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Research from the United States shows that gaps in early cognitive and non-cognitive ability appear early in the life cycle. Little is known about this important question for developing countries. This paper provides new evidence of sharp differences in cognitive development by socioeconomic status in early childhood for five Latin American countries. To help with comparability, we use the same measure of receptive language ability for all five countries. We find important differences in development in early childhood across countries, and steep socioeconomic gradients within every country. For the three countries where we can follow children over time, there are few substantive changes in scores once children enter school. Our results are robust to different ways of defining socioeconomic status, to different ways of standardizing outcomes, and to selective non-response on our measure of cognitive development. Download Paper
This paper evaluates the impact of three different performance incentives schemes using data from a social experiment that randomized 88 Mexican high schools with over 40,000 students into three treatment groups and a control group. Treatment one provides individual incentives for performance on curriculum-based mathematics tests to students only, treatment two to teachers only and treatment three gives both individual and group incentives to students, teachers and school administrators. Program impact estimates reveal the largest average effects for treatment three, smaller impacts for treatment one and no impact for treatment two. Download Paper
This study investigates the impacts of negative economic shocks on child schooling in households of rural Malawi, one of the poorest countries in Sub-Saharan Africa (SSA). Two waves of household panel data for years 2006 and 2008 from the Malawi Longitudinal Study of Families and Health (MLSFH) are used to examine the impact of negative shocks on child schooling. Both individually-reported and community-level shocks are investigated. A priori the impact of negative shocks on schooling may be negative (if income effects dominate) or positive (if price effects dominate). Also the effects may be larger for measures of idiosyncratic shocks (if there is considerable within-community variation in experiencing shocks) or for aggregate shocks (if community support networks buffer better idiosyncratic than aggregate shocks). Finally there may be gender differences in the relevance for child schooling of shocks reported by men versus those reported by women with, for example, the former having larger effects if resource constraints have strong effects on schooling and if because of gender roles men perceive better than women shocks that affect household resources. The study finds that negative economic shocks have significant negative impacts on child school enrollment and grade attainment, with the estimated effects of the community shocks larger and more pervasive than the estimated effects of idiosyncratic shocks and with the estimated effects of shocks reported by men as large or larger than the estimated effects of shocks reported by women. Download Paper
Despite women’s significant improvement in educational attainment, underrepresentation of women in Science, Technology, Engineering, and Mathematics (STEM) college majors persists in most countries. We address whether one particular institution – single-sex schools – may enhance female – or male – students’ STEM careers. Exploiting the unique setting in Korea where assignment to all-girls, all-boys or coeducational high schools is random, we move beyond associations to assess causal effects of single-sex schools. We use administrative data on national college entrance mathematics examination scores and a longitudinal survey of high school seniors that provide various STEM outcomes (mathematics and science interest and self-efficacy, expectations of a four-year college attendance and a STEM college major during the high school senior year, and actual attendance at a four-year college and choice of a STEM major two years after high school). We find significantly positive effects of all-boys schools consistently across different STEM outcomes, whereas the positive effect of all-girls schools is only found for mathematics scores. Download Paper
Using data on MZ (monozygotic, identical) female twins from the Minnesota Twin Registry, we estimate the causal effect of schooling on completed fertility, probability of being childless and age at first birth, using the within-MZ twins methodology. We find strong cross-sectional associations between schooling and the fertility outcomes and some evidence that more schooling causes women to have fewer children and delay childbearing, though not to the extent that interpreting cross-sectional associations as causal would imply. Our conclusions are robust when taking account of (1) endogenous within-twin pair schooling differences due to reverse causality and (2) measurement error in schooling. We also investigate possible mechanisms and find that the effect of women’s schooling on completed fertility is not mediated through husband’s schooling but rather through age at first marriage. Download Paper
Conditional cash transfer (CCT) programs link public transfers to human capital investment in hopes of alleviating current poverty and reducing its intergenerational transmission. Whereas nearly all studies of their impacts have focused on youth, these CCT programs may also have an impact on aging adults, by increasing household resources or inducing changes in allocations of time of various household members, that may be of substantial interest, particularly given the rapid aging of most populations. This paper contributes to this under-researched area by examining health and work impacts on the aging for the bestknown and most influential of these programs, the Mexican PROGRESA/Oportunidades program. For a number of health indicators, the program appears to significantly improve health, with impacts that are larger with a greater time receiving the program. However, most of these health impacts are concentrated on women. Download Paper
