Adult Earnings Research Articles

Accumulation of Opportunities Predicts the Educational Attainment and Adulthood Earnings of Children Born Into Low- Versus Higher-Income Households

Accumulation of Opportunities Predicts the Educational Attainment and Adulthood Earnings of Children Born Into Low- Versus Higher-Income Households

Is private education worth it? Evidence from school-to-work transitions in Chile

Using comprehensive longitudinal data from Chile, we examine the impact of attending a private high school on labor market outcomes. The empirical strategy exploits conditional independence assumptions and leverages the effects of self-selection based on ability. We establish that private high schools boost average adult earnings by 99–144 dollars a month (relative to public schools), equivalent to a 15%–22% premium. We then explore potential channels behind these effects. Both academic and non-academic factors emerge as mediators. Our findings highlight the importance of financial resources, as education investments have long-term impacts on private high school students, while yielding negligible effects for those attending public and voucher schools. Finally, we document the prominent role of firms as mediators of the private school advantages during the school-to-work transition. Our analysis provides new insights into the association between school choice and income disparities, even after controlling for pre-labor market academic performance.

The intergenerational effect of tuition-free lower-secondary education on children’s nutritional outcomes in Africa

ABSTRACT One in five child deaths under age 5 are a result of severe wasting. Malnutrition at early ages is linked to lifelong consequences, such as reduced cognitive skills, reduced earnings in adulthood and chronic health conditions. Countries worldwide have committed to addressing child undernutrition, and ending hunger is foundational to the Millennium Development Goals. In this paper, we study the intergenerational effect of providing free tuition in secondary school on future children’s nutrition. We combined a novel longitudinal dataset that captures educational policies for 40 African countries from 1990 to 2019 with the Demographic and Health Survey (DHS). We identified three countries that introduced free secondary education several years after implementing free primary education. Exploiting this variation in timing we estimate the additional impact of providing free secondary education over free primary education. Using a difference-in-difference approach, we find that introducing free secondary education significantly reduced wasting. Cohorts exposed to free secondary had an 18% relative decrease in wasting. The impact on cohorts exposed only to free primary was smaller and not statistically significant. Expanding free secondary education has long-term, intergenerational benefits and is an effective path to reducing malnutrition. Results are robust to different specifications.

The Potential Long-Run Impact of a Permanently Expanded Child Tax Credit

Inclusion of the expanded Child Tax Credit (CTC) in the 2021 American Rescue Plan was, for many, a feasibility test of the impact of a permanent child allowance in the U.S. The CTC expansion was short-lived, however, so evaluations of its effects cannot provide complete evidence on the long-run impacts of a permanent expansion of the benefit. Here, we predict the long-term effects of a permanently expanded, refundable CTC. We use theory from standard economic models, frameworks from behavioral science and child development, and empirical evidence from literature that has evaluated previous long-term cash and quasi-cash transfers to families with children. We find that provision of the benefit would lead to increased future adult earnings and tax payments; improved child health and longevity; and reduced costs in health care, crime, and child protection. We predict that benefits to society would outweigh costs nearly 10 to 1, with most benefits due to the tax credit’s refundability.

Mechanisms and pathways linking kindergarten behavior problems with mid-life employment earnings for males from low-income neighborhoods.

Childhood behavior problems are associated with reduced labor market participation and lower earnings in adulthood, but little is known about the pathways and mechanisms that explain these associations. Drawing on a 33-year prospective birth cohort of White males from low-income backgrounds (n = 1040), we conducted a path analysis linking participants' teacher-rated behavior problems at age 6 years-that is, inattention, hyperactivity, aggression-opposition, and low prosociality-to employment earnings at age 35-39 years obtained from tax records. We examined three psychosocial mediators at age 11-12 years (academic, behavioral, social) and two mediators at age 25 years (non-high school graduation, criminal convictions). Our findings support the notion that multiple psychosocial pathways-especially low education attainment-link kindergarten behavior problems to lower employment earnings decades later.

