The impact of repealing “Obamacare” on children’s academic performance

By Michael A. Leeds (Temple University and IZA)

There are many reasons to feel relieved by the recent failure to overturn the Patient Protection and Affordable Care Act, better known as the ACA or “Obamacare.” While attention was rightly focused on the impact that repealing the ACA would have had on the poor, the sick, and the elderly, the repeal could have had severe consequences for another group that was not directly targeted by opponents of the ACA. The cognitive and non-cognitive development of America’s youth, even of boys and girls whose health coverage was not threatened by repeal of the ACA, could have been deeply harmed.

This risk was largely overlooked because it was an unintended consequence of the repeal-and-replace movement. Lost in the debate over Medicaid cuts was the impact such cuts would have had on public schools. Public schools are legally required to provide special education programs for the physically and mentally disabled, for which they rely heavily on Medicaid funding. If Medicaid appropriation levels fell significantly, schools would be forced either to increase their revenues through taxation—never a popular idea—or to cut spending elsewhere. School superintendents have stated that such cuts would likely have forced them to reduce such extracurricular activities as art, music, and athletics.

Participation in athletics increases cognitive and non-cognitive skills

If extracurricular activities lead to greater educational attainment and better labor market outcomes later in life, such cuts might be short-sighted. Some claim, for example, that participation in sports (as well as other extracurriculars) generates greater cognitive skills—the ability to process information and reason, frequently measured by standardized tests. Others claim that athletic participation fosters greater non-cognitive skills. These are the “softer” abilities, such as self-confidence or self-discipline.

Leeds

Michael A. Leeds

Research on whether athletic participation causes greater skill development is complicated by a number of factors, such as the precise skill being measured and the subset of the population (e.g. men or women) being studied. The most serious difficulty is what econometricians call “the endogeneity problem.” This states that, while it is clear that athletic participation and skills are correlated, it is not obvious which factor causes which.

The most successful approach to dealing with the endogeneity problem in this case has been to use panel data. Panel data follows a group of individuals over time, so that one can view their behavior before and after they undergo a treatment of some kind. In this case, it allows us to see how participation in sports—the “treatment” here—changes youths’ academic performance and behavior.

These studies provide clear evidence that participation in athletics increases cognitive and non-cognitive skills. Moreover, the impact of sports on skill development appears to be greatest among the very young. Elementary school-age children who participate in sports earn higher grades later on, suggesting that they have developed stronger cognitive skills. They also encounter fewer emotional problems, enjoy better physical health, and have a stronger sense of personal well-being, all of which indicate that sports inculcate stronger non-cognitive skills.

The attempts to replace the ACA could thus have consequences that go well beyond insurance markets and health care. If schools were forced to limit extracurricular activities to fulfill their mandates to provide services to children with special needs, they probably would have to cut back on activities that benefit children’s development. The defeat of the attempt to “repeal and replace” thus prevented even more harm than the ACA’s defenders had imagined.

Read Michael A. Leeds‘ IZA World of Labor article:

See also a related article by Michael Lechner:

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Educational choices can help explain income inequality in Germany

vocational trainingRising levels of income inequality in many developed countries have led to much political and scientific controversy. One of the empirical challenges is to identify the causes and drivers of inequality. A new study by German economists Albrecht Glitz (Universitat Pompeu Fabra and IZA) and Daniel Wissmann (LMU Munich) investigates how shifts in skill premiums – the wage difference between skilled and unskilled workers – can help explain income inequality between different skill and age groups.

Different trends in wage differentials since 1980s

The authors show for Germany that the wage differential between medium (those with vocational training and/or Abitur) and low-skilled workers (those without a post-secondary degree) decreased slightly over the 1980s and then increased by a third from 18% to 24% since the late 1980s (solid line in graph), while the high skill premium, i.e. the wage differential between those holding a college or university degree and those with vocational training, followed a U-shape pattern over the same period (Figure 1).

But not all medium-skilled workers benefited from this rise in the skill premium, which is apparently attributable to a pronounced increase in the medium skill premium of young workers (aged 30 and below).

skill premiums

According to Glitz and Wissmann, these differences in the development of wage premia may simply be due to the relative abundance of workers with a specific skill level. Analyzing long-term education trends in Germany for those born between 1950 and 1981, the authors find a pronounced trend break in the educational attainment of the West-German population: relative to previous trends, the shares of both high- and low-skilled individuals increased while the share of medium-skilled individuals declined markedly.

Fewer medium-skilled workers

For cohorts born after 1965, the share of individuals with completed vocational training decreased strongly and was as large for the 1980s cohorts as it was for the 1940s cohorts, while the share of individuals with tertiary education increased to unprecedented levels and the long-term decline in the share of low-skilled individuals came to a hold.

The authors conclude that a considerable part of recent changes in earnings inequality between different skill groups in Germany are the result of longer term educational choices of the population and hence, ultimately, driven by labor supply. With this explanation, the authors complement recent attempts focusing on demand-side explanations of rising inequality, such as technological change and the role of globalization in the vanishing of manual, routine-intensive occupations.

