Essays on Human Capital Investment

Essays on Human Capital Investment Sarena Faith Goodman This dissertation contains a collection of essays on human capital formation and social service provision in the United States. The chapters evaluate three policies targeted to populations for whom the development and retention of skills is particularly critical – young adults, children, and the near-homeless. The first and second chapters focus on uncovering methods that could enhance the performance of the U.S. educational system: the first chapter examines a policy that better aligns educational expectations and potential among secondary school students; the second chapter evaluates a policy that incentivizes teachers to improve achievement among students in high-poverty primary and secondary schools. The third chapter examines an intervention designed to assist high-need families on the brink of homelessness. The chapters are also linked methodologically: in each, I exploit the exact timing of policy events (i.e., testing mandates, the opportunity for teachers to earn bonuses, the availability of homelessness prevention services) to identify their causal effects. The first chapter examines whether requiring a high school student to take a college admissions exam increases the likelihood that she attends a selective college. The analysis is based on quasiexperimental variation in the adoption of state mandates that require high school juniors to take one of two college entrance exams available to meet admissions requirements for U.S. selective colleges. I show that the fraction of new test-takers owing to the mandates who go on to selective colleges far exceeds the share that could be accommodated by rational test-taking behavior, given the relative cost of sitting for the exam and benefits to attending a selective college. Instead, there must be a large subgroup of students who would prefer a selective school but who also underestimate their admissibility, and thus take college entrance exams at suboptimal rates. Altogether, the results demonstrate that providing students with even very low-cost information appears to have a large impact on their educational choices, and that policies aimed at reducing information shortages among secondary school students, particularly those who are disadvantaged, are likely to be effective at increasing human capital investment. The second chapter, which is joint work with Lesley Turner and was published in the Journal of Labor Economics in April 2013, examines whether tying teacher salaries to particular educational outputs leads to increases in primary and secondary student achievement. We analyze a program that randomized over New York City high-need public schools the opportunity for teachers to earn bonuses based on school-wide performance metrics. We demonstrate little effect of the program on student achievement, teacher effort, and school-wide decisions, which could either imply that teacher incentive pay is broadly ineffective or that, in this context, the incentive to free-ride obscured the potential returns to individual effort in the outcomes we consider. The main contribution of this chapter to the debate on teacher incentive pay is our investigation of whether the group-based nature of the program contributed to its ineffectiveness. We show that in schools where incentives to free-ride were weakest (i.e. where there were relatively few teachers with tested students), the program led to small increases in math achievement. We conclude that teacher incentive pay administered according to school-wide performance measures is likely not an efficient method to encourage increased academic achievement. The third chapter, which is a collaborative study with Brendan O’Flaherty and Peter Messeri, examines a New York City homeless prevention program designed to reduce the number of families entering its homeless shelters. Under the program, families who think they are in danger of becoming homeless are eligible to receive a wide variety of assistance, including financial help and counseling, to keep them out of shelters. Exploiting quasi-experimental variation in the timing, location, and intensity of the program, we generate estimates, according to two levels of geography, of its effects on spells of homelessness and shelter entries and exits. Taken together, the estimates reveal that for every hundred families enrolled in the program, there were between 10 and 20 fewer entries, with no discernible impact on shelter spells. Additionally, we provide suggestive evidence that foreclosure initiations were associated with shelter entries.