Conditional cash transfer (CCT) programs have spread worldwide as a new form of social assistance for the poor. Previous evaluations of CCT programs focus mainly on rural settings, and little is known about their effects in urban areas. This paper studies the short-term (one and two-year) effects of the Mexican Oportunidades CCT program on urban children/youth. The program provides financial incentives for children/youth to attend school and for family members to visit health clinics. To participate, families had to sign up for the program and be deemed eligible. Difference-in-difference propensity score matching estimates indicate that the program is successful in increasing school enrollment, schooling attainment and time devoted to homework and in decreasing working rates of boys. Download Paper
Many studies document significantly positive associations between schooling attainment and wages in developing countries. But when individuals enter occupations subsequent to completing their schooling, they not only face an expected work-life path of wages, but a number of other occupational characteristics, including wage risks and disability risks, for which there may be compensating wage differentials. This study examines the relations between schooling on one hand and mean wages and these two types of risks on the other hand, based on 77,685 individuals from the wage-earning population as recorded in six Labor Force Surveys of Pakistan. The results suggest that schooling is positively associated with mean total wages and wage rates, but has different associations with these two types of risks: Disability risks decline as schooling increases but wage risks, and even more, wage rate risks increase as schooling increases. The schooling-wage risks relation, but not the schooling-disability risks relation, is consistent with there being compensating differentials. Download Paper
Most investigations of the importance of and the determinants of adult cognitive skills assume that (a) they are produced primarily by schooling and (b) schooling is statistically predetermined. But these assumptions may lead to misleading inferences about impacts of schooling and of pre-schooling and post-schooling experiences on adult cognitive skills. This study uses an unusually rich longitudinal data set collected over 35 years in Guatemala to investigate production functions for adult (i) reading-comprehension and (ii) nonverbal cognitive skills as dependent on behaviorally-determined pre-schooling, schooling and postschooling experiences. Major results are: (1) Schooling has significant and substantial impact on adult reading comprehension (but not on adult nonverbal cognitive skills) but estimates of this impact are biased upwards substantially if there are no controls for behavioral determinants of schooling in the presence of persistent unobserved factors such as genetic endowments and/or if family background factors that appear to be correlated with genetic endowments are included among the first-stage instruments. (2) Both preschooling and post-schooling experiences have substantial significant impacts on one or both of the adult cognitive skill measures that tend to be underestimated if these pre- and post-schooling experiences are treated as statistically predetermined in contrast to the upward bias for schooling, which suggests that the underlying physical and job-related components of genetic endowments are negatively correlated with those for cognitive skills. (3) The failure in most studies to incorporate pre- and post-schooling experiences in the analysis of adult cognitive skills or outcomes affected by adult cognitive skills is likely to lead to misleading over-emphasis on schooling relative to these pre-and post-schooling experiences. (4) Gender differences in the coefficients of the adult cognitive skills production functions are not significant, suggesting that most of the fairly substantial differences in adult cognitive skills favoring males on average originate from gender differences in schooling attainment and in experience in skilled jobs favoring males. These four sets of findings are of substantial interest in themselves. But they also have important implications for broader literatures, reinforcing the importance of early life investments in disadvantaged children in determining adult skills and options, pointing to limitations in the cross-country growth literature of using schooling of adults to represent human capital, supporting hypotheses about the importance of childhood nutrition and work complexity in explaining the "Flynn effect" of substantial increases in measured cognitive skills over time, and questioning the interpretation of studies that report productivity impacts of cognitive skills without controlling for the endogeneity of such skills. Download Paper
Early childhood nutrition is thought to have important effects on education, broadly defined to include various forms of learning. We advance beyond previous literature on the effect of early childhood nutrition on education in developing countries by using unique longitudinal data begun during a nutritional experiment during early childhood with educational outcomes measured in adulthood. Estimating an intent-to-treat model capturing the effect of exposure to the intervention from birth to 36 months, our results indicate significantly positive, and fairly substantial, effects of the randomized nutrition intervention a quarter century after it ended: increased grade attainment by women (1.2 grades) via increased likelihood of completing primary school and some secondary school; speedier grade progression by women; a one-quarter SD increase in a test of reading comprehension with positive effects found for both women and men; and a one-quarter SD increase on nonverbal cognitive tests scores. There is little evidence of heterogeneous impacts with the exception being that exposure to the intervention had a larger effect on grade attainment and reading comprehension scores for females in wealthier households. The findings are robust to an array of alternative estimators of the standard errors and controls for sample attrition. Download Paper
