Measurement and Cross-Country Differences

The results not shown indicated that there are very

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Unformatted text preview: ther than net worth as sample cutoff points. The results (not shown) indicated that there are very modest differences between the high and low ends of the earnings distribution. In no case were the differences remotely close to significant, and in Fortin – Econ 560 Lecture 5B 3.Strategies to Identify Causal Effects a. Adoptive Children A number of recent papers (e.g. Björklund, Lindahl, and Plug (2006), and Sacerdote (2007)) have used adoption data to ascertain what portion of the transmission of income and education comes from nature (the birth parents) and from nurture (the adoptive parents). If we assume that 1. Adopted children are randomly assigned to families as infants 2. Adopted children are treated exactly the same was as biological children o Then adoption can be considered to be an experimental intervention that randomly assigns children to families. Björklund, Lindahl, and Plug (2006) use the census of Swedish adoptees placed during 1962–1966 that contains information on the children’s educational and economic outcomes and on the characteristics of both their adoptive and biological parents. Fortin – Econ 560 Lecture 5B They measure children’s outcome in 1999 when children are 33–37 years of age and model the transmission of an outcome from the biological parent bp and the adoptive parent ap to the adopted child ac born in family j and adopted and reared in family i as y iqc 0 1 y bp 2 yiap iac j as where i represents unobserved child-specific characteristics. Comparing 1 and 2 allow them to distinguish what comes from pre-birth and post-birth factors. They find that both pre- and postbirth factors contribute to intergenerational earnings and education transmissions, but the prebirth factors are relatively more important for the transmission of education and postbirth factors relatively more important for the transmission of earnings. They also find that intergenerational associations are much stronger in families that are better educated and generate more income. A potential source of bias in this study is introduced by the combination of selecti...
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This document was uploaded on 02/26/2014 for the course ECON 560 at UBC.

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