Progress Report on the Children's Program (2004)

The impact of public policy on the well-being of children continues to be a major area of interest for policymakers. Likewise, the economics of children's issues continue to concern members of the Children's Program at the NBER. This Program brings together a wide variety of researchers from across many different fields, including labor economics, public economics, industrial organization, econometrics, and development economics. These researchers work on a diverse set of issues related to the wellbeing of children, and present their work in annual meetings each spring and in the NBER's Summer Institute. Much of the work that is done by Children's Program members is funded by an Integrated Research Program Grant from the National Institute of Child Health and Human Development. The first report on the Children's Program was written four years ago; since that time, the Program has continued to thrive because of a rapid growth in its roster of members, including some of the most exciting young economists in the profession. In this report, I focus on the contributions of this group of researchers in five areas: the economics of education; evaluating welfare reform; modeling child health and insurance coverage; modeling and assessing the implications of risky behaviors among youth; and modeling the determinants of and assessing the implications of family structure for youth. Education The economics of education remain the main focus for researchers affiliated with the Children's Program. This research is concerned with estimating the labor market returns to additional schooling. The problem facing researchers has been that individuals who obtain higher levels of schooling may be of higher ability, so their higher wages later in life could reflect the returns to their ability, and not to the education per se. David Card (WP 7769) reviews a number of clever solutions to this problem that have been suggested by researchers, including comparing those who differ in their access to schools, or those subject to different compulsory schooling laws. He concludes that the returns to additional education are larger than traditional estimates, reflecting the fact that the low-income groups that are affected by supply side innovations have particularly high returns to schooling. Consistent with this conclusion, Philip Oreopolous (10155) shows that students who are allowed to drop out of school earlier through looser compulsory schooling laws see enormous reductions in their lifetime earnings, wealth, and health. He finds that dropping out one year later increases future income by more than ten times the foregone wages during that extra year of high school. Esther Duflo (7860, 8710) shows that in Indonesia a massive school construction project was associated with substantial improvements in the labor market outcomes of the generation of students that benefited from that program. In assessing the appropriate government role in education, however, what matters is not only the private returns in terms of higher wages, but also the public returns to society from having a more highly educated populace. Researchers in the Children's Program have made great progress over the past few years in documenting these public returns, relying on the type of solutions used to estimate the wage returns to education. Thomas Dee (9588) and Kevin Milligan, Enrico Moretti, and Oreopolous (9584) show that higher education attributable to college availability and compulsory schooling laws leads to higher levels of civic participation, in terms of voting and awareness of public issues. Adriana Lleras-Muney (8986) demonstrates that higher education related to compulsory schooling laws in the early twentieth century led to reduced mortality later in life. Janet Currie and Moretti (9360) show that higher maternal education linked to college openings leads to improved health for the infants of these mothers. Oreopolous, Marianne E. …