Understanding the determinants of individuals' perceptions of their risk of becoming infected with HIV and their perceptions of acceptable strategies of prevention is an essential step towards curtailing the spread of this disease. We focus in this paper on learning and decision-making about AIDS in the context of high uncertainty about the disease and appropriate behavioral responses, and we argue that social interaction is animportant determinant of risk perceptions and the acceptability of behavioral change. Using longitudinal survey data from rural Kenya and Malawi, we test this hypothesis. We investigate whether social interactions-and especially theextent to which social network partners perceive themselves to be at risk -exert causal influenceson respondents' risk perceptions and on one approach to prevention, spousal communication about the threat of AIDS to the couple and their children. The study explicitly allows for the possibility that important characteristics, such as unobserved preferences or community characteristics, determine not only the outcomes of interest but also the size and composition of networks. The most important empirical result is that social networks have significant and substantial effects on risk perception and the adoption of new behaviors even after controlling for unobserved factors. Download Paper
Interest in estimating the impact of school quality on earnings has increased. But most studies on this topic have important limitations, particularly in studies for developing countries. They tend to ignore behavioral decisions regarding schooling and individual and family background characteristics, use school quality measures aggregated to the regional level, and rely on crude indicators of teacher quality. These limitations may explain why the micro evidence of important school quality effects is scant. Moreover, the question of the relative rates of return, in terms of earnings, to improving school quality versus raising quantity has not been addressed. The data demands for estimating such rates of return are considerable. This paper presents a conceptual framework for undertaking such estimates, uses special data collected for this study, and makes estimates within a framework that controls for important individual and household choices, including the duration of schooling and subsequent participation in the wage labor market. Subject to qualifications because such an ambitious strategy stretches the limits of the even the special data that we collected, the estimates suggest that in rural Pakistan rates of return are much higher for investing in primary school quality or quantity than for investing in middle schools and, at the primary school level, somewhat higher for expanding low-quality schools (predominantly for girls) than for increasing quality in existing schools. More generally, the methods adopted here permit a more satisfactory assessment in developing economies than previously of the rates of return to improving school quality versus increasing quantity and their implications for educational policy. Download Paper
We use survey-based data on siblings to assess the potential role of bequests in either redistributing income among siblings or affecting offspring behavior as implied by prominent models. The data are not focused on the upper tail of the wealth distribution and include both own and sib reports on own bequests and on sib's bequests, enabling the use of a flexible measurement model. Our results indicate tha bequests are received by almost two-thirds of eligible decedents, average bequest amounts are a significant fraction of annual earnings, and there are significant differences between siblings with respect to schooling, earnings, and visits with parents. However, there are not significnat sib differences in bequests once measurement error is incorporated into the analysis. Download Paper
The assessment of the impact of social programs is the subject of lively, sometimes heated debate over whether program evaluation is best conducted either by comparing mean outcomes from a randomized intervention or by using econometric techniques with nonrandom samples. This paper contributes to this debate through an examination of PROGRESA, a Mexican anti-poverty and human resource program, on child nutritional status. PROGRESA was randomly assigned at the locality level. However, a shortage in the availability of one component- a nutritional supplement provided to preschool children -led local administrators to exercise discretion in its delivery, systematically favoring those children with poorer nutritional status. While comparisons of mean outcomes suggest that PROGRESA had no or a negative effect on nutritional status, estimates that control for this heterogeneity using child specific fixed effects find that PROGRESA had significant and substantial positive impacts in increasing stature. The long-term consequences of these improvements are non-trivial; its impact working through adult height alone may result in a 2.9% increase in lifetime earnings. Download Paper