Download the paper (IZA DP No. 10901):

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Unpaid graduate internships: Career boost or bust?

internshipThe rising prevalence of unpaid internships as a gateway to highly competitive careers in law, politics, creative industries, media and publishing, and the sciences, has raised concerns about diminishing social mobility, and raised questions about whether and how interns benefit from the experience.

A recent IZA Discussion Paper by Angus Holford (University of Essex & IZA) uses the Destination of Leavers from Higher Education (DLHE) survey on graduates from English and Welsh universities between 2005 and 2011 to study the returns to taking an unpaid internship six months after graduating from a first degree, on labor market outcomes a further three years later. He compares interns with individuals who went straight into paid work, into further study, or something else, by pairing them each one with a ‘matched’ individual, according to their demographic characteristics and their reported motivations for taking the job or internship they are in.

The results show that, on average, former interns face a salary penalty of approximately £3500 per year compared with those who went straight into paid work, and £1500 compared with those who went into further study. Only compared with those doing ‘something else’ (including traveling or remaining unemployed) do interns gain any significant benefit on average, being 6.4 percentage points more likely to be ‘very satisfied’ with their career.

Outcomes vary by demographic group

Holford also analyzes access to and returns from unpaid internships by demographic characteristics. His findings suggest that there are both advantaged and disadvantaged groups (in terms of expected labor market outcomes after university) who are more likely to be taking an internship. Among the former group are those with parents in professional or managerial jobs, those who went to private schools or ‘elite’ universities, and those graduating with a first or upper second class degree. Among the latter group are Black and ethnic minority graduates, those with disabilities, and from areas with a higher unemployment rate.

The study also finds the negative returns to taking an internship to be significantly smaller for graduates who were privately schooled or with parents in professional occupations. This suggests a segregated market in which the social and financial capital that graduates from higher socio-economic backgrounds can access gives them an advantage in accessing the ‘good’ internships, with a relatively high labor market return.

Holford argues for improving access to and reducing the opportunity cost for students with low socio-economic status of taking relevant experience for ambitious careers during undergraduate degrees, and improving provision of information to students and early graduates about the likelihood of different outcomes from internships in key fields.

Download the paper (IZA DP No. 10845):

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GLM|LIC Call for Proposals: Growth and labor markets in low-income countries

glm-licThe IZA/DFID Programme on Growth and Labour Markets in Low-Income Countries (GLM|LIC) has opened the electronic application portal for Phase IV research proposals. Research projects can be proposed for the following research areas:

  1. Growth and Labour Market Outcomes
  2. Active Labour Market Policies, Labour Market Institutions and Labour Market Frictions
  3. Human Capital and Labour Productivity
  4. Migration and Labour Markets
  5. Labour Market Dimensions of Population Dynamics, Urbanisation, and the Environment

Proposals will be due on October 16, 2017.

https://glm-lic.iza.org/call-phase-iv

 

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IZA continues GLM|LIC program with DFID – new website now online

glm-lic

Since 2011, IZA has been coordinating the “Growth and Labour Markets in Low Income Countries” program on behalf of the British Department for International Development (DFID). The objective is to fund research projects that deliver a significant new body of evidence to help shape future policies in low-income countries.

So far, 31 projects within five topic areas have been supported, generating more than 150 publications. Many of these publications have been featured in in top academic journals and major international conferences. A number of important policy recommendations have come out of the projects, described in the Policy Brief series.

To facilitate access to these findings, the relaunched GLM|LIC website has a number of new features. In addition to information about the supported projects, including working papers, policy briefs, and published articles from the projects, an Evidence Finder makes it easy to locate GLM-LIC research results by topic and country.

Meanwhile, the cooperation between DFID and IZA has been renewed until 2020. The “Call for Proposals” for innovative new research to be funded in the next phase will be posted on August 1.

glmlic launch

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Long-term unemployed through the eyes of recruiters: Less motivated, less talented and less trainable

jobsearchRecent research has shown that employers are reluctant to hire long-term unemployed: the longer job candidates’ unemployment spell, the lower is their chance of a positive reaction. In a new IZA Discussion Paper, scholars from Ghent University, KU Leuven, Vrije Universiteit Brussel, and University of Oxford have investigated why this is the case.

Unemployment as a signal of factors not shown in a CV

The research results confirm what was found in recent experiments with fictitious job applications: job candidates with long unemployment spells get fewer positive call-backs on their applications. Doctoral researcher Eva Van Belle: “Recruiters judging job candidates are confronted with very limited information. They use this information to predict other factors that drive productivity. In this respect, a main finding of our research is that recruiters perceive long-term unemployment as a signal of lower motivation. This turns out to be the most important explanation for the fact that long-term unemployed job candidates are immediately rejected.”

In addition, long-term unemployed are perceived as having lower intellectual and social skills, being less up-to-date with technological changes, and being less trainable. The research shows that these perceptions also drive the lower hiring chances of the long-term unemployed, albeit to a lesser extent than the association between unemployment and motivation.

