A Note on Why Quarter of Birth is Not a Valid Instrument for Educational Attainment

In their justification for using entrance cutoff dates and compulsory education laws as a natural experiment, the authors of Angrist and Krueger (1991) rightly give much attention to the effectiveness of compulsory attendance laws. However, the authors do not give proper attention to the decisions made by parents. If redshirting is commonplace and nonrandom, as it is in the ECLS-K data set, then the identifying assumption of monotonicity does not hold, and their identification scheme does not work. This problem is distinct from those discussed in Bound and Jaeger (2000).

Assessing the evidence on neighborhood effects from moving to opportunity

This paper presents a new perspective on results from the Moving to Opportunity (MTO) housing mobility program. Building on recent developments in the program evaluation literature, this paper defines several treatment effect parameters and then estimates and interprets these parameters using data from MTO. The evaluation framework is used to make a clear distinction between the interpretation of Intent to Treat (ITT) and Treatment on the Treated (TOT) parameters as program effects and Local Average Treatment Effect (LATE) parameters as neighborhood effects. This distinction helps to clarify that results from MTO are only informative about a small subset of neighborhood effects of interest. Tests for instrument strength show that MTO induced large changes in neighborhood poverty rates. However, it is also shown that MTO induced remarkably little variation in many of the other neighborhood and school characteristics believed to influence outcomes and that much of this variation was confined to the tails of these characteristics' national distributions. Consistent with prevailing theories of neighborhood effects, labor market and health outcomes improved when households moved to neighborhoods with characteristics at or above the national median. The evidence suggests housing mobility programs designed to induce moves to neighborhoods with characteristics in addition to or in lieu of low poverty might induce larger effects than MTO, and results point to the investigation of heterogeneity in program effects from MTO as a fruitful direction for future research.Housing policy ; Poverty

Redshirting, compulsory schooling laws, and educational attainment

A wide literature uses date of birth as an instrument to study the causal effects of educational attainment. This paper shows how parents delaying their children’s initial enrollment in kindergarten, a practice known as redshirting, can make estimates obtained through this identification framework all but impossible to interpret. A latent index model is used to illustrate how the monotonicity assumption in this framework is violated if redshirting decisions are made in a setting of essential heterogeneity. Empirical evidence is presented from the ECLS-K data set that favors this scenario; redshirting is common and heterogeneity in the treatment effect of educational attainment is likely a factor in parents’ redshirting decisions.Education

Community-based well maintenance in rural Haiti

The international community has pledged $11 billion to Haiti, a country where nongovernmental organizations (NGOs) provide nearly all public goods and services. This raises at least two questions: How can NGOs most effectively perform their own work, and how can NGOs integrate their programs into broader efforts organized by public institutions? This paper addresses these questions by evaluating the community-based model of Haiti Outreach (HO) that focuses on training communities to manage wells after they have been constructed. The effect of this management training is identified by comparing the outcomes of HO’s wells with a control group of wells that were refurbished by HO in the aftermath of the January 12, 2010, earthquake but then subsequently managed by other groups. Wells managed under the community-based approach are 8.7 percentage points more likely to be functioning after only one year. We also propose a social planner’s problem to quantify the tradeoff between equity and efficiency created by user fees that may be applied to many development programs. A social planner indifferent between standard and community-based interventions has strong preferences for sporadically providing water to the poorest members of a community at the expense of sustainably providing water to the majority of community members. Policy-makers deciding between alternative interventions should also give consideration to the community-based approach for its ability to build political institutions.Water-supply ; Rural development

Community-Based Well Maintenance in Rural Haiti

Under the Haiti Outreach (HO) model, HO asks communities for proposals to drill or refurbish a well. Then, they will only do so if the community agrees to form a maintenance committee; deposit a set amount per month for operation and maintence (committees decide who forms the community and how to set user fees); hire a guard (to enforce hours of operation, set by committees); and disseminate information through public meetings. These researchers found a unique opportunity to test the effectiveness of this community-based model as compared to standard well maintenance: following the earthquake in 2010, HO was asked to repair 158 wells and then turn them over to other groups. These wells did not receive the community-based management training, and thus serve as a comparison group. Although there are some weakness to this methodology, the author notes that it is difficult to imagine better data becoming available for evaluating alternative well maintenance approaches in rural Haiti. This paper also presents a model to quantify the tradeoff between equity and sustainabilty that characterizes the choice of whether or not to charge user fees

Continuity and Equilibrium Stability

This paper discusses the problem of stability of equilibrium points in normal form games in the tremling-hand framework. An equilibrium point is called perffect if it is stable against at least one seqence of trembles approaching zero. A strictly perfect equilibrium point is stable against every such sequence. We give a sufficient condition for a Nash equilibrium point to be strictly perfect in terms of the primitive characteristics of the game (payoffs and strategies), which is new and not known in the literature. In particular, we show that continuity of the best response correspondence (which can be stated in terms of the primitives of the game) implies strict perfectness; we prove a number of other useful theorems regarding the structure of best responce correspondence in normal form games.Strictly perfect equilibrium, best responce correspondence, unit simplex, face of a unit simplex

The growing difference in college attainment between women and men

Workers with more education typically earn more than those with less education, and the difference has been growing in recent decades. Not surprisingly, the percentage of the population going after and getting a college degree has been rising as well. Since the late 1970s, though, the increase in college attainment has stalled for men and gathered steam for women. Among college-age individuals, more women now graduate than men. Changes in labor market incentives appear to explain the increased investment in education made by women. But men’s investments in education have been much less responsive to the same incentivesEducation ; Women - Education

Monetary Equilibrium and the Differentiability of the Value Function

In this study we offer a new approach to proving the differentiability of the value function, which complements and extends the literature on dynamic programming. This result is then applied to the analysis of equilibrium in the recent class of monetary economies developed in [13]. For this type of environments we demonstrate that the value function is differentiable and this guarantees that the marginal value of money balances is well defined.value function ; optimal plans ; money

Interior Optima and the Inada Conditions

We present a new proof of the interiority of the policy function based on the Inada conditions. It is based on supporting properties of concave functions.growth model ; Inada conditions ; policy function

General equilibrium analysis in ordered topological vector spaces

The second welfare theorem and the core-equivalence theorem have been proved to be fundamental tools for obtaining equilibrium existence theorems, especially in an infinite dimensional setting. For well-behaved exchange economies that we call proper economies, this paper gives (minimal) conditions for supporting with prices Pareto optimal allocations and decentralizing Edgeworth equilibrium allocations as non-trivial equilibria. As we assume neither transitivity nor monotonicity on the preferences of consumers, most of the existing equilibrium existence results are a consequence of our results. A natural application is in Finance, where our conditions lead to new equilibrium existence results, and also explain why some financial economies fail to have equilibrium.Equilibrium; Valuation equilibrium; Pareto-optimum; Edgeworth equilibrium; Properness; ordered topological vector spaces; Riesz-Kantorovich formula; sup-convolution