</p> This paper provides a general framework for integration of high-frequency intraday data into the measurement, modeling, and forecasting of daily and lower frequency volatility and return distributions.  Most procedures for modeling and forecasting financial asset return volatilities, correlations, and distributions rely on restrictive and complicated parametric multivariate ARCH or stochastic volatility models, which often perform poorly at intraday frequencies. Use of realized volatility constructed from high-frequency intraday returns, in contrast, permits the use of traditional time series procedures for modeling and forecasting. Building on the theory of continuous-time arbitrage-free price processes and the theory of quadratic variation, we formally develop the links between the conditional covariance matrix and the concept of realized volatility. Next, using continuously recorded observations for the Deutschemark / Dollar and Yen / Dollar spot exchange rates covering more than a decade, we find that forecasts from a simple long-memory Gaussian vector autoregression for the logarithmic daily realized volatilities  erform admirably compared to popular daily ARCH and related models. Moreover, the vector autoregressive volatility forecast, coupled with a parametric lognormal-normal mixture distribution implied by the theoretically and empirically grounded assumption of normally distributed standardized returns, gives rise to well-calibrated density forecasts of future returns, and correspondingly accurate quantile estimates. Our results hold promise for practical modeling and forecasting of the large covariance matrices relevant in asset pricing, asset allocation and financial risk management applications. Download Paper
Two major health-related policy objectives are to increase the birthweights of children in low-birthweight populations and to reduce weight or body mass among most adults. There have been a number of previous studies on these topics. However, the literatures concerned with the consequences of weight gain at birth or in adulthood generally do not provide a clear interpretation of the observed linkages between physical characteristics, adult human capital investments and adult earnings. A problem with prior studies of the consequences of birthweight variation, for example, is that the policy-relevant effects of increasing the nutrition received by a fetus and possible genetic influences on fetal development are not distinguished. Moreover, generally researchers are inattentive to estimation problems that arise from endowment heterogeneity in assessing the effects of anthropometrics on adult human capital. Three recent exceptions to this generalization use data on relatives, but their resolutions of these estimation problems are incomplete. For example, the sibling-based studies ignore the responsiveness of resource allocations in the family to endowment differences.  This paper obtains improved estimates of the impacts of anthropometrics at birth and in adulthood on critical outcomes over the life cycle within a context in which individuals are born with health and earnings endowments that may be correlated with each other and across generations and optimally invest in health and earnings capacity. A simple three-period optimizing model is constructed that determines investments in human capital and physical characteristics and that incorporates endowment heterogeneity. The model (i) illustrates the difficulties in identifying the effects of at-birth and adult physical characteristics in the labor market and (ii) shows how both the distinct roles of endowments and of early health investments can be identified using data on identical twins. Estimates using use new survey data on female twins collected by the authors from a sample from the Minnesota Twins Registry provide a number of clear results. (1) Increasing fetal growth, for given endowments, has a significant positive effect on subsequent schooling attainment. The effect of increasing birthweight on schooling, moreover, is underestimated by 50% if there is no control for genetic endowments as is the case for cross-sectional estimates. This suggests that either nutrient consumption is negatively correlated with genetic endowments or that health and ability endowments are negatively correlated. (2) Intrauterine nutrient consumption does not have effects that persist to affect significantly adult BMI - increasing birthweight is not a cause of adult obesity. (3) The genetic birthweight endowment also is the component of birthweight that plays the dominant role in the intergenerational correlation of birthweights. (4) In contrast, intrauterine nutrient consumption plays the dominant role in determining adult height, consistent with the literature that makes use of height statistics to gage childhood nutritional investments over time and across countries. (5) The significant inverse association between adult BMI and wages found in cross-sectional estimates solely reflects a correlation between unmeasured earnings endowments and BMI, and disappears with control for endowments common to monozygotic (MZ) twins. (6) The significant positive association between adult height and wages found in cross-sectional estimates is increased substantially with control for endowments. There is thus evidence that augmenting birthweight in low-birthweight populations, which evidently increases both adult schooling attainment and height, has real labor-market payoffs, while the returns to controlling adult body mass in high-income settings may be illusory, at least in terms of labor market consequences for adults of prime labor-force age. Download Paper
New data on identical female and male twins are used to estimate the impact of increasing parental schooling on child schooling that incorporates the existence of unmeasured heritable traits and marital sorting. These data yield cross sectional estimates that are consistent with previous studies of the impact of parental schooling on child schooling attainment. However, when twinning is exploited to estimate intergenerational schooling effects, the results are strikingly different. Controlling for women's earnings and childrearing endowments and husband's endowments and schooling leads to a marginally negative rather than a significantly positive coefficient for mother's schooling in the determination of child schooling. Download Paper