Gender differences in intergenerational effects of laid-off parents

This paper evaluates the gender differences in intergenerational effects of laid-off parents on children’s adult outcomes. Using the China Health and Nutrition Survey (CHNS) over the period from 1991 to 2015, we construct the children’s lengths of exposure to fathers’/mothers’ layoffs from state-owned enterprises (SOEs) retrenchment starting in the 1990 s before they turn 18 years old. We find that, when experiencing fathers’ layoffs for a longer period, only girls suffer a significant reduction in education outcomes and are hence more likely to have manual occupations; when suffering mothers’ layoffs for a longer period, boys’ education levels increase, but this advantage does not reduce their probability of having manual occupations. Although the gender difference in children’s education persists in their occupations, girls do not underperform in adult earnings compared to boys with similar family backgrounds. Instead, for girls with manual occupations, fathers’ layoffs increase their gardening income.

Exposures to ambient particulate matter are associated with reduced adult earnings potential

The societal costs of air pollution have historically been measured in terms of premature deaths (including the corresponding values of statistical lives lost), disability-adjusted life years, and medical costs. Emerging research, however, demonstrated potential impacts of air pollution on human capital formation. Extended contact with pollutants such as airborne particulate matter among young persons whose biological systems are still developing can result in pulmonary, neurobehavioral, and birth complications, hindering academic performance as well as skills and knowledge acquisition. Using a dataset that tracks 2014–2015 incomes for 96.2% of Americans born between 1979 and 1983, we assessed the association between childhood exposure to fine particulate matter (PM2.5) and adult earnings outcomes across U.S. Census tracts. After accounting for pertinent economic covariates and regional random effects, our regression models indicate that early-life exposure to PM2.5 is associated with lower predicted income percentiles by mid-adulthood; all else equal, children raised in high pollution tracts (at the 75th percentile of PM2.5) are estimated to have approximately a 0.51 decrease in income percentile relative to children raised in low pollution tracts (at the 25th percentile of PM2.5). For a person earning the median income, this difference corresponds to a $436 lower annual income (in 2015 USD). We estimate that 2014–2015 earnings for the 1978–1983 birth cohort would have been ∼$7.18 billion higher had their childhood exposure met U.S. air quality standards for PM2.5. Stratified models show that the relationship between PM2.5 and diminished earnings is more pronounced for low-income children and for children living in rural environments. These findings raise concerns about long-term environmental and economic justice for children living in areas with poor air quality where air pollution could act as a barrier to intergenerational class equity.

“O Youth and Beauty:” Children's looks and children's cognitive development

We use data from the 11 waves of the U.S. Study of Early Child Care and Youth Development 1991–2005, following children from ages 6 months through 15 years. Observers rated videos of them, obtaining measures of looks at each age. Given their family income, parents’ education, race/ethnicity, and gender, being better-looking raised subsequent changes objective learning outcomes. The gains imply a long-run impact on cognitive achievement of about 0.04 standard deviations per standard deviation of differences in looks. Similarly specified models describing changes in reading and arithmetic scores at ages 7, 11 and 16 in the U.K. National Child Development Survey 1958 cohort show larger effects, 0.20 standard deviations. The extra gains persist when instrumenting children's looks by their mother's looks, and do not work through measures of teachers’ reports of closeness to children, mothers’ reports of children's behavior, their victimization by bullies, or self-confidence. Results from the U.K. data show that greater childhood beauty raises educational attainment both directly and indirectly, through impacts on test scores, thus contributing to higher adult earnings.

Investing in human development and building state resilience in fragile contexts: A case study of early nutrition investments in Burkina Faso.

