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    ABSTRACT: This paper studies the asymptotic properties of partitioning estimators of the conditional expectation function and its derivatives. Mean-square and uniform convergence rates are established and shown to be optimal under simple and intuitive conditions. The uniform rate explicitly accounts for the effect of moment assumptions, which is useful in semiparametric inference. A general asymptotic integrated mean-square error approximation is obtained and used to derive an optimal plug-in tuning parameter selector. A uniform Bahadur representation is developed for linear functionals of the estimator. Using this representation, asymptotic normality is established, along with consistency of a standard-error estimator. The finite-sample performance of the partitioning estimator is examined and compared to other nonparametric techniques in an extensive simulation study.
    Journal of Econometrics. 06/2013; 174(2):127–143.
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    ABSTRACT: This paper proposes and analyzes a Social Security reform in which individuals no longer face the OASI payroll tax after, say, age 54 or a career of 34 years, and their subsequent earnings have no bearing on their benefits. We first estimate parameters of a life-cycle model. Our specification includes non-separable preferences and possible disability. It predicts a consumption-expenditure change at retirement. We use the magnitude of the expenditure change, together with households' retirement-age decisions, to identify key structural parameters. The estimated magnitude of the change in consumption-expenditure depends importantly on the treatment of consumption by adult children of the household. Simulations indicate that the reform could increase retirement ages one year or more, equivalent variations could average more than $4,000 per household, and income tax revenues per household could increase by more than $14,000.
    Journal of Public Economics 08/2012; 96(7-8):615-634.
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    ABSTRACT: Recent fiscal policies, including the 2008 stimulus payments and the 2009 Making Work Pay Tax Credit, aimed to increase household spending. This paper quantifies the spending response to these policies and examines differences in spending by whether the stimulus was delivered as a one-time payment or as a flow of payments from reduced withholding. Based on responses from a representative sample of households in the Thomson Reuters University of Michigan Surveys of Consumers, the paper finds that the reduction in withholding in 2009 boosted spending at roughly half the rate (13 percent) as the one-time payments (25 percent) in 2008.
    American Economic Journal: Economic Policy 08/2012; 4(3):216-50.
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    ABSTRACT: Decades of research on the US gender gap in wages describes its correlates, but little is known about why women changed their career paths in the 1960s and 1970s. This paper explores the role of "the Pill" in altering women's human capital investments and its ultimate implications for life-cycle wages. Using state-by-birth-cohort variation in legal access, we show that younger access to the Pill conferred an 8 percent hourly wage premium by age 50. Our estimates imply that the Pill can account for 10 percent of the convergence of the gender gap in the 1980s and 30 percent in the 1990s.
    American Economic Journal Applied Economics 07/2012; 4(3):225-254.
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    ABSTRACT: Almost 50 years after domestic US family planning programs began, their effects on childbearing remain controversial. Using the county-level roll-out of these programs from 1964 to 1973, this paper reevaluates their shorter and longer term effects on US fertility rates. I find that the introduction of family planning is associated with significant and persistent reductions in fertility driven both by falling completed childbearing and childbearing delay. Although federally funded family planning accounted for a small portion of the post-baby boom US fertility decline, my estimates imply that they reduced childbearing among poor women by 19 to 30 percent. (JEL I38, J12, J13, J18).
    American Economic Journal Applied Economics 04/2012; 4(2):62-97.
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    ABSTRACT: This paper explores how high school graduate men and women vary in their behavioral responses to beginning labor market entry during a recession. In contrast with previous related literature that found a substantial negative wage impact but minimal employment impact in samples of highly educated men, the empirical evidence presented here suggests a different outcome for the less well educated, and between the sexes. Women, but not men, who graduate high school in an adverse labor market are less likely to be in the workforce for the next four years, but longer-term effects are minimal. Further, while men increase their enrollment as a short-run response to weak labor demand, women do not; instead, they appear to temporarily substitute into home production. Women's wages are less affected then men's, and both groups' wages are less affected than the college graduates previously studied.
    The B E Journal of Economic Analysis & Policy 01/2012; 12(1).
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    ABSTRACT: This paper analyzes the large racial differences in progress through secondary school in South Africa. Using recently collected longitudinal data we find that grade advancement is strongly associated with scores on a baseline literacy and numeracy test. In grades 8-11 the effect of these scores on grade progression is much stronger for white and coloured students than for African students, while there is no racial difference in the impact of the scores on passing the nationally standardized grade 12 matriculation exam. We develop a stochastic model of grade repetition that generates predictions consistent with these results. The model predicts that a larger stochastic component in the link between learning and measured performance will generate higher enrollment, higher failure rates, and a weaker link between ability and grade progression. The results suggest that grade progression in African schools is poorly linked to actual ability and learning. The results point to the importance of considering the stochastic component of grade repetition in analyzing school systems with high failure rates.
    Journal of Development Economics 07/2011; 95(2):121-136.
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    ABSTRACT: This paper utilizes data on subjective probabilities to study the impact of the stock market crash of 2008 on households' expectations about the returns on the stock market index. We use data from the Health and Retirement Study that was fielded in February 2008 through February 2009. The effect of the crash is identified from the date of the interview, which is shown to be exogenous to previous stock market expectations. We estimate the effect of the crash on the population average of expected returns, the population average of the uncertainty about returns (subjective standard deviation), and the cross-sectional heterogeneity in expected returns (disagreement). We show estimates from simple reduced-form regressions on probability answers as well as from a more structural model that focuses on the parameters of interest and separates survey noise from relevant heterogeneity. We find a temporary increase in the population average of expectations and uncertainty right after the crash. The effect on cross-sectional heterogeneity is more significant and longer lasting, which implies substantial long-term increase in disagreement. The increase in disagreement is larger among the stockholders, the more informed, and those with higher cognitive capacity, and disagreement co-moves with trading volume and volatility in the market.
    Journal of Applied Econometrics 05/2011; 26(3):393-415.
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    ABSTRACT: This study uses data from pre- and post-crash surveys from the Cognitive Economics study to examine the impact of recent stock and labor market wealth losses on the planned retirement ages of older Americans. Regression estimates imply that the average wealth loss between July 2008 and May/June 2009 is associated with an increase in planned retirement age of approximately 2.5 months. Furthermore, pessimism about future stock market returns is found to amplify the impact of wealth losses on retirement timing.
    American Economic Review 05/2011; 101(3):40-44.
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    ABSTRACT: We report a new estimate of the effect of immigration on U.S. labor market outcomes that exploits a novel source of exogenous variation in migrant inflows: rainfall shocks in migration source areas. Spatial and temporal variation in rainfall within Mexico generates variation in immigration to the U.S. from specific Mexican locations. Crucially for our identification strategy, there is historical persistence in the U.S. destinations of migrants from particular source regions in Mexico. We predict changes in Mexican immigration in a given U.S. state on the basis of rainfall shocks occurring in Mexican locations that historically sent migrants to that U.S. state. Rainfall shocks at the Mexican state level, operating through established migration channels, are strongly correlated with changes in the Mexican labor force share in an annual panel of U.S. states. Using our instrument to estimate the effect of the Mexican labor force share on native labor market outcomes, we find that a higher Mexican share of the labor force leads to lower wages and higher unemployment for non-Mexicans. Our point estimates are substantially larger in magnitude than previous estimates of the wage impact of immigration.
    02/2011;
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