Well-being effects vary for formal and informal childcare

All parents are faced with the difficult decision of how to organize childcare. Parents preferring to return to the labor market early after childbirth usually rely on formal daycare or give the children to the grandparents. Others are convinced that only maternal care is best for their kids’ development. Beyond the labor market aspects of these decisions, however, what kinds of effects do these different options have on the emotional and mental well-being of both the caregivers and the children?

Three recently published IZA Discussion Papers have scrutinized these options and suggest policy solutions that might alleviate some potential pitfalls.

Caretaking grandparents more likely to become depressed

With life expectancy increasing, grandparental caretaking is a common and cheap alternative to formal childcare. While parents are happy to know their children are in safe and familiar hands, grandparents might not necessarily share that joy. IZA Discussion Paper No. 10022 by University of Padova researchers Giorgio Brunello and Lorenzo Rocco reveals that grandparents are more likely to develop depressive symptoms when they have to take care of their grandchildren.

The authors analyzed data from the SHARE survey, a cross-national European data set containing the information of 25,000 Europeans over the age of 50. From the analysis of interview results, they show that 10 additional hours of childcare per month increases the probability of developing depressive symptoms by 4 to 4.3 percentage points. The susceptibility to depression is larger for grandfathers, where the probability ranges between 5.4 to 5.9 percentage points, than it is for grandmothers (3.0 to 3.2 percentage points).

Brunello and Rocco explain that those grandparents with little willingness to devote their time for taking care of their grandchildren are more likely to suffer negative effects. This is particularly the case for grandfathers from Italy, Poland, and Spain, where the traditional division of gender roles makes grandfathers less used to taking care of children than grandmothers.

Intensive mothering adds pressure on higher educated women

Instead of relying on grandparents, some mothers are convinced that only their own personal contact is best for their children’s development. In the United States, intensive mothering continues to dominate the cultural framework. While a large body of research has found that under the right circumstances intensive mothering is beneficial for children, few studies have investigated how mothers themselves are affected.

J. Ignacio Gimenez-Nadal (Universidad Zaragoza) and Almudena Sevilla (QMUL & IZA) sought to fill this research gap and studied the impact of intensive mothering on the well-being of American women. The Spanish researchers wanted to understand the emotions experienced during mothering and find out how these emotions vary by maternal educational attainment and the type of child care activity mothers engage in.

The results, published in the IZA DP No. 10023, show that higher educated mothers report lower happiness and meaning as well as higher levels of fatigue when engaging in mothering activities than less-educated mothers. The gap in well-being does not depend on the type of child care activity and suggests that intensive mothering practices are more likely add pressure to the most educated women, who may subscribe to more time-intensive forms of mothering.

Formal childcare at very young ages may reduce children’s IQ

A third option for mothers is to rely on formal daycare. Enrollment rates in center-based daycare are soaring in countries with a developed labor market, and governments are trying to keep up with the increasing demand. However, the question of how formal daycare affects children’s development, especially if childcare is provided at a young age, has not yet been clearly answered in the academic literature.

IZA DP No. 9756 by University of Bologna researchers Margherita Fort, Andrea Ichino and Giulio Zanella takes up this topic by examining how daycare at age 0–2 affected children’s IQ at age 8–14.

The Italian research team analyzed data from the daycare system in Bologna and compared different groups of children, sorted according to the time spans they attended daycare. They found that one additional month in daycare reduces the children’s IQ by 0.5%. In addition, the negative effect of daycare on IQ is larger and more significant for girls than for boys.

These results – a novelty in the literature – can be explained by the fact that children in daycare experience less one-on-one interaction with adults, an important process known to promote a child’s cognitive development. These interactions should be particularly relevant for girls who, at this early age, are more mature than boys and thus more capable of benefiting from the cognitive stimuli generated by adult-child contacts.