Maternal and early malnutrition have negative health and developmental impacts over the life-course. Consequently, early nutrition support can provide significant benefits into later life, provided the later life contexts allow. This study examines the limits of siloed investments in nutrition and illustrates how ignoring life-course contextual constraints limits human development benefits and exacerbates inequality, particularly in fragile contexts. This case study focuses on Burkina Faso, a country with high rates of early malnutrition and a fragile state. We modelled the impact of scaling up 10 nutrition interventions to 80% coverage for a single year cohort on stunting, nationally and sub-nationally, using the Lives Saved Tool (LiST), and the consequent impact on earnings, without and with a complementary cash-transfer in later life. The impact on earnings was modelled utilising the well-established pathway between early nutrition, years of completed schooling and, consequent adult earnings. Productivity returns were estimated as the present value of increased income over individuals' working lives, then compared to estimates of the present value of providing the cost of nutrition interventions and cash-transfers. The cost benefit ratio at the national level for scaled nutrition alone is 1:1. Sub-nationally the worst-off region yields the lowest ratio < 0.2 for every dollar spent. The combination of nutrition and cash-transfers national cost benefit is 1:12, still with regional variation but with great improvement in the poorest region. This study shows that early nutrition support alone may not be enough to address inequality and may add to state fragility. Taking a life-course perspective when priority-setting in contexts with multiple constraints on development can help to identify interventions that maximizing returns, without worsening inequality.

Child Sexual Abuse and Employment Earnings in Adulthood: A Prospective Canadian Cohort Study

Child sexual abuse remains a worldwide concern with devastating consequences on an individual's life. This longitudinal study investigates the associations between child sexual abuse (official reports versus retrospective self-reports) and subgroups by perpetrator identity (intrafamilial and extrafamilial), severity (penetration/attempted penetration, fondling/touching, noncontact), and chronicity (single, multiple episodes) and employment earnings in adulthood in a cohort followed for over 30 years. The Quebec Longitudinal Study of Kindergarten Children database was linked to child protection services (official reports of sexual abuse) and to Canadian government tax returns (earned income). The sample included 3,020 individuals in Quebec French-language school kindergartens in 1986/1988, followed until 2017, and assessed with retrospective self-reports at age 22 years. Tobit regressions were used for associations with earnings (ages 33-37 years), adjusting for sex and family socioeconomic characteristics in 2021-2022. Individuals who experienced child sexual abuse had lower annual earnings. Those with retrospective self-reported sexual abuse (n=340) earned $4,031 (95% CI= -7,134, -931) less annually at ages 33-37 years than nonabused individuals (n=1,320), with pronounced differences for those with official reports (n=20), earning $16,042 (95% CI= -27,465, -4,618) less. Individuals self-reporting intrafamilial sexual abuse earned $4,696 (95% CI= -9,316, -75) less than those who experienced extrafamilial sexual abuse, whereas those self-reporting penetration/attempted penetration earned $6,188 (95% CI= -12,248, -129) less than those who experienced noncontact sexual abuse. Earnings gaps were highest for severest child sexual abuse (official reports, intrafamilial, penetrative). Future studies should investigate the underlying mechanisms. Improving support for victims of child sexual abuse could yield socioeconomic returns.

High School Majors and Future Earnings

We study how high school majors affect adult earnings using a regression discontinuity design. In Sweden students are admitted to majors in tenth grade based on their preference rankings and ninth grade GPA. We find engineering, natural science, and business majors yield higher earnings than social science and humanities, with major-specific returns also varying based on next-best alternatives. There is either a zero or a negative return to completing an academic program for students with a second-best nonacademic major. Most of the differences in adult earnings can be attributed to differences in occupation, and to a lesser extent, college major. (JEL I21, I26, J24, J31)

Investigating the Determinants of Female Child Labour: An Analytic Hierarchy Process (AHP) Analysis

