Becker Friedman Institute
for Research in Economics
The University of Chicago

Research. Insights. Impact. Advancing the Legacy of Chicago Economics.

J24: Human Capital; Skills; Occupational Choice; Labor Productivity

Risky Business? The Effect of Majoring in Business on Earnings and Educational Attainment

Rodney J. Andrews, Scott Imberman, Michael Lovenheim

One of the most important decisions a student can make during the course of his or her college career is the choice of major. The field of study a student selects translates directly into the types of skills and knowledge he or she will obtain during college, and it can influence the type of career chosen after postsecondary education ends. Business is one of the most popular majors in the US, accounting for 19% of all college degrees granted.

Vocational Training Programs and Youth Labor Market Outcomes: Evidence from Nepal

Shubha Chakravarty, Mattias Lundberg, Plamen Nikolov, Juliane Zenker

Lack of skills is arguably one of the most important determinants for high levels of unemployment and poverty. Targeting youth unemployment and also important because of its strong influence on other important social outcomes. Using a “fuzzy” regression discontinuity design, we examine the employment effects of a vocational training program in Nepal launched in 2009 over a three-year period. We find program participation generated an increase in non-farm employment of 28 percentage points for an overall gain of 95 percent, three years into the program.

Adults Behaving Badly: The Effects of Own and Peer Parents’ Incarceration on Adolescent Criminal Activities

Jason Fletcher

A maturing literature across the social sciences suggests important impacts of the intergenerational transmission of crime as well as peer effects that determine youth criminal activities. This paper explores these channels by examining gender-specific effects of maternal and paternal incarceration from both own-parents and classmate-parents. This paper also adds to the literature by exploiting across-cohort, within school exposure to peer parent incarceration to enhance causal inference.

Occupational Licensing Reduces Racial and Gender Wage Gaps: Evidence from the Survey of Income and Program Participation

Peter Blair, Bobby Chung

In order to work legally, 29% of U.S. workers require an occupational license. We show that occupational licensing reduces the racial wage gap between white and black men by 43%, and the gender wage gap between women and white men by 36%-40%. For black men, a license is a positive indicator of non-felony status that aids in firm screening of workers, whereas women experience differentially higher returns to the human capital that is bundled with occupational licenses.

Educational Investment Responses to Economic Opportunity: Evidence from Indian Road Construction

Anjali Adukia, Sam Asher, Paul Novosad

The rural poor in developing countries, once economically isolated, are increasingly being connected to regional markets. Whether these new connections crowd out or encourage educational investment is a central question. We examine the impacts on educational choices of 115,000 new roads built under India’s flagship road construction program. We find that children stay in school longer and perform better on standardized exams.

Interactions between Financial Incentives and Health in the Early Retirement Decision

Pilar García-Goméz, Titus Galama, Eddy van Doorslaer, Ángel López-Nicholás

We present a theory of the relation between health and retirement that generates testable predictions regarding the interaction of health, wealth and financial incentives in retirement decisions. The theory predicts (i) that wealthier individuals (compared to poorer individuals) are more likely to retire for health reasons (affordability proposition), and (ii) that health problems make older workers more responsive to nancial incentives encouraging retirement (reinforcement proposition).

Early and Late Human Capital Investments, Borrowing Constraints, and the Family

Elizabeth Caucutt, Lance Lochner

We develop a dynastic human capital investment framework to study the importance of potential market failures--family borrowing constraints and uninsured labor market risk--as well as the process of intergenerational ability transmission in determining human capital investments in children at different ages. We explore the extent to which policies targeted to different ages can address these market failures, potentially improving economic efficiency and equity.

The Evolution of Awareness and Belief Ambiguity in the Process of High School Track Choice

Pamela Giustinelli, Nicola Pavoni

In this article, we provide novel survey evidence on middle schoolers' knowledge and on how such knowledge evolves in the process of high school track choice. Children in our study display only partial awareness of the set of available tracks, and they report low confidence regarding their beliefs (i.e., substantial belief ambiguity) about their likelihood of a regular high school path. This is especially the case for lower-ranked tracks.

Earnings over the Life Course: General versus Vocational Education

Bart Golsteyn, Anders Stenberg

Two common hypotheses regarding the relative benefits of vocational versus general education are (1) that vocational skills enhance relative short-term earnings and (2) that general skills enhance relative long-term earnings. Empirical evidence for these hypotheses has remained limited. Based on Swedish registry data of individuals in short (2-year) upper secondary school programs, this study provides a first exploration of individuals’ earnings across nearly complete careers. The descriptive earnings patterns indicate support for both hypotheses (1) and (2).

Toothless Reforms? The Remarkable Stability of Female Labor Force Participation in a Top-Reforming Country

Norberto Pignatti, Karine Torosyan, Maka Chitanava

Low Female Labor Force Participation (FLFP) constitutes a foregone opportunity at both the macro and at the micro levels, potentially increasing the vulnerability of households and lowering the long-run development perspectives of a country. Most international organizations and national policy makers see low FLFP as a serious issue that needs to be addressed by adopting appropriate policies. We investigate the possible reasons of the remarkable stability of FLFP in a top-reforming upper-middle income country.