Long-term and Intergenerational Effects of Education: Evidence from School Construction in Indonesia,” with Richard Akresh and Daniel Halim (conditionally accepted, Economic Journal)

Online Appendix

Interactive Cost-Benefit Analysis

Featured on VoxDev, on VoxEU, and on GlobalDev (in Spanish and French)

NBER working paper (2018)

In 1973, the Indonesian government began one of the largest school construction programs ever. We use 2016 nationally representative data to examine the long-term and intergenerational effects of additional schooling as a child. We use a difference-in-differences identification strategy exploiting variation across birth cohorts and regions in the number of schools built. Men and women exposed to the program attain more education. As adults, exposed men are more likely to be formal workers, work outside agriculture, and migrate. Women are more likely to migrate and have fewer children. Households with parents exposed to the program have improved living standards and pay more government taxes. Education benefits are transmitted to the next generation. Increased parental education has larger impacts for daughters, particularly if mothers are exposed to school construction. Intergenerational results are driven by changes in the marriage partner’s characteristics, with spouses having more education and improved labor market outcomes.

Recent research has pointed to large gaps in labor productivity between the agricultural and non-agricultural sectors in low-income countries, as well as between workers in rural and urban areas. Most estimates are based on national accounts or repeated cross-sections of micro-survey data, and as a result typically struggle to account for individual selection between sectors. This paper uses long-run individual-level panel data from two low-income countries (Indonesia and Kenya). Accounting for individual fixed effects leads to much smaller estimated productivity gains from moving into the non-agricultural sector (or urban areas), reducing estimated gaps by over 80%. Per capita consumption gaps are also small once individual fixed effects are included. Estimated productivity gaps do not emerge up to five years after a move between sectors. We evaluate whether these findings imply a re-assessment of the conventional wisdom regarding sectoral gaps, discuss how to reconcile them with existing cross-sectional estimates, and consider implications for the desirability of sectoral reallocation of labor.

We examine the determinants of membership into the National Bureau of Economic Research using data from all tenured and tenure-track economists at R1 universities in the US. We construct an annual panel of employment, research productivity, NBER membership, and connectedness to NBER members. Combining these data with a survival model, we show that men are substantially less likely to be selected into NBER. NBER membership is highly dependent on top-5 publications rather than total publications or citations, particularly so for women. Networks play a crucial role in determining NBER membership – especially having same-sex colleagues and advisors who are NBER members.

We study the labour market impact of internal migration in Indonesia by instrumenting migrant flows with rainfall shocks at the origin area. Estimates reveal that a one percentage point increase in the share of migrants decreases income by 0.97% and reduces employment by 0.24 percentage points. These effects are different across sectors: employment reductions are concentrated in the formal sector, while income reduction occurs in the informal sector. Negative consequences are most pronounced for low‐skilled natives, even though migrants are systematically highly skilled. We suggest that the two‐sector nature of the labour market may explain this pattern.

There are many reasons why people migrate, and different motivations may lead to different types of migration. I study the choice to migrate within a developing country, where people may face substantial risk and liquidity constraints. On the one hand, migration can be used as an ex-post risk-coping strategy after sudden negative income shocks. On the other hand, migration can be seen an as investment, but liquidity constraints may prevent households from paying up-front migration costs, in which case positive income shocks may increase migration. I model these diverging migratory responses to shocks in a dynamic migration choice model that I test using a 28-year panel of internal migration decisions by more than 45,000 individuals in Indonesia. I document evidence that migration increases after contemporaneous negative income shocks as well as after an accumulation of preceding positive shocks. Consistent with the model, migration after negative shocks is more often characterized by temporary moves to nearby, rural destinations, while migration as an investment strategy is more likely to involve urban destinations and take place over longer durations and distances.

While formal insurance is widespread in much of the developed world, households in lower-income countries continue to rely heavily on informal risk-sharing networks when faced with unexpected shocks. Kin networks of non-coresident family members may play an important role by providing each other with informal social protection, sharing resources in response to correlated production shocks (rainfall) or idiosyncratic household shocks (sickness and death). Using detailed panel data from Indonesia, we examine how inter-household transfers within a household's kin network respond to different types of shocks and whether they are able to reduce household vulnerability. We find that households are exposed to meaningful risk from variations in local rainfall in the form of both income and household consumption. Rainfall substantially increases both transfers sent and received by households, suggesting that household and local supply effects dominate demand effects resulting from rainfall fluctuation. Finally, we find modest evidence that transfers reduce vulnerability of consumption to rainfall fluctuations by up to 11\%, but do not find strong evidence on the efficacy of formal social protection programs.