This exploratory article, on the basis of a comprehensive field survey, identifies and empirically examines the various key quantitative and qualitative determinants of female child labour in Haryana (India). These factors have been examined on three broader parameters, viz. economic, sociocultural and institutional by way of using a multiple-criteria decision-making (MCDM) technique, called the analytic hierarchy process model. The analysis clearly establishes that while the economic dynamics are certainly the elementary drivers of the supply of female child labour, this phenomenon is also attributed, and that too up to a significant extent, to several area-specific sociocultural factors, which are many times ignored. The study finds that three sub-criteria, viz. inadequate annual adult earnings, patriarchy and alcoholism have emerged as major sub-factors in this context. The outcomes of this study have several connotations, both for mitigation of the problem of female child labour as well as further research in this area. The government may emphasise more appropriate strategies like the improvements in labour market outcomes for socio-economically underprivileged sections, restraining alcoholism as well as creating awareness among the masses for bringing changes in the state’s orthodox cultural norms with regard to the girl children and child labour.

Trends in the academic achievement gap between high and low social class children: The case of Brazil

Since student achievement is related to educational attainment and to adult earnings, there is considerable interest in within-country achievement gaps between different social class groups, how they change over time, and the possible sources of those changes. In this paper, we analyze academic achievement gaps over a ten year period in Brazil. Our results suggest that social class inequality in public school student achievement on the Prova Brasil national test increased significantly among Brazilian 5th graders in the period 2007–2017, and that all of this increase was before 2013--indeed, mostly between 2011 and 2013. To the contrary, social class achievement inequality among 9th graders barely increased in 2007–2017, and that small increase appears to have occurred mainly in earlier years. We find that this increased achievement inequality among 5th graders was partly the result of increased inequality between schools with students of higher and lower average school class, and among municipalities with higher and lower income per capita and differing educational policies. Yet, a significant part of the increase is also related to changes in the within-school achievement gaps.

The role of working memory updating, inhibition, fluid intelligence, and reading comprehension in explaining differences between consistent and inconsistent arithmetic word-problem-solving performance

Children’s performance in arithmetic word problems (AWPs) predicts their academic success and their future employment and earnings in adulthood. Understanding the nature and difficulties of interpreting and solving AWPs is important for theoretical, educational, and social reasons. We investigated the relation between primary school children’s performance in different types of AWPs and their basic cognitive abilities (reading comprehension, fluid intelligence, inhibition, and updating processes). The study involved 182 fourth- and fifth-graders. Participants were administered an AWP-solving task and other tasks assessing fluid intelligence, reading comprehension, inhibition, and updating. The AWP-solving task included comparison problems incorporating either the adverb more than or the adverb less than, which demand consistent or inconsistent operations of addition or subtraction. The results showed that consistent problems were easier than inconsistent problems. Efficiency in solving inconsistent problems is related to inhibition and updating. Moreover, our results seem to indicate that the consistency effect is related to updating processes’ efficiency. Path analyses showed that reading comprehension was the most important predictor of AWP-solving accuracy. Moreover, both executive functions—updating and inhibition—had a distinct and significant effect on AWP accuracy. Fluid intelligence had both direct and indirect effects, mediated by reading comprehension, on the overall measure of AWP performance. These domain-general factors are important factors in explaining children’s performance in solving consistent and inconsistent AWPs.

The Causal Effect of Growing up in a Two-Parent Household on Child’s Adult Earnings

The children who grew up in two-parent households for their entire childhood earn more than the other children reared in non-intact parental families. The causal effect of growing up in a twoparent household on the child’s adult earnings is the hourly earnings difference between the children who grew up in intact families and their counterparts raised by parents who have ever divorced, separated, or widowed, holding relevant factors constant and accounting for endogeneity issues. I identify the causal effect by using the following specification strategies. First, I control the parental income and educational attainment, along with the child’s demographic characteristics (gender, age, race, region, and tenure), to disentangle the childhood family intactness effect from the other parental influence. Second, I take into account the unobserved clan-specific heterogeneity, such as family traditions and genetic characteristics, by fitting the clan fixed effects (FE) models. Third, I use two instrumental variables (IVs), the state divorce rate and the no-fault divorce law effectiveness, for the endogenous childhood family structure and adopt the two-stage least squares (2SLS) approach to further alleviate the omitted variable bias. The estimates are around 0.16, suggesting that the children who grew up in a twoparent household earn about 16% more in adulthood than their counterparts from non-intact families, other things equal. The effect goes through three channels. The child’s education, health, and marital behavior are the mediator variables representing the three observable channels through which childhood family intactness affects the child’s adult earnings. The effect of growing up in a two-parent family on the child’s adult earnings varies with parental income and education. The effect is larger and more significant for sons than for daughters. The heterogeneous pattern of the effect is consistent with the parental utility maximization model’s predictions. Growing up in a two-parent household not only has a positive and significant effect on the child’s adult earnings in absolute values, but it also encourages intergenerational relativeearnings improvement. An intact childhood family lowers the probability of the intergenerational relative-earnings worsening by 6.72% and increases the probability of the intergenerational relative-earnings improvement by 6.67%.

