The Long-Run Effects of Parental Unemployment in Childhood (Submitted)
Parental job loss is a large, negative shock to the household that can affect children in both the short- and long-run. Little is known, however, about how the long-run impacts of job loss on children vary with the child's age at the time of displacement. This paper provides the first empirical evidence of the long-run effects of parental unemployment on children exposed before age 10 (and as young as 2), a period thought to be critical for child development. Using administrative tax data covering the universe of children born in Canada between 1972 and 1985 and random forest proximity matching, I estimate the causal effects of parental job loss experienced at different points in childhood on a child's income attainment. I find that children exposed to parental unemployment at ages 2 to 10 experience losses of 3 to 4 rank points in average earnings attainment in adulthood (approximately $2,500 per year). These children are also 36% more likely to receive welfare as adults and 4% less likely to pursue post-secondary education. Consistent with critical periods of child development, children who experience parental job loss before age 10 experience larger reductions in income attainment than children exposed at older ages. Decomposing these estimates, I show that the majority of my treatment effects are attributable to the timing of income losses experienced during childhood, as well as unemployment-induced moves to neighourhoods with less opportunity.
A draft of this paper has also been circulated under CLEF Working Paper #45.
Canadian Labour Economic Forum's Award for Young Researchers (2nd Prize)
A policy note building off of this paper was the 2022 winner C.D. Howe Institute's PhD Intelligence Memo Competition. A copy of that Intelligence Memo is available here.
The Great Migration and Educational Attainment in the South (Reject and Resubmit, Journal of Economic History)
It is well documented that the Great Migration erased many of the economic opportunities which had previously been available to Black families in the North. Very little attention, however, has been paid to how Black emigration in the South. Using a shift-share instrument to isolate the causal effects of Black emigration, I find that higher emigration rates caused the Black-white gap in average educational attainment to shrink considerably. My estimates imply that the average rate of Black emigration between 1940 and 1970 in Southern counties caused the Black-white gap in average educational attainment to close by 0.71 years for males and 0.77 years for females. Respectively, these effects amount to 146.6% and 76.5% of the overall reduction of the gap between 1940 and 1970, or 22.8% and 25.7% of the initial Black-white gap in average educational attainment in 1940. For males, I find that the Great Migration caused the educational attainment gap to close faster at the 75th percentile of the schooling distribution, but did not affect the gap at the 25th percentile or the median. Similarly, the Great Migration caused the Black-white gap in educational attainment to close faster for females at the median and the 75th percentile of the schooling distribution, but did not affect the gap at the 25th percentile. I provide suggestive evidence that these gains in equality of opportunity were the result of weaker support for segregation at the county-level.
Work in Progress
The Emergence of the Modern Welfare System: Evidence from the Mothers’ Pension Program
(with Shari Eli, Price Fishback, and Adriana Lleras-Muney)
(with Shari Eli, Price Fishback, and Adriana Lleras-Muney)
To understand the origins of the American welfare system, we study the political economy of the first welfare program in the United States, the Mothers' Pension, which paid monthly pensions to widowed mothers. Mothers' Pensions were legislated in 46 states between 1911 and 1931, though counties were left to administer, and often finance, the programs themselves. Delegating the payment of pensions to counties lead to irregular coverage in many states and is understood in the narrative evidence to have played a major role in the pensions ultimately being replaced by Aid to Dependent Children in the New Deal. We collect new, county-level data on the payment of pensions across the continental United States to understand these irregularities. Our data allow us to study the political and economic factors which led to the adoption of Mothers' Pension legislation at the state-level, and then uncover the roles these factors played in the administration of pensions at the county-level. We document a large gap between the legislated generosity of pensions and the benefits received by mothers throughout the United States. We provide descriptive evidence that local demographics and affluence played an important role both in the adoption of and the payment of Mothers' Pensions. States and counties with more affluent or larger immigrant populations, particularly immigrants from Southern and Eastern Europe, passed pension legislation earlier and were more likely to ultimately pay pensions. We also highlight important regional differences which suggest that institutions common to the South deterred the payment of Mothers' Pensions.
The Great Equalizer? The Intergenerational Transmission of Human Capital and Optimal Public School Provision
(with Torsten Jaccard)
(with Torsten Jaccard)
Parents differ in their ability to endow children with human capital and therefore earnings potential. The literature modelling parental decision-making in this vein, however, often presents the trade-off for parents as a matter of consumption: a parent can consume for themselves or purchase human capital for their child. This paper introduces a model of intergenerational inequality in which parents endogenously invest time in the development of their child's human capital. The productivity of a parent's time spent teaching her child is increasing in her human capital as is her wage rate of market labour, thus introducing ambiguity in the relationship between parental human capital and labour supply. We document the flexibility of this model through a number of exercises. We consider how the availability of teachers, in both private and public schools, allows parents to outsource their human capital time investments and reduces intergenerational income inequality. We solve the planner's problem, choosing the optimal level of skills provided by public schools funded with either (i) a labour income tax or (ii) a tax on monetary bequests. In both cases, the optimal level of public schooling selected by the planner reflects the strength of intergenerational correlation of innate ability. The less correlated innate ability is across generations, the greater the social gains from redistributive public schooling as this counteracts the concentration of high ability children in borrowing constrained households and therefore increases societal productivity.
Optimal Unemployment Insurance Benefits with Dependents
Unemployed parents may be forced to cut back on human capital investments made in their children, knowing that skills which are not developed today may affect future learning opportunities. These dynamic complementarities in human capital formation are not accounted for in the Baily-Chetty formula for optimal unemployment insurance. I add dependants to the canonical model of unemployment insurance, and the derive optimal unemployment insurance schedule with an arbitrary human capital production function. If there are dynamic complementarities in human capital formation, my model implies that unemployed parents with younger children will search for work with effort which is more inelastic to unemployment insurance benefits than parents with older children. Consequently, the optimal unemployment benefit schedule should pay higher benefits to unemployed parents with young children. Using administrative data from the Labour Force Survey in Canada, I exploit a natural experiment in 1990 where Canadian unemployment insurance benefits were increased across the country as a result of a legislative logjam (Baker and Rea, 1994) to test for heterogeneity in search effort by age of dependants.