Working Papers

We estimate the effect of unplanned children on the careers of women identified from failures of long-acting reversible birth contraceptives. Using linked health and labor market data from Sweden, we find that unplanned pregnancies halt women's career progression resulting in income losses of 20% by five years after the initial contraceptive failure. The detrimental effects of unplanned pregnancies are larger for younger women and women enrolled in education, suggesting that unplanned births are particularly disruptive early in the career. In contrast, when we study the impact of children identified from quasi-random success of fertilization procedures, we find small impacts of children. Taken together, the results suggest that children can have large disruptive effects on careers, and by timing pregnancy women mitigate these disruptions.

This paper examines how high school specialization shapes college investment decisions and their subsequent returns through dynamic complementarities. Using Swedish administrative data, we estimate a dynamic Roy model that accounts for selection on multidimensional skills, family background, prior investments, and unobserved heterogeneity. We identify the model using rich skill measures and quasi-experimental variation in program popularity. For marginal students, STEM specialization in high school increases wages by 9%, with more than half this return attributed to dynamic complementarities that enhance the productivity of subsequent college investments. Consequently, we find that counterfactual policies encouraging high school STEM specialization generate twice the returns of equivalent college-level interventions. These findings demonstrate how the timing of specialized human capital investments matters during adolescence, with important implications for education policies that encourage or restrict specialization.

This paper investigates the dynamics of behavioral changes during a crisis. We study this in the context of the first year of the Covid-19 pandemic, where behavioral responses were important in mitigating the costs of the pandemic. To identify behavioral responses to unanticipated and transient health risk shocks, we combine high-frequency cellphone mobility data with detailed incidence data in Germany. Using an event-study design on local outbreaks, we find that county-level mobility immediately and significantly decreased by about 2.5% in response to an outbreak independent of non-pharmaceutical interventions. We also find that the reproduction rate decreased by about 17% in response to a local outbreak. Both behavioral responses are quite persistent even after the relative health risk has dissipated. By the time of the second wave, the behavioral response to a second or third shock is small or negligible. Our results demonstrate the importance of (1) integrating behavioral persistence in models used to study behavior and policies that change behavior, (2) the effectiveness of policies that provide high-frequency localized information on health risks, and (3) the potential persistence of behavioral changes after the Covid-19 pandemic has passed.

Why do many individuals remain stuck in poor mental health despite the availability of effective treatments? We propose and provide empirical evidence for a mental health trap driven by pessimistic beliefs about self-investment. In our dynamic human capital framework, deteriorating mental health generates pessimistic beliefs, reducing investment in mental health and social functioning and triggering further deterioration. Using the Danish VestLiv longitudinal cohort study—which tracks mental health, beliefs, and coping behaviors from adolescence through young adulthood—we document the self-reinforcing dynamics at the core of this mechanism. We find that both mental health status and beliefs independently predict investment behavior, that beliefs update in response to mental health, and that mental health exhibits high persistence while responding to investment choices. These findings support a belief-based mental health trap that operates even in a setting with universal healthcare and generous social insurance, suggesting a mechanism not driven by access or financial constraints.

The gap in wages between workers with and without a college degree has widened substantially since 1980. This change in observed wage patterns could have multiple explanations, including changes in the individual returns to college training, changes in the composition of workers at each schooling level, and changes in the returns to pre-schooling skill endowments. We estimate a robust dynamic model of educational choices and wages that incorporates all three possibilities. The methodology accounts for measurement error in latent abilities, imperfect proxies, and reverse causality. We find that most of the growth in the observed college premium from the late 1980s to 2015 can be attributed to changes in the causal effect of college. Changes in the composition of workers at each schooling level have offset some of the growth in the college premium.

Does the college major premium reflect returns to prior abilities or college education? We decompose the college major premium into labor market returns to multidimensional abilities (grit, interpersonal, and cognitive) and skills learned in college. This allows us to quantify how much of the college major premium is due to sorting on multi-dimensional abilities and how much is due to the differential labor market value of major-specific skills. We find that sorting on abilities accounts for 10-50% of the college major premium. We also provide novel estimates of complementarities and interaction effects between abilities and skills, since the returns to abilities vary significantly across college majors. We document that 40% of students who enter STEM degrees change major or drop out. We evaluate counterfactual policies to promote STEM degrees, accounting for the fact that many who start STEM degrees do not finish.

Informed by new measurements of labor market dynamics, I develop and estimate an equilibrium search model of worker mobility. I first describe new facts about the dynamics of wages across involuntary unemployment spells in Denmark. This implies that the job-ladder search model cannot by itself explain all the observed movements of workers between firms. I construct a new model of worker mobility which combines search and human capital accumulation. Workers in the model accumulate skills via learning-by-doing which has decreasing returns for a given job. Workers must either be promoted or find a job at a new firm in order to continue learning new skills. I show that by including this incentive to change jobs, career development not only helps explain wage dispersion, but also contributes to a more complete understanding of labor market dynamics. I structurally estimate the job-ladder model using matched employer-employee data from Denmark. The estimates show that the job-ladder model explains less than 10% of the worker mobility seen in the data. In addition, worker heterogeneity explains about 65% of the wage variance for college graduates and about 45% for all other workers.

Can surveys affect human capital investments? This paper examines whether individual education choices and outcomes are affected by a survey posing questions related to expectations and forward-looking behavior. We have administrative data for the whole Swedish population to which an extensive education survey was administered to randomly drawn samples of 3rd graders. The causal effect of the survey on both short- and long-term outcomes is generally not significantly different from zero. We find, however, that being surveyed increases educational attainment and job stability in the early career for those with low parental education.

This paper presents a comprehensive empirical analysis of the impact of attending a child day care center on early childhood development (ECD) in Chile, examining child development from a multi-dimensional perspective. The potential endogeneity associated with the parental decision of sending children to day care centers (or preschools) is addressed. Additionally, unobserved heterogeneity is interpreted as (latent) abilities. This approach provides a unifying framework combining parental decisions, childrens endowments, and child care characteristics. The results of the study suggest that: (i) cognitive and socioemotional test scores from children younger than two are too noisy to be analyzed; (ii) analysis of enrollment in child care centers for children older than two reveals significant effects of family background, unobserved abilities, the local availability of centers, and local capacity; and (iii) enrollment in child care centers seems to boost cognitive development among children older than two.