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  5. From Micro Data to Public Policy
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From Micro Data to Public Policy

Paper Session

Sunday, Jan. 9, 2022 12:15 PM - 2:15 PM (EST)

Hosted By: Korea-America Economic Association
  • Chair: Yoosoon Chang, Indiana University

A Trajectories-Based Approach to Measuring Intergenerational Mobility

Steven Durlauf
,
University of Chicago

Abstract

This paper develops a new approach to intergenerational mobility in which the childhood and adolescent trajectory of parental incomes defines the conditional variables for assessing the persistence of socioeconomic status across generations. This perspective leads to the use of functional regression methods that allow us to analyze how parental income at each child’s age is associated with future economic or educational outcomes, producing mappings from the parental trajectories to offspring outcomes. We are therefore able to characterize collections of trajectories that lead to relative success versus deprivation in children. Using PSID data, we find a number of interesting patterns. Most notably, offspring economic and educational success is associated with rising income trajectories for parents, as well as the levels of the trajectories. The importance of such positive derivatives appears novel in the mobility literature. Further, later adolescence parental income plays a relatively large role on offspring educational and economic outcomes.

Entrepreneurial Reluctance: Talent and Firm Creation in China

Ruixue Jia
,
University of California-San Diego

Abstract

The theoretical literature has long noted that talent can be used in both the entrepreneurial and non-entrepreneurial sectors, and its allocation depends on the reward structure. We test these hypotheses by linking administrative college admissions data for 1.8 million individuals with the universe of firm registration records in China. Within a college, we find that individuals with higher college entrance exam scores – the most important measure of talent in this context – are less likely to create firms, but, when they do, their firms are more successful than those of their lower-score counterparts. Additional survey data suggest that higher-score individuals enjoy higher wages and are more likely to join the state sector. Moreover, the score-to-firm creation relationship varies greatly across industry, according to the size of the state sector. These findings suggest that the score is positively associated with both entrepreneurial ability and wage-job ability but higher-score individuals are attracted away by wage jobs, particularly those of the state sector.

The Heterogeneous Effects of Social Assistance and Unemployment Insurance: Evidence from a Life-Cycle Model of Family Labor Supply and Savings

Victoria Prowse
,
Purdue University

Abstract

We empirically analyze the optimal mix and optimal generosity of unemployment insurance and social assistance programs. To do so, we specify a structural life-cycle model of the labor supply, savings, and social assistance claiming decisions of singles and married couples. Partial insurance against wage and employment shocks is provided by social programs, savings, and the labor supplies of all adult household members. We show that the optimal policy mix is dominated by moderately generous social assistance, which guarantees a permanent universal minimum household income, with only a minor role for temporary earnings-related unemployment insurance. The optimal amount of social assistance is heavily influenced by income pooling in married households. This pooling provides partial insurance against negative economic shocks, reducing the optimal generosity of social assistance.

Macroeconomics and On-Line Prices

Roberto Rigobon
,
Massachusetts Institute of Technology

Abstract

Big Data sources can play a very useful role in research. The data tends to be large, collected almost in real time, usually at the individual level, and with many characteristics of the individual being recorded. It is easy to be mesmerized by the size and detail of the micro data – which some even call nano-data. This paper describes how pricing data from the web provides new insights into pricing behavior. And as in the case of prices from the web, Big Data sources provide opportunities to find new stylized facts and possibilities of testing our theories more carefully. However, there are significant challenges. One is the fact that we do not know exactly how to estimate confidence bands when the data collection is nonrandom – which is the case of almost every source of Big Data. This implies that many of the findings – with astronomical t-stats – might not be as significant as people have computed.

Discussant(s)
Serena Rhee
,
ChungAng University
Yujung Hwang
,
Johns Hopkins University
Siha Lee
,
McMaster University
Gee Hee Hong
,
International Monetary Fund
JEL Classifications
  • I3 - Welfare, Well-Being, and Poverty
  • J2 - Demand and Supply of Labor