Investing in Infants: the Lasting Effects of Cash Transfers to New Families

Abstract We provide new evidence that cash transfers following the birth of a first child can have large and long-lasting effects on that child’s outcomes. We take advantage of the January 1 birthdate cutoff for U.S. child-related tax benefits, which results in families of otherwise similar children receiving substantially different refunds during the first year of life. For the average low-income single-child family in our sample, this difference amounts to roughly ${\$}$1,300, or 10% of income. Using the universe of administrative federal tax data in selected years, we show that this transfer in infancy increases young adult earnings by at least 1%–2%, with larger effects for males. These effects show up at earlier ages in terms of improved math and reading test scores and a higher likelihood of high-school graduation. The observed effects on shorter-run parental outcomes suggest that additional liquidity during the critical window following the birth of a first child leads to persistent increases in family income that likely contribute to the downstream effects on children’s outcomes. The longer-term effects on child earnings alone are large enough that the transfer pays for itself through subsequent increases in federal income tax revenue.

Headstrong Girls and Dependent Boys: Gender Differences in the Labor Market Returns to Child Behavior

The authors use data from the Children of the National Longitudinal Survey of Youth (C-NLSY79) to examine gender differences in the associations between child behavioral problems and early adult earnings. They find large and significant earnings penalties for women who exhibited more headstrong behavior and for men who exhibited more dependent behavior as children. By contrast, the authors observe no penalties for men who were headstrong or for women who were dependent. Although other child behavioral problems are also associated with labor market earnings, their associations did not differ significantly by gender. The gender differences in headstrong and dependent behavior are not explained by education, marriage, depression, self-esteem, health, or adult personality traits. One potential explanation is that these gender differences are a consequence of deviations from gender norms and stereotypes in the workplace.

The Long-Run Effects of Recessions on Education and Income.

This paper examines the long-run effects of the 1980-1982 recession on education and income. Using confidential Census data, I estimate difference-in-differences regressions that exploit variation across counties in recession severity and across cohorts in age at the time of the recession. For individuals age 0-10 in 1979, a 10 percent decrease in earnings per capita in their county of birth reduces four-year college degree attainment by 15 percent and earnings in adulthood by 5 percent. Simple calculations suggest that, in aggregate, the 1980-1982 recession led to 1.3-2.8 million fewer college graduates and $66-$139 billion less earned income per year.

Refugee children’s earnings in adulthood

Refugee children’s earnings in adulthood

Adult skills and labor market conditions during teenage years: cross-country evidence from international surveys

Abstract Do individuals finishing compulsory school in economic downturns end up with higher skills in adulthood than comparable individuals that finish compulsory school in economic upturns? This article answers this question by exploring data on country unemployment rates combined with individual data on educational attainment and adult skills in numeracy and literacy from the Program for the International Assessment of Adult Competencies. We find that completed education is countercyclical, and the same pattern is found for adult skills in numeracy and literacy. The results are fairly robust across different model specifications including fixed country and cohort effects and country-specific cohort trends. The results indicate that the labor market conditions at the time when young people make crucial educational decisions have long-lasting effect on skills and potential earnings in adulthood.