Amanda Pallais’s research while affiliated with The National Bureau of Economic Research and other places

Referred workers are more likely than nonreferred workers to be hired, all else equal. In three field experiments in an online labor market, we examine why. We find that referrals contain positive information about worker performance and persistence that is not contained in workers’ observable characteristics. We also find that referrals perform particularly wellwhen working directlywith their referrers.However, we do not find evidence that referrals exert more effort because they believe their performance will affect their relationship with their referrer or their referrer’s position at the firm.

In an ongoing evaluation of post-secondary financial aid, we use random assignment to assess the causal effects of large privately-funded aid awards. Here, we compare the unbiased causal effect estimates from our RCT with two types of non-experimental econometric estimates. The first applies a selection-on-observables assumption in data from an earlier, nonrandomized cohort; the second uses a regression discontinuity design. Selection-on-observables methods generate estimates well below the experimental benchmark. Regression discontinuity estimates are similar to experimental estimates for students near the cutoff, but sensitive to controlling for the running variable, which is unusually coarse.

In 1997, the ACT increased the number of free score reports it provided to students from three to four, maintaining a $6 marginal cost for each additional report. In response to this$6 cost change, ACT-takers sent many more score reports and applications relative to SAT-takers. They widened the range of colleges they sent scores to, and low-income ACT-takers attended more-selective colleges. Back-of-the-envelope calculations suggest that the policy substantially increased low-income students’ expected earnings. This sizable behavioral change in response to such a small cost change suggests that in this setting, small policy perturbations can have large effects on welfare.

This paper by Caroline Hoxby and Christopher Avery provides a comprehensive analysis of the differences in college application patterns between high-achieving students of differing family incomes. It finds that high-achieving, low-income students apply to substantially different sets of colleges than do their higher-income peers. Over half of the low-income group send SAT or ACT test scores to at least one nonselective college and do not send scores to any college with a median test score within 15 percentiles of their own score. Only 8 percent send scores to a portfolio containing at least one "match" college, one "safety" college, and no nonselective college. This paper is not the first to note that low-income students apply to different sets of colleges than high-income students (see, for example, Spies 2001, Bowen and others 2005, and Pallais and Turner 2006). However, it is distinguished by its comprehensiveness and the sheer amount of data that allow the authors to fully characterize the application choices of high-achieving students. The paper starts with data on everyone in the high school class of 2008 who took either the ACT or the SAT I. Then it links these students to the colleges they sent scores to, to data on their high schools, and to data on their census block and zip code, as well as to information on whether and where they ultimately enrolled in college and whether they had completed a 4-year degree by 2012. After showing the differences in application patterns between high-and low-income high achievers, the paper considers the characteristics both of those low-income students whose application behavior is similar to high-income students' (what the authors call "achievement-typical" students) and of those who do not apply to selective institutions ("income-typical" students). Achievement-typical students are more likely to come from schools and neighborhoods where they could more easily obtain information about colleges (for example, because they are more likely to have teachers who attended selective colleges and friends from earlier cohorts who applied to selective colleges). The paper suggests that many low-income, high-achieving students would actually benefit from attending selective colleges but do not apply, because unlike high-income students, they do not have specific relevant information (for example, about the range of colleges available, colleges' true costs, or the relevant benefits of attending specific colleges). A closely related explanation for low-income high achievers' distinct application choices is that applying to college or for financial aid is prohibitively difficult for some. For example, they may be less likely to have parents or guidance counselors who can assist them with the application process. This explanation also implies that low-income high-achievers might benefit from attending selective colleges but are failing to apply. However, if the applications themselves are preventing these students from attending selective colleges, simply providing more information without also assisting them in filling out the applications (or simplifying the application process) will not be effective. In the rest of this comment, I summarize some of the existing literature on these two explanations as they relate to low-income students in general, not just high-achievers. This relatively new literature provides many examples in which giving high school students information about colleges or assistance with completing applications affects whether and where students attend college. A recent paper by Hoxby and Sarah Turner (2013) presents the results of a randomized experiment with several different treatments. In one treatment, they sent high-achieving, low-income students information on colleges' actual net cost. They found that this induced students to apply to more colleges and raised the likelihood both of their applying to a selective college and of their being admitted. (The point estimate also implies that this intervention increased the probability that students attended a selective college, but it is not statistically significant.) Another randomized treatment sent students information about suggested application strategies, college graduation rates, and application deadlines. Additionally, it sent students a copy of the Common Application (a standardized application used by many colleges), perhaps making it easier to apply. This treatment also induced students to send more applications and led to...

Hiring inexperienced workers generates information about their abilities. If this information is public, workers obtain its benefi…ts. If workers cannot compensate …firms for hiring them, fi…rms will hire too few inexperienced workers. I hired 952 randomly-selected workers in an online labor market, giving them either a detailed or coarse public evaluation. Both hiring workers and providing more detailed evaluations substantially improved workers subsequent employment outcomes. These bene…fits did not come solely at other workers' expense: the treatments increased overall market employment. Under plausible assumptions, the experiment's benefi…ts exceeded its cost, suggesting that some experimental workers had been inefficiently unemployed.