Recruiters rely on the negative judgment of their colleagues

A final phenomenon at play is what economists call “rational herding”. IZA research fellow Stijn Baert, labor economics professor at Ghent University: “The recruiters in our research concluded that long-term unemployed candidates had often been rejected by other employers. In other words, other employers had found the candidate’s productivity to be low. As a consequence, inviting these candidates for a job interview seemed inefficient.”

Policy perspective

The study shows that long-term unemployed might benefit from including as many relevant details as possible regarding their motivation in their job applications. It seems that the focus here should be on work motivation and not on general (social) motivation as an additional analysis showed that the association between unemployment duration and hiring chances could not be compensated by revealing engagement as a volunteer.

Method

The results are based on a state-of-the-art vignette experiment in which 219 recruiters evaluated five fictitious job candidates each. These candidates differed by gender, education level, work experience, social activities, and unemployment duration (from 1 to 36 months). Each recruiter had to evaluate different candidates. The recruiters judged and ranked these candidates in terms of likelihood of job interview invitation (and being hired). In addition, they rated the candidates on eight characteristics (including perceived motivation and intellectual and social skills). By means of an econometric model, the association between unemployment duration and chance of a job interview could be explained by these eight characteristics.

Download the paper (IZA DP No. 10876):

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Public health in utero: How external factors influence birth outcomes

By Jeanna Canapari (Yale University)

inuteroIn the study of birth outcomes, going to extremes is not always necessary. While intense events such as heat waves, deep cold or famine can impact fetal development and play a major role in the health of newborns, scientists who study birth outcomes can learn a great deal in more moderate scenarios.

To illuminate this, IZA research fellow Xi Chen, a health economist and assistant professor in the Department of Health Policy & Management at Yale University, looked to the Muslim observance of Ramadan, which requires a month of fasting from sunrise until sunset, to understand how nutritional disruptions to an expecting mother can impact fetal development. The study was published as IZA Discussion Paper No. 8494.

Studies of external factors such as fasting also can have greater influence on policy making than the study of extreme factors such as famine, Chen said. Moderate factors affect far more people: the Ramadan fast potentially impacts the health of more than one billion Muslims worldwide.

Fasting mothers, obese children

Chen’s study revealed that babies who were deprived of prenatal nutrition during Ramadan were more likely to be obese later in life. More generally, having been constrained during early life, Chen said, babies make more efficient use of the limited nutrients they receive during a time of fast, and develop stronger digestive systems. As this generation ages with access to abundant food supply (high fat, sugar diets, etc.), Chen said, the effect of this adaptation to the early environment of under-nutrition begins to show.

chen

Xi Chen

“When they are older, and richer, and they take the same dose of nutritious food as the cohort not exposed to under-nutrition in an early stage of life, biologically their stronger digestive systems tend to produce more surplus energy as regulated in part by peptide hormones in the brain and gut, they are more likely to be susceptible to the risk of developing obesity and other chronic diseases.”

Birth outcomes can hold several clues to the adult that newborn will someday become. By examining factors such as a newborn’s birth weight, gestational size and birth defects, Chen looks to predict not only future health, but also the potential for future economic success. In another study, for instance, he looked to poor, rural China and the effect that the practice of gift giving has on birth outcomes.

“If you do not send a gift,” during community festivals and observances such as births, marriages and funerals, “you become socially isolated,” said Chen. In years with an abundance of such events, expectant parents are often forced to choose gifts over prenatal nutrition, to protect their social standing. The result, Chen said, is a negative impact on the height of children from birth to age 6 who were born during years of frequent festivals. The study was published as IZA Discussion Paper No. 10662.

Predicting future health and career

Prenatal care, said Chen, is an investment that parents make in their children. “Social scientists, like myself, often treat birth outcomes as the starting point for human capital,” he said. The conditions that expectant parents live in, and the economic decisions they make, reflect their commitment to investing in the future health of their children. This prenatal care can help determine a child’s success as he or she grows up, and ultimately enter the workforce and contribute to the economy themselves.

As telling as birth outcomes can be, Chen is part of a growing group of researchers going even further back to conception and the whole pregnancy to predict future health. Through data collected from prenatal ultrasounds, Chen is examining three measures: head circumference, femur length and abdominal circumference, all of which, he said, are indicators of long-term health, and predictors of adult chronic disease. Ultrasound data enables Chen to track each ultrasound throughout a fetus’s development, enabling his team to study trajectories of growth before birth.

“I know of only other one economist, Dr. Gabriella Conti of the University College London, who has been exploring early human health using an ultrasound data set.” Chen said. While Heckman’s data set counts information from 1,000 infants in the United Kingdom, Chen, together with Yawei Zhang from Yale’s Environmental Health Sciences Division, are working with a data set of 20,000 babies, collected from hospitals in two Chinese provinces.

Next, Chen and his team plan to use ultrasound data to explore prenatal exposure to air pollution and climate change, and how it interacts with an infant’s genes to affect their long-term development. Additionally, Chen hopes to not only continue going back in time, to fetal development, but forward as well.

“Ideally, we want to follow up on these infants all the way until they grow up and go into the labor market,” he said. “Everyone wants to know the longer-term impact. Our eventual goal is to link the two ends of life course to better understand the role of early childhood circumstances in shaping health inequality in old age.”

Download the papers:

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