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The purpose of this chapter is to illustrate the identification problem involved in estimating the impact of military service on labor-market outcomes and to review the…
The purpose of this chapter is to illustrate the identification problem involved in estimating the impact of military service on labor-market outcomes and to review the modern literature in economics which aim to estimate this effect. Drawing from the literature on microeconometric treatment evaluation, the existence of a selection bias is demonstrated and a discussion of empirical strategies to overcome this is presented. Studies on the effect of military service in the United States, Germany, the Netherlands, Portugal, and the United Kingdom are discussed. The main results of each reviewed article are presented. There is substantial heterogeneity in the estimated impacts of military service on labor-market outcomes. The results may not be generalizable to the general population due to the econometric methods employed. Moreover, the literature review is concentrated on the contribution of economists to this issue and neglects to discuss research conducted by other social scientists. The studies are varied and located in different journals. This review serves to summarize the results in one article. Furthermore, the technical discussion on methods will be useful for those who wish to pursue the topic further. This chapter provides practical advice on how to credibly estimate treatment effects based on nonexperimental data. It also facilitates future reviews of the topic by collecting the available evidence.
We discuss the two most popular frameworks for identification, estimation and inference in regression discontinuity (RD) designs: the continuity-based framework, where the…
We discuss the two most popular frameworks for identification, estimation and inference in regression discontinuity (RD) designs: the continuity-based framework, where the conditional expectations of the potential outcomes are assumed to be continuous functions of the score at the cutoff, and the local randomization framework, where the treatment assignment is assumed to be as good as randomized in a neighborhood around the cutoff. Using various examples, we show that (i) assuming random assignment of the RD running variable in a neighborhood of the cutoff implies neither that the potential outcomes and the treatment are statistically independent, nor that the potential outcomes are unrelated to the running variable in this neighborhood; and (ii) assuming local independence between the potential outcomes and the treatment does not imply the exclusion restriction that the score affects the outcomes only through the treatment indicator. Our discussion highlights key distinctions between “locally randomized” RD designs and real experiments, including that statistical independence and random assignment are conceptually different in RD contexts, and that the RD treatment assignment rule places no restrictions on how the score and potential outcomes are related. Our findings imply that the methods for RD estimation, inference, and falsification used in practice will necessarily be different (both in formal properties and in interpretation) according to which of the two frameworks is invoked.
An interest in social transmission as a source of welfare and income inequality in a society has re-emerged recently with new vigour in leading economic research (see…
An interest in social transmission as a source of welfare and income inequality in a society has re-emerged recently with new vigour in leading economic research (see Piketty, 2014). This paper presents a mixed Bourdieu-Mincer (B-M) type micro-economic model which provides a testable mechanism for culturally biased socio-economic inter-generational transmission. In particular, the operationalisation of this mixed B-M type model seeks to find evidence for individual and local cultural capital effects on the economic achievements, in addition to the human capital effect, for both migrants and locals in the Netherlands. The purpose of this paper is to examine two sources of wage differential in the local labour market, namely: individual cultural capital (approximated by immigrant background), which affects schooling results; and the local cultural capital (approximated with the cultural milieu), which directly biases the selection of employees.
The study utilises the 2007-2009 data set for higher professional education (in Dutch termed HBO) graduates registered in the Maastricht database. The Mincer-type equation is augmented with a control variable for the local cultural milieu. The authors cope with this model empirically by means of 2SLS and 3SLS methods.
The authors find convincing evidence for the existence of both an individual cultural capital and a local cultural capital effect on schooling and wage differentials. This can be interpreted as a migrant background effect leading to a disadvantaged position on the labour market due to less frequently attending high-quality secondary schools.
More importantly, the authors find evidence for a classical Myrdalian effect of self-fulfilling prophecy, in which graduates with second-generation migrant background have a disadvantaged position due to access only to poorer quality of schooling.