market

By Thibaut Lamadon, Magne Mogstad, and Bradley Setzler

òòò½Íø Review, January 2022

We quantify the importance of imperfect competition in the US labor market by estimating the size of labor market rents earned by American firms and workers. We construct a matched employer-employee panel dataset by combining the universe of US business a...

Consumption Response to Credit Expansions: Evidence from Experimental Assignment of 45,307 Credit Lines

By Deniz Aydin

òòò½Íø Review, January 2022

In a field experiment that constructs a randomized credit limit shock, participants borrow to spend 11 cents on the dollar in the first quarter and 28 cents by the third year. Effects extend to those far from the limit, those who had the new limits as ava...

Employment Structure and the Rise of the Modern Tax System

By Anders Jensen

òòò½Íø Review, January 2022

This paper builds a new microdatabase that covers 100 countries at all income levels and long-run time series in the United States (1870–2010) and Mexico (1960–2010) to document how the modern tax system arises over development. I establish a new set ...

The Relative Efficiency of Skilled Labor across Countries: Measurement and Interpretation

By Federico Rossi

òòò½Íø Review, January 2022

I study how the relative efficiency of high- and low-skill labor varies across countries. Using microdata for countries at different stages of development, I document that differences in relative quantities and wages are consistent with high-skill workers...

A/B Contracts

By George Georgiadis and Michael Powell

òòò½Íø Review, January 2022

This paper aims to improve the practical applicability of the classic theory of incentive contracts under moral hazard. We establish conditions under which the information provided by an A/B test of incentive contracts is sufficient for answering the ques...

When Should There Be Vertical Choice in Health Insurance Markets?

By Victoria R. Marone and Adrienne Sabety

òòò½Íø Review, January 2022

We study the welfare effects of offering choice over coverage levels—"vertical choice"—in regulated health insurance markets. We emphasize that heterogeneity in efficient coverage level is not sufficient to motivate choice. When premiums cannot reflec...

Counterfactuals with Latent Information

By Dirk Bergemann, Benjamin Brooks, and Stephen Morris

òòò½Íø Review, January 2022

We describe a methodology for making counterfactual predictions in settings where the information held by strategic agents and the distribution of payoff-relevant states of the world are unknown. The analyst observes behavior assumed to be rationalized by...

Front Matter

òòò½Íø Journal: Applied Economics, January 2022

The Long-Run Effects of Recessions on Education and Income

By Bryan A. Stuart

òòò½Íø Journal: Applied Economics, January 2022

This paper examines the long-run effects of the 1980–1982 recession on education and income. Using confidential census data, I estimate difference-in-difference regressions that exploit variation across counties in recession severity and across cohorts ...

Finally a Smoking Gun? Compensating Differentials and the Introduction of Smoking Bans

By Daniel Wissmann

òòò½Íø Journal: Applied Economics, January 2022

Using the staggered introduction of smoking bans in the German hospitality industry over 2007–2008, I find a robust 2.4 percent decline in the daily earnings of workers in bars and restaurants associated with the most comprehensive smoking ban. This eff...

Subways and Urban Air Pollution

By Nicolas Gendron-Carrier, Marco Gonzalez-Navarro, Stefano Polloni, and Matthew A. Turner

òòò½Íø Journal: Applied Economics, January 2022

We investigate the effect of subway system openings on urban air pollution. On average, particulate concentrations are unchanged by subway openings. For cities with higher initial pollution levels, subway openings reduce particulates by 4 percent in the a...

Can Information Reduce Ethnic Discrimination? Evidence from Airbnb

By Morgane ³¢²¹´Ç³Üé²Ô²¹²Ô and Roland Rathelot

òòò½Íø Journal: Applied Economics, January 2022

We use data from Airbnb to identify the mechanisms underlying discrimination against ethnic minority hosts. Within the same neighborhood, hosts from minority groups charge 3.2 percent less for comparable listings. Since ratings provide guests with increas...

Rational Habit Formation: Experimental Evidence from Handwashing in India

By Reshmaan Hussam, Atonu Rabbani, Giovanni Reggiani, and Natalia Rigol

òòò½Íø Journal: Applied Economics, January 2022

We test the predictions of the rational addiction model, reconceptualized as rational habit formation, in the context of handwashing in rural India. To track handwashing, we design soap dispensers with timed sensors. We test for rational habit formation b...