The research findings from these IZA papers show the challenges and risks associated with both formal and informal childcare. Read all three studies in detail:

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Backlash against Muslim immigrants after terrorist attacks harms integration and the economy

muslim-womanThe recent rise in the number and intensity of fundamentalist Islamic terrorist attacks occurring in several Western cities could, as it has in previous situations, inflame an aggressive socio-political atmosphere against Muslims. How does this affect the integration of Muslim immigrants?

An IZA discussion paper by Ahmed Elsayed (IZA) and Andries de Grip (Maastricht University and IZA) investigates the effect that the violent wave of terrorist attacks that hit Western Europe in 2004-2005 (namely, the Madrid bombings, the assassination of Theo van Gogh, and the London train bombings) had on the lives of Muslim immigrants living there.

Using unique panel data from the Netherlands that oversamples immigrants and collects detailed information on their attitudes and experiences of integration in the host country, the authors show that shortly after the attacks, Muslim immigrants’ attitudes toward integration worsened significantly compared to those of non-Muslim immigrants. Furthermore, no evidence was found of a negative trend in the attitudes of Muslims prior to the attacks.

Segregation and return migration

While, in particular, low-skilled Muslims became more geographically segregated and unemployed after the attacks, high-skilled Muslims were affected most negatively in terms of their attitudes toward integration. The deterioration of attitudes toward integration of high-skilled Muslims could be explained by their higher expectations of integrating within the host country, whereas the increase in geographic segregation of low-skilled Muslims could act as a buffer that mitigates the effect of terrorism on their perceived integration. In a final step, the paper shows that negative attitudes toward integration are associated with a higher intention to permanently re-migrate to the country of origin.

Thus, with some mainstream politicians and popular pundits adopting hostile rhetoric about Islam, the unprecedented atmosphere of outrage being whipped up against Muslims could have a negative impact on the prospective stay of the most productive Muslim immigrants. This could have far-reaching negative economic implications for the knowledge economy of Western societies.

The paper was originally published as IZA Discussion Paper No. 7530.

A revised version is available here.

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Women’s chances in STEM fields better than often thought

science-998347_960_720One of the most common explanations why women are underrepresented in many areas of science, technology, engineering, and mathematics (STEM) is that a hiring bias against women exists in those fields. A new study by Thomas Breda and Mélina Hillion, published as IZA DP No. 10079 and in Science, challenges this view. The authors show that in France the minority gender in a given field in academia is, on a very large scale, systematically favored during recruiting for high-level teaching positions in that field.

The analysis draws on rich administrative data on the three national exams used in France to recruit virtually all primary-school teachers (CRPE), middle- and high-school teachers (CAPES and Agrégation), as well as a large share of graduate school and university teachers (Agrégation).

Favored minority genders

Using the specific design of these exams, the authors are able to compare the outcomes of two separate sections of the exam: an oral test in which the gender of the student is known and a written gender-blind test. The results of these exams, which cover about 100,000 individuals observed in 11 different fields (from Math and Physics to Modern Literature and Foreign Languages) over the period 2006-2013, reveal a bias in favor of women that is strongly increasing with the extent of a field’s male-domination (see figure below).

This bias turns from 3 to 5 percentile ranks for men in literature and foreign languages to about 10 percentile ranks for women in math, physics or philosophy.

fig1dp10079

Female evaluation advantage/disadvantage and fields’ extent of male-domination

y-axis: gap between females’ average percentile rank on non-blind oral tests and blind written tests, minus the same gap for men. It is computed for each field-specific exam at the high- and medium-level. The size of each point indicates the extent to which it is different from 0 (p-value from tests of Student).

x-axis: Fields’ extent of (non) male-domination measured by the share of women among academics in the fields (see (22) for alternative measures).

The authors point out, however, that the focus on STEM versus non STEM fields can be misleading to understand female underrepresentation in academia, as some STEM fields are not dominated by men (e.g., 54% of U.S. Ph.Ds. in molecular biology are women) while some non-STEM fields, including humanities, are male-dominated (e.g., only 31% of U.S. PhDs in philosophy are women).