The link between taxes and occupational choices is central for understanding the welfare impacts of income taxes. Just as taxes distort the labor-leisure decision, they also distort the wage-amenity decision. Yet, there are no estimates of the full response on this margin. When tax rates increase, workers favor jobs with lower wages and more non-taxable amenities. We introduce a two-step methodology which uses com-pensating differentials to characterize the tax elasticity of occupational choice. We estimate a significant compensated elasticity of 0.05, implying that a 10% increase in the net-of-tax rate causes workers to change to a 0.5% higher wage job. for their comments, advice, and support. We thank Dan Feenberg and Inna Shapiro for their help with NBER's TAXSIM program and Donald Bruce for graciously sharing his PSID code.

Most policies seeking to improve high school achievement historically either provided incentives for educators or punished students. Since 1991, however, over a dozen states, comprising approximately a quarter of the nation’s high school seniors, have implemented broad-based merit scholarship programs that reward students for their high school achievement with college financial aid. This paper analyzes one of these initiatives, the Tennessee Education Lottery Scholarships, using individual-level data from the ACT exams. The program did not achieve one of its stated goals, inducing more students to prefer to stay in Tennessee for college, but it did induce large increases in performance on the ACT. Policies that reward students for performance do affect behavior and may be an effective way to improve high school achievement.

STUDENTS FROM relatively low-income families are persistently underrepresented in the most selective institutions of higher education (see, for example, Bowen, Kurzweil, and Tobin 2005). This is true among the most expensive private colleges and universities as well as many selective public universities with more modest tuition charges. Because selective colleges and universities are perceived to be important stepping-stones to professional and leadership positions, the representation of students from a broad range of socioeconomic backgrounds at these institutions is a significant demonstration of commitment to opportunity and intergenerational mobility.1 With increased public attention to the underrepresentation of low-income students at selective colleges and universities, a number of leading universities have responded with aggressive initiatives intended to increase opportunities for low-income students. The direct costs of college have risen substantially over the past decade, particularly at selective colleges and universities, and there is little indication that this trend will abate. This reality has increased the degree of concern about the capacity of elite colleges and universities to provide opportunities for students from low- and moderate-income families. Although the direct charges at selective public universities remain well below those at private universities, the combination of decreased state support, rising costs, and the need to raise tuition prices to maintain the quality of program offerings contributes to a sense that costs may exacerbate the difficulty in enrolling low-income students at state flagship universities (see Schwartz, in chapter 7, for more on college costs). At issue is whether aggressive recruiting and generous financial aid can counteract the effects of high tuition at selective universities to increase the representation of students from the most economically disadvantaged families. Researchers and the press have shone a brighter spotlight on the underrepresentation of low-income students at the most selective institutions. One indication of the prominence of the issue is that the most recent U.S. News and World Report college rankings includes a section highlighting the colleges with a particularly high representation of low-income students. Colleges and universities have responded proactively, with the most selective at the forefront of initiatives to increase the enrollment of low-income students. A number of colleges and universities are making aggressive and visible efforts to increase the availability of need-based financial aid to increase the representation of low-income students in their entering classes. In the fall of 2005, we identified ten such efforts, many with catchy titles such as AccessUVa, Illinois Promise, and Carolina Covenant. In the course of a year, a significant number of universities announced new programs and others announced expanded offerings. Among the private universities, Harvard, Yale, Brown, and-more recently-MIT have each announced programs. There is a common theme among these efforts. In all cases, the universities are making a direct and public case that a college education is affordable to low- and moderate-income students.2 Because these programs are so new, however, it is far too early to evaluate their effects on outcomes such as college completion.

Whether the nation's most selective and resource-intensive colleges and universities are successful in serving as "engines of opportunity" rather than "bastions of privilege" depends on the extent to which they increase the educational attainment of students from the most economically disadvantaged backgrounds (Bowen, Kurzweil, and Tobin, 2005). Less than 11 percent of first-year students matriculating at 20 highly selective institutions were from the bottom income quartile of the income distribution, leading to significant concerns from higher education leaders and policy makers about the role of higher education in reducing intergenerational inequality, particularly in an era of high returns to education. Responding to what Lawrence Summers described as the "manifest inadequacy of higher education's current contribution to equality of opportunity in America," Harvard University and other public and private universities have introduced new initiatives designed to encourage the enrollment of students from low- and moderate-income families. One question addressed in this paper is whether the population of low-income students with high observed academic achievement is sufficiently large that aggressive institutional policies will be an effective tool in increasing the representation of low-income students at the most highly ranked colleges and universities. Using data on test-taking outcomes we also examine where students currently send scores (as a proxy for application) and then consider the extent to which differences in family income affect students' choice sets. While the problem of the underrepresentation of low-income students affects both public and private universities, the effect of outreach and financial aid policies on outcomes is likely to differ appreciably across institutions.