We analyze trends in labor market returns to psychological traits using data from half a million Finnish men from 2001 to 2015. Cognitive skills' value declined, while noncognitive skills' value increased. Our novel findings show that extraversion drives this rise, while conscientiousness remains stable. Extraversion's rising returns are most pronounced for lower earners and those on the employment margin. These traits predict different labor market paths: extraversion predicts lower education and more work experience, while cognitive ability and conscientiousness lead to higher education and high-paying jobs.
Using Danish registry data linked to the Labor Force Survey, we provide the first rigorous evidence with external validity on the hours-career nexus (positive association between hours and career success). Guided by three theories (human capital, rat race, tournament), we unpack the hours-career nexus through examining the differential effect of hours in the present firm and elsewhere, hours relative to peers' hours, standard versus evening/night/weekend hours, and the importance of sustaining long hours. Supplemented by the time use survey, we show that the gender gap in hours and career success is mostly due to gendered division of labor in household production.
We use data from a sample of adoptees born in Sweden to study to what extent the association between parental educational attainments and adult health of the child can be attributed to pre- or postbirth factors. We find significant and similarly sized associations between the educational attainment of both adoptive and biological parents and children's adult health outcomes. This suggests that growing up in a more educated household has long-term effects on health. However, the magnitude of these associations is roughly 50% smaller than the corresponding estimates obtained from children raised by their biological parents.
Do peers in childhood influence the development of noncognitive skills? Despite a large literature on peer effects, this question remains largely unanswered. In this paper, we use Big Five Inventory measures of personality traits linked to the administrative records of children randomly assigned to primary school classrooms. We find that children exposed to "left-behind" classmates whose parents have temporarily migrated away for work become less conscientious, agreeable, and emotionally stable. These impacts mirror the traits of their left-behind peers with whom children become friends.
The rise of accountability programs was perhaps the most noticeable change in American education during the 1990s and early 2000s. We measure how these programs affected students' long-run outcomes. We find increases in income, occupational skill level, and attainment, though the labor market effects are insignificant in most specifications. A typical accountability regime with high-stakes testing in seven grades increased attainment by 0.1 years. Last, the pattern of occupational skill usage does not support concerns about teaching to the test. Our results suggest that accountability was more likely beneficial than harmful for students' human capital.
This paper revisits the link between education-based marriage market sorting and income inequality. Leveraging Danish administrative data, we develop a novel categorization of “ambition types” that is based on starting wages and wage growth trajectories associated with detailed educational programs. We find a substantial increase in assortative matching by educational ambition over time, and the marriage market explains more than 40% of increasing inequality since 1980. In contrast, sorting trends are flat with the commonly-used educational level categorization. We conclude that the mapping from education to types matters crucially for conclusions about how education-based marriage market sorting contributes to rising income inequality. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
Weak local labor market conditions may change the trajectories of young adults who expected to find work. Well-documented responses include increasing educational investments, moving to more prosperous labor markets, or reducing labor force attachment. Military enlistment is a channel of potential adjustment that has received less study. Using data on Army recruits, we demonstrate a significant local response in enlistment to mass layoffs, characterized by increased labor supply to the military rather than increased local military recruiting. Our work documents the significance of military employment as an important arm of adjustment to local labor market shocks.
Firms are starting to replace humans with algorithms in important screening decisions, but there are potential spillovers of human biases contained in datasets to subsequent algorithmic predictions. When these biases are motivated by human prejudices, there are risks of algorithms perpetuating discrimination. I prove that when datasets are generated by a sufficiently discriminatory human, firms are more profitable when training discriminatory algorithms. If instead enough affirmative action is instituted in favor of a disadvantaged group, firms are more profitable when training algorithms that inflate scores for this group, but this effect diminishes with excess affirmative action.
We exploit a randomized high-stakes exam in Norwegian high schools to evaluate consequences of exam fail for an academically marginal and policy-relevant group of students. Failing the exam more than doubles the dropout rate. By age 30, we find evidence for lower educational attainment but no significant effects on labor market earnings. This may be explained by flexible pathways in the educational system: failing students are more likely to switch to vocational training and be self-employed in their early careers. We show that marginal students are disadvantaged and provide evidence on how policymakers can target this group.
We investigate the role of gender norms in shaping parental childcare following changes in the relative take-home pay of mothers and fathers. Exploiting variation from Swedish tax reforms, we estimate the elasticity of substitution in parental childcare for native and immigrant couples from a variety of countries characterized by varying gender norms. Couples originating from countries with relatively conservative norms are more likely to reallocate childcare to mothers following a reduction in the father's tax rate and less likely to reallocate childcare to fathers following a reduction in the mother's tax rate, thereby reinforcing a traditional allocation of childcare across parents.
This study examines the long-term effects of student loans and grants in Chile through a regression discontinuity design. It finds that university loans significantly boost degree completion, especially among women and low-income students, with marginal positive effects on employment and earnings for women. Vocational loans benefit only those ineligible for university loans. Conversely, grants, alongside loans, do not affect education or labor market outcomes. The limited impact of the tuition reductions induced by grants, combined with the substantial gains for low-income students, highlights the presence of credit constraints.