Thus, by exploiting an oral test that is similar across all field-specific exams and using the fact that some candidates take several exams, Breda and Hillion are able to confirm that these findings reflect evaluation biases rather than a selection process of candidates across fields and/or gender differences in abilities between oral and written tests.

Preferences for women disappear in lower level positions

These results confirm evidence from a recent correspondence study that puts forward that women who have already specialized and heavily invested in their field can actually be favored in male-dominated fields when the recruiting is for positions at high levels (from secondary school teaching to professorial hiring).

In contrast, an analysis of the recruiting process for primary school teachers suggests that pro-women biases in male-dominated fields may disappear in less prestigious and less selective hiring exams, where candidates are not necessarily specialized. The bias in favor of women in male-dominated fields might even reverse at lower levels, as was found in two experiments done with medium-skilled applicants.

Discrimination may then still impair women’s chances to pursue a career in quantitative science (or philosophy), but only at early stages of the curriculum, before or just when they enter the pipeline that leads to a PhD or a professorial position.

Counteracting stereotypes should focus on early ages

In summary, Breda and Hillion suggest that there is no compelling evidence of hiring discrimination against individuals who have already decided against social norms to pursue an academic or a teaching career in a field where their own gender is in the minority.

The authors conclude that active policies aimed at counteracting stereotypes and discrimination should probably focus on early ages, before educational choices are made. By advertising that women have at least as good—or even better—opportunities as their male counterparts in higher positions could encourage more young women to study in those fields.

Finally, non-blind evaluation and hiring should be favored over blind-evaluation in order to reduce gender imbalances across academic fields. In particular, policies imposing anonymous CVs in the first stages of academic hiring are likely to reach opposite effects to those expected. This confirms the findings of a previous IZA study on the hiring process for fresh Ph.D. economists.

Read the whole paper (IZA DP No. 10079):

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Thematic series: Reforming minimum wage and labor regulation policies in developing economies

izajoldMinimum wages are a not just a hot policy issue in the United States and other highly developed nations. They are also a central aspect of the policy discourse in developing and transition economies, with diametrically opposite perspectives dominating the debate. Theory is ambiguous, and at its core this is an empirical question, not least because enforcement can vary across countries.

A collection of papers published in the IZA Journal of Labor & Development conduct detailed and country specific analyses of the consequences of minimum wage policies for China, Indonesia, Thailand, Russia, Honduras and South Africa. They provide the empirical foundations for a reasoned debate on this contentious policy question.

  • View the Thematic Series (Guest Editors: Haroon Bhorat, Ravi Kanbur and Shi Li)
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Peer effects! Peer effects everywhere! Whether you are shopping, working, leaving the nest…

Does the social environment influence what individuals buy? Are mothers more likely to work when other women in the neighborhood have a job? Do young people choose to continue living with their parents because their friends also do? If so, how does this mechanism work? From an economic point of view, understanding the influence of peers on individual decision-making is important in several ways.

Social networks can have considerable impact on social programs like welfare, for example, when households live beyond their means or save less in order to keep up with the consumption of peers. From a policy perspective, understanding these network effects is relevant not only because of the particular effects of specific policies on the intended group, but also because often these effects span beyond the group that was originally targeted.

Peer effects on consumption

https://pixabay.com/en/shopping-centre-escalator-shopping-1003650/To advance the understanding of the social influence of peers on consumption, Giacomo De Giorgi (NY Fed), Anders Frederiksen (Aarhus University & IZA) and Luigi Pistaferri (Stanford University & IZA) analyze data on the consumption behavior of the entire Danish population, organized into various social network categories and at the household and firm level.

Their paper, published as IZA DP No. 9983, uses administrative data on income and assets and constructs reference groups made of co-workers sharing similar characteristics such as occupation or education. They then match this dataset with the results from a large Danish consumption survey covering three years from 1994 until 1996. Consumption is also divided into three categories: visible goods (cars, luxury goods, clothing, etc.), neutral goods (e.g., food at home) and non-visible goods (insurance, rent, etc.).