 This paper applies a new approach to the estimation of the impact of policy, both the levels and the changes, on wage differentials using a new high-quality data set on wage differentials by schooling level for 18 Latin American countries for the period 1977-1998. The results indicate that liberalizing policy changes overall have had a short-run disequalizing effect of expanding wage differentials, although this effect tends to fade away over time. This disequalizing effect is due to the strong impact of domestic financial market reform, capital account liberalization and tax reform. On the other hand, privatization contributed to narrowing wage differentials and trade openness had no significant effect on wage differentials. Technological progress, rather than trade flows, appears to be a channel through which policy changes are affecting inequality. Download Paper
This paper uses a large, nonexperimental data set to evaluate the effects of a preschool enrichment program in a developing country on cognitive, psycho social, and anthropometric outcomes. Outcomes are shown to be highly dependent on age and duration of exposure to the program. To minimize the impact of distributional assumptions, program impacts are estimated nonparametrically as a function of age and duration. A generalized version of the method of matching is developed and used to control for nonrandom selectivity into the program or into alternative program durations. The estimates obtained using this method reveal a different pattern of program impacts with respect to age and duration than does a parametric model under more restrictive functional form assumptions. The estimates based on matching show a greater dependence of test score impacts on duration of exposure to the program and show larger impacts for the anthropometric measures for a range of durations.  Impact estimates are based on three different comparison groups: children in the same communities in which the program was introduced who were not in the program, children in similar communities in which the program had not yet been introduced, and children who were in the program for a month or less. The average impact estimates for test score outcomes are robust to the three alternative comparison groups. The preschool program is found to increase cognitive and psycho social test scores, but only for children who participated in the program for at least seven months. The anthropometric results for weight differ substantially depending on which comparison group is used, suggesting that estimates based on the first two comparisons are contaminated by important unobserved characteristics related to program entry. The preferred estimates based on the third comparison group indicate that the program tends to improve the anthropometric outcomes, again with initially increasing effects as the duration of program participation increases. Cost benefit analysis based on these estimates and other assumptions indicate fairly high rates of return for this program. Download Paper
A new anti poverty program in Mexico, PROGRESA, provides monetary transfers to families that are contingent upon their children's regular attendance at school. The benefit levels are intended to offset the opportunity costs of not sending children to school and vary with the grade level and gender of the child. The initial phase of the program was implemented as a randomized social experiment. This paper uses a Markov schooling transition model applied to the experimental data to assess the impact of the educational subsidy program along several dimensions, including effects on initial ages of school entry, dropout rates, grade repetition rates, and school reentry rates. The findings show that the program effectively reduces drop out rates and facilitates progression through the grades, particularly during the transition from primary to secondary school. Results based on a simulation evaluating the effects of longer terms of exposure to the program indicate that if children were to participate in the program between ages 6 to 14, they would experience an increase of 0.6 years in average educational attainment levels years and an increase of 19% in the percentage of children attending junior secondary school. Download Paper
</p> A newly-assembled data set that combines national household survey data, census data and satellite images of land use in rural India over a 29-year period is used to obtain estimates of economic growth and population effects on forests, to identify the mechanisms by which these factors affect land use, and to address whether forest areas are efficiently managed where community land management is present.  The evidence suggests that increases in the returns to alternative uses of land induced by agricultural technical change and population growth, combined with the difficulty of monitoring forest-resource extraction, are the major contributing factors to deforestation.   Download Paper
This paper first discussed a general framework for thinking about the impact of mothers schooling on child education and then surveys what we know on the basis of all 237 estimates that have been located.  Examination of available estimates in light of this general framework suggests that knowledge on the impact of women's schooling on child education generally could be improved with more clarity about what model is estimated, roles of possibly important unobserved variables such as preferences and abilities, distinctions between particular and more general total effects and use of broader indicators of both mother's and child's education that capture outcomes rather than primarily time-in-school inputs.  Download Paper