We estimate the causal effect of internal migration on crime in Indonesia by combining detailed migration data with reports of crime and violence from over 2 million local newspapers, and from individual victimization reports from nationally representative surveys. To address endogeneity in the choice to migrate, we instrument the share of migrants in a destination with rainfall shocks at the migrant origin locations. We find that a 1 percent increase in the proportion of migrants in the population leads to a 3.9 percent increase in the number of economically-motivated crimes reported by local media. This is consistent with the existing literature on the effect of international migration to developed countries, but larger in magnitude. However, when using data on individual victimization from household surveys, we instead find that an increase in the share of migrants leads to a reduction in the probability that a person is a crime victim at the destination. The reduction in crime victimhood is particularly large for migrants and for women. We explore various reasons for these competing results, including reporting bias in newspapers as a source of increased crime coverage in areas with an influx of migrants, even though the number of crime victims decreases.

Selection and Heterogeneity in the Returns to Migration,” with Eduardo Cenci and Emilia Tjernstrom

There is considerable debate on the returns to rural-urban migration in developing countries and magnitudes differ sharply depending on the method used. We aim to reconcile these divergent estimates by explicitly accounting for the role of heterogeneity in the returns to migration. We begin by using machine learning methods to examine key features of the distribution of conditional average returns. We exploit rich panel data from over 58,000 individuals in Indonesia whom we observe over a 28-year time period. The estimates from this exercise inform a multi-period Roy model, which allows for worker heterogeneity in both absolute and comparative advantage. We then explore several econometric models that allow us to estimate returns under both types of heterogeneity. The first of these is an instrumental variable approach to estimate marginal treatment effects using weather shocks interacted with historical migration patterns. The second is a correlated random coefficient model that gets identification from a parametric assumption on the relationship between comparative advantage and absolute advantage. This model lets us extrapolate the returns identified from switcher sub-populations to stayers—a group of particular interest to policymakers deciding whether to encourage migration as a development strategy. We then draw on recent developments in the literature on non-parametric panel data identification and employ a group random coefficient model that allows us to explicitly test the parametric assumptions that identify the returns to non-movers.

This paper analyzes the effects of internal emigration on labor market outcomes in sending areas in Indonesia. To identify the impact, we apply an instrumental variable approach using labor demand shocks at destination areas to instrument emigration from origin areas. These shocks act as pull factors that generate exogenous variation in the number of emigrants that leave their origin locations, which allow us to estimate the causal effect of emigration on these areas. We find that individuals in origin locations with higher emigrant shares have lower income, specially in the formal sector: one percentage point increase in the emigrant share, decreases the average income by 5% and the formal income by 4%. There are no effects on labor supply. These effects are present in low-skilled workers and in males. The results can be explained under a dual-sector labor market model that is based on two sectors that determine wages differently.

Work in Progress

What’s in the Name? Volunteer and Employment Opportunities in Egypt,” with Brian Feld

Labor Markets and Childbirth: New Evidence from European Countries,” with Wilfried Adohinzin, Allen Hardiman, Rebecca Thornton and Theodoros Velentzas

Who Belongs? How Much is Belonging Worth? The Determinants and Effects of Selective Membership in the Economics Profession,” with Rebecca Thornton

Scoring Points: How Soccer Performance Shapes Attitudes towards Migrants,” with Brian Feld

Intergenerational Transfers and Informal Safety Nets,” with Sylvan Herskowitz

The Long-Term Effects of Graduating during the Asian Financial Crisis,” with Allen Hardiman

Scientific Credit and Page Limits: Evidence from Publications in Economics,” with Cristhian Molina and Rebecca Thornton

Reports and reviews:

Understanding Attitudes Towards Migrants: A Broader Perspective,” with Jeni Klugman, Human Development Research Paper Series, No 53, 2009

Human Development Report 2009: Overcoming barriers: Human mobility and development,” contributor, United Nations Development Program, 2009