Keeping up with the Joneses

The researchers find statistically significant evidence for “intertemporal” effects of social influence on individual consumption, showing that many households “follow” the consumption choices of either the wife’s or the husband’s colleagues over time. The results are in line with the “Keeping up with the Joneses” model, in which individual utility depends on the current average consumption of one’s peers.

Interestingly, the social influence on consumption did not change significantly with regard to the type of goods that were consumed. Therefore, De Giorgi and his colleagues were able to reject the “conspicuous consumption” model, which argues that the peer effects on consumption are tilted towards very visible goods, such as jewelry, luxury cars, and restaurants.

From a policy perspective, these results highlight the importance of taking into account the degree of connectedness of the policy’s target group. Depending on how much these buying habits actually pressure others to do the same, the overall effects of specific policies might reach beyond the intended group, for example, when a tax increase for the rich also affects less wealthy households that “follow” the consumption of their richer peers.

Peer effects on female labor supply

office-620822_960_720Network effects also affect behavior in the labor market. In another recent paper, published as IZA DP No. 9985, Nuno Mota (Fannie Mae), Eleonora Patacchini (Cornell University & IZA) and Stuart S. Rosenthal (Syracuse University) examine the influence of neighbors on the decision of women to work.

Their results reinforce the importance of neighborhood peer effects and the significance of cultural norms as drivers of economic decisions: Women appear to emulate the work behavior of nearby women with similar-age children. Adding one additional working peer to a woman’s adjacent neighbors increases her tendency to work by 4.5 percentage points, while adding a non-working peer reduces her tendency to work by 9 percentage points. For men, similar peer effects are mostly absent.

Read more about this topic in a previous IZA Newsroom Post.

Peer effects on nest-leaving behavior

homeA third new paper, IZA DP No. 10070 by Efi Adamopoulou (Bank of Italy & IZA) and Ezgi Kaya (Cardiff University), finds that the behavior of peers also explains, to some extent, why young adults nowadays tend to continue living with their parents longer. The researchers show that young adults with friends who have already made the choice to leave their parents’ home are also more likely to do the same.

The study analyzes data from the National Longitudinal Study of Adolescent Health (Add Health) on a representative sample of adolescents in the U.S. who were followed until young adulthood. The analysis accounts for various demographic and socioeconomic characteristics of young adults as well as the local labor and housing market conditions. Using the differences in the timing of leaving parental home, the paper investigates the causal effect of “leaving the nest” on friends in the same peer group.

The authors find significant effects on the decision of young adults to remain or leave their parents’ home depending on the respective choices made by their friends. They also show that the similarity in the choices of adolescents and their friends to leave the nest is neither simply due to the fact that people select friends with similar behavior to their own, nor to shared common factors that might affect the living arrangements of the entire peer group.

Imitation and reduced stigma

Furthermore, other possible mechanisms, such as the complementarities between friends that move out at the same time or the desire to maintain friendship ties, also fail to explain the main reason driving this peer influence. Rather, the authors conclude that the reduced stigma of living with parents during young adulthood, or simply imitation among friends, may lie behind these peers’ similar behavior.

This is relevant for debates over evaluating policies that are intended to boost youth independence or mobility. Almost five years after the end of the Great Recession in the U.S., even though labor market conditions have greatly recovered, the proportion of young adults living with their parents remains high. Moreover, in the “millennial” age group aged 20-24, who experienced the recession right at the beginning of their careers, it continues to increase. The new findings by Adamopoulou and Kaya suggest that in the presence of positive peer effects, the increasing trend may persist regardless of the labor and housing market conditions.

Read all three papers:

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On the costs and benefits of international labor mobility: Interview with George Borjas

forced_displacementThe drastic and unexpected increase in the number of people seeking asylum in Germany in 2015 has overshadowed the long ongoing discussion about amending the German immigration law. The current refugee situation has caused some to argue that such a reform is now obsolete. But, on the other hand, with refugee numbers beginning to decline, it could provide the opportunity to take up the discussion again and not yield the floor to right-wing populists.