Increased investment in schooling is often promoted as a key development strategy aimed at promoting economic growth. Most of the micro evidence that has been used to support the importance of schooling in augmenting incomes in low-income countries comes mainly from data describing the returns to schooling for men (e.g, Psacharopolous, 1994).  Given the relatively low rates of participation by women in formal-sector labor markets in such countries, information on the potential contribution of women’s schooling to income is less available and where found problematical to interpret due to labor market selectivity. Download Paper
Child health is widely perceived to affect strongly schooling. But evidence is quite limited because numerous studies based on socioeconomic surveys fail to consider the endogeneity of child health, measurement error, and the impact of unobserved fixed and choice inputs. This paper shows that a priori the resulting biases may be positive or negative depending on which of a number of household allocation behaviors dominate and what is the nature of any unobserved choice inputs in educational production. Then illustrative empirical analysis, using rich data from Ghana, is presented, with the following results: (1) IV estimates based on observed family and community characteristics similar to those used in other studies suggest a downward bias in OLS. (2) Family and community fixed effects estimates suggest that the direction of the bias in standard estimates is upward and that the true effects of the range of observed child health on school success is not significant despite the strong association that leads to the appearance of an effect in standard OLS or IV estimates using family and community variables. (3) The usual assumption that there are no unobserved choice inputs in educational production probably leads to an upward bias in the estimated impact of child health on schooling even if there is good control for the endogeneity of child health and measurement error. (4) Child health also does not significantly affect child cognitive achievement through schooling attainment; consideration of the relations that usually have been used to investigate such a possibility, moreover, suggests that the coefficients that are usually estimated are not coefficients that represent the impact of child health on child schooling. (5) The preferred estimates control for unobserved family and community fixed effects and are robust to other estimation problems, so the standard estimates overstate the impact of child health in the observed range on child schooling success, which should strike a cautionary note about the interpretation of the many production function estimates in the literature, including, but not limited to those that focus on household production. Download Paper
Schooling is widely seen as critical for income generation in all types of economies. A growing concern among many has been the possibility of increasing inequality in part due to children from higher-income households obtaining more schooling and reaping greater gains from schooling than children from lower-income households. There are many empirical studies for various societies that tend to find significantly positive, but small associations between household income and schooling. But these studies generally have three major limitations for the purpose of characterizing the degree of association between household income and schooling-related investments: (1) use of income indicators that may be contaminated by relatively large measurement errors and endogeneity, (2) inclusion of other household, community and schooling variables that may represent part of the association with income in empirical estimates, and (3) use of limited indicators of schooling. This paper uses a rich new household survey-commune-school facility survey from Viet Nam to illustrate how important these limitations may be. The estimates suggest: (1) predicted income (expenditure) tends to yield estimates of much stronger associations than does current income or expenditures, (2) controlling for variables such as in most previous studies reduces the estimated associations with income substantially, and (3) including a wide range of schooling-related variables leads to more nuanced understanding of income-schooling associations, with some benefits for children from poorer households but a dominant tendency for school and private behaviors to favor significantly and in many cases substantially children from higher-income households. Download Paper
Better health and nutrition are thought to improve children's performance in school, and therefore their productivity after school. Most literature ignores the fact that child health and schooling reflect behavioral choices, so the estimated impact of health and nutrition on a child's schooling reflects biases in the studies. Using an explicit dynamic model for preferred estimates, the authors use longitudinal data to investigate how children's health and nutrition affect school enrollment in rural Pakistan. They use price shocks when children were of preschool age to control for behavior determining the measure of children's health and nutrition stock. The authors find that children's health and nutrition is three times more important for enrollment than is suggested by"naive estimates"that assume that children's health and nutrition is predetermined rather that determined by household choices. Not only does improved nutrition increase enrollments, it does so more for girls, thus closing a portion of the gender gap. These results strongly reinforce the importance of using estimation methods that are consistent with the economic theory of households to explore the impact of some choice variables on others, using socioeconomic behavioral data. Private behaviors and public policies that affect the health and nutrition of children have much greater effect on school enrollment and on eventual productivity than suggested by early literature methods. Download Paper