Despite being one of the most popular destination countries of worldwide immigration since the early 1960s, Germany only introduced a half-hearted attempt at reform in 2004. The current law still falls short of well-defined qualitative and quantitative selection criteria.

Borjas@IZA

George Borjas at IZA

We took the opportunity to ask George Borjas (Harvard University), one of the world’s leading migration economists and program director of IZA’s “Labor Mobility” research area, to comment on his perceptions and views in the debate.

IZA: Mirroring the polarized public debate, migration economists also have diverging views on the expected costs and benefits of increased international labor mobility. What is your take on this discussion in general?

George Borjas: This is a very interesting question that’s actually hard to answer. Whenever I think about international labor mobility, I tend to think of it in terms of economic models. So that means I have a particular methodological approach that sets up the question in my mind and that guides me to an answer. I do a lot of empirical analysis as well, but I usually look at the data through the lens of an economic framework.

Other social scientists, and even some economists, often look at immigration as a policy issue—which it obviously is—but that lens also determines how one frames questions and how one looks at data. The problem with this policy-based lens is that it is very easy for your own policy preferences to filter into the work and contaminate the conclusions.

Germany is in the midst of a public debate about how to reform its migration law. How can migration policy make a difference in extracting potential benefits from migration?

If the economic literature on immigration has taught us anything, it has taught us that from the receiving country’s point of view, high-skill migration is economically more beneficial than low-skill migration. High-skill immigrants tend to complement the resources that industrialized economies have far more than low-skill immigrants.

High-skill immigrants could potentially introduce knowledge and information that would spill over into other sectors of the economy, making everyone more productive. And high-skill immigrants would contribute more in taxes and require many fewer social services.

The question, therefore, is not whether high-skill immigration is economically preferable to low-skill immigration. The question instead is whether the receiving country’s immigration policy should be guided by economic gains alone.

You have an upcoming release of a new book this October titled, “We Wanted Workers: Unraveling the Immigration Narrative.” How would you describe the key message for German readers?

The title of the book comes from a quote by Swiss writer Max Frisch. Looking at the guest worker migration into Germany and other Western European countries in the 1950s and 1960s, he quipped that: “We wanted workers, but we got people instead.”

I think a key lesson from this insight, which I develop in my new book, is that the “economistic perspective” on international migration—one that views immigrants as an army of worker-robots—is very misguided. Immigrants are people who have many other consequences on the receiving country, and the economic impact of those consequences could be far greater than the benefits that accrue from immigrant participation in the labor market.

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The overeducated Italian doctors

By Giuseppe Lucio Gaeta, Giuseppe Lubrano Lavadera, and Francesco Pastore

phdGaining a Ph.D. possibly determines positive outcomes from both an individual and a societal perspective. For candidates, doctoral education is an investment aimed at acquiring skills and competences to be used in future career. For the society as a whole those who achieve a Ph.D. are likely promoters of innovation. In order to achieve these outcomes, Ph.D. holders must be able to get job positions that allow them to fully exploit their educational background. How frequently does this occur?

A crucial question in Europe and in Italy

This question is particularly important in Europe nowadays. Starting from the Bologna Process, doctoral studies are interpreted as the third cycle of education and therefore public as well as private entities, alongside the academia, are considered as possible destinations for Ph.D. holders. This makes it very important to investigate whether the job-education matching is frequent among Ph.D. holders.

Italy is an appropriate context to investigate this issue for two main reasons. First, a remarkable growth of doctoral education has been reported in this country over recent years. Data reveals that at the beginning of the 2000s the annual number of new Ph.D. holders was approximately 3,000 while few years later, in 2006 it was higher than 10,000. Nevertheless, in 2011, the Italian graduation rate at a doctoral level was still lower than the OECD average.

Second, in Italy the size of personnel devoted to research and development (R&D) is lower than the EU28 average. Personnel working in Italian universities has been declining from 2008 (-17%, data provided by the Italian Ministry of Education, Universities and Research), while over recent years (2007-2013) an opposite increasing trend (+33%) is reported for the R&D personnel working in private firms.

Unemployment and overeducation

In 2009, ISTAT carried out a survey of Ph.D. holders who completed their studies three and five years earlier, in 2006 and in 2004, respectively. The data reveals that unemployment among Ph.D. holders is lower than what is reported for university graduates. A share as high as 92.5% of doctors who completed their studies in 2006 was working at the time of the survey and the figure is even higher in the case of those who graduated in 2004 (93.7%).

Figure 1 confirms this, while also showing that there is high heterogeneity of unemployment rates across fields of study, since Human Sciences and some of the Social Sciences perform worse than other fields. The share of Ph.D. holders working in the academia after the completion of their studies is approximately 36% with a remarkable variability among fields of study; it is higher in Mathematics and Physics and lower in Law and Life Sciences (see figure below).

unemployed-phd

Figure 1: Unemployment and university employment of Ph.D. holders.
Source: IZA DP No. 10051 based on ISTAT data.

What about the job to education matching among those who work outside of the academia? Approximately 31.28% of them report that their Ph.D. title was not useful to get the job they were carrying out when interviewed. Nevertheless this figure does not tell us anything about skills utilization.

In order to provide a more in depth analysis, we used the ISTAT self-reported data to observe for each of the respondents which of the following alternative situation applies: 1) genuine overeducation (GO) defined as holding a job for which the Ph.D. title and the skills acquired during doctoral studies are useless; 2) apparent overeducation (AO) that arises when the Ph.D. title was not useful to get the current job while doctoral competences are valuable in carrying it out; 3)  apparent matching (AM), that arises when doctoral education was useful to get the current job but Ph.D. skills are not; 4) genuine matching (GM) defined as holding a job for which both the Ph.D. title and skills acquired during doctoral studies are useful.

Figure 2 shows the incidence of these conditions among the surveyed doctorate holders who work in the extra-academic by field of doctoral studies. Data suggests that GO is particularly frequent among those who studied Philosophy, Law, Political Sciences and Human Sciences. Particularly worrying is that the sum of GO and AM results to be higher than 50% in most of the fields of study, which suggests that the application of skills acquired during Ph.D. studies is critical.

phd-matching

Figure 2: Genuine overeducation (GO), apparent matching (AM) , apparent overeducation (AO) and genuine matching (GM) among Ph.D. holders working outside the academia.
Source: IZA DP No. 10051 based on ISTAT data.

The detrimental effect of overeducation on wages

This mismatch presumably affects in a negative way the Ph.D. holders’ capacity to generate positive outcomes for the society but also individual private returns to education might be harmed by it.

To check whether the latter claim is true, our recent IZA Discussion Paper relies on the cross-sectional data presented so far. We account for the possible endogeneity of GO by proposing an instrumental variable analysis in which the instrument is represented by the incidence of GO among those who share the same profile of respondents in terms of field of study, area of residence and year of graduation.

According to the empirical investigation, GO leads to a wage penalty of approximately -9%. This effect is remarkably higher (approximately -25%) when the GO status of respondents is defined in a slightly different way, i.e. when we consider as genuinely overeducated those who hold a job for which the Ph.D. title is useless and who are totally dissatisfied with the current use of the skills acquired during their doctoral studies.

Conclusion

While most of research focuses on the career outcomes of university graduates, our essay suggests that there is also need of investigating those of doctors. Since Ph.D. holders are considered to be crucial actors in knowledge economies, incentives should be designed in order to ease the application of doctoral knowledge in non-academic jobs and support the dialogue between the academic and non-academic world in defining some specific topics for Ph.D. training.

Keeping in mind these aims, it is very important to carry out a careful assessment of projects such as the recently released Italian Ph.D.ITalents, which is specifically aimed at easing matching between supply and demand of doctors.

Read more (IZA Discussion Paper No. 10051):

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On a related note, see also Hilmar Schneider’s recent op-ed (in German) published in Wirtschaftswoche:

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