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Do public investments in compulsory schooling translate into the same long-run economic gains for all students? Using a large intergovernmental transfer reform in Norway that mechanically shifted municipal school revenues based on pre-reform student age structure, I estimate the long-run impacts of school funding on human capital, earnings, and family outcomes. Municipalities allocate the additional funds primarily toward operating expenditures, especially teacher hiring. On average, nine years of exposure to an additional $100 per pupil per year raises students' annual earnings by about $200 in the mid-30s, implying an internal rate of return of about 6% and a marginal value of public funds between roughly 1.2 and 2.1. Returns are largest for boys from low-educated families, consistent with partial parental crowd-out of public investments among highly educated households. However, these mean effects mask sharp heterogeneity by gender. The labor-market return is concentrated among men, whose earnings rise by over $350 per year, while women show little response in own earnings, though they also show higher human capital outcomes. Economic gains for women are instead realized primarily through the marriage market, experiencing significant increases in partner earnings and couple per-capita income, alongside higher partnership formation. A simple model with skill-increasing labor-market discrimination and gendered norms about partner-provided consumption rationalizes why similar human-capital gains can map into gender-divergent earnings channels.
Work in Progress
Work in Progress
Course-Taking Incentives, College Admissions, and the Human Capital Allocations of Students; Joint with Samuel Hirshman, Kjell Salvanes & Alexander Willén [PDF] (R&R in AEJ Economic Policy)
Abstract: We study how targeted educational incentives shape human capital formation, educational trajectories, and labor market outcomes. Exploiting a nationwide reform in Norway that removed bonus credits from university admission scores for taking science and advanced specialization courses in high school, we provide novel evidence of how marginal changes in course-level incentives affect students' academic decisions and long-run career paths. Using population-wide administrative data and a dose-response difference-in-differences design, we show that students more exposed to the reform shift away from advanced science and specialization courses and toward easier alternatives. This substitution leads to modest GPA gains but lower admission scores and reduces completion of prerequisite courses required for selective programs. As a result, affected students experience a contraction in their higher-education opportunity sets, sort into less selective programs, and become less likely to complete master's degrees, especially in STEM fields. These educational adjustments translate into economically meaningful reductions in realized earnings at age 30. We further show that instead of improving outcomes the policy worsens them for the whole distribution, with larger losses among the most exposed. Survey evidence suggests that these responses operate through both perceived academic costs and unequal awareness of the admissions system. Our findings show that seemingly modest changes in admissions incentives can reshape skill investment, educational sorting, and long-run labor market outcomes.
Balancing Efficiency and Equity: The Effects of Funding Flexibility on Local Educational Choices and their Impacts on Students [PDF]
Abstract: This paper examines whether increased flexibility in education budget choices leads to better learning outcomes. I explore this research question by leveraging an intergovernmental transfer reform in Norway during the 1980s that shifted from public grants tied to specific resource provisions—teaching hours—to needs-based block grants based on demographics. This change gave local governments more freedom in how they allocated education spending. To identify the effects of this increased flexibility, I focus on municipalities' ability to respond to the reform, measured by their distance from national class size caps before the reform. Municipalities farther from these caps had more room to adjust to the changes in incentives. The findings show that municipalities with greater flexibility reduced operational costs through school closures and decreased teacher numbers, leading to larger class sizes. Students in these municipalities experienced significant long-term benefits, including higher educational attainment, improved cognitive abilities, and increased earnings in adulthood. Notably, the positive effects were mainly driven by municipalities that were previously constrained from closing schools, which instead reduced the number of teachers but built more schools, keeping class sizes mostly unchanged. However, the benefits were not evenly distributed. Male students from higher-income families and those in central municipalities gained more, indicating that the reform may have unintentionally widened existing inequalities. Overall, the study suggests that increasing flexibility in education funding can enhance student outcomes, but policymakers should consider the potential for unequal effects across different groups.
Information and the Politics of School Quality: Large Evidence from a Nationwide Reform in Brazil; Joint with Claudio Ferraz, Wayne Sandholtz & Marina Dias
Abstract. We use the introduction of a school-level accountability system in Brazil to estimate the effects of public information on school quality. Reports revealing that schools are high in the test score distribution increase the incumbent mayor’s vote share by about 2 percentage points. The revelation of low scores reduces incumbent mayor vote share by roughly the same margin, but also causes decreased class sizes and pupil-teacher ratios in subsequent years. These effects are larger in places with more educated voters.
The Impact of a Large Social Transfers Expansion on Education and Labor Market Outcomes; Joint with Carlos Henrique Leite Corseuil & Joana Costa
Abstract. We study the labor-market effects of Brazil's Bolsa Família Program, the country's largest cash-transfer policy, after post-pandemic reforms raised average benefits to roughly one-third of national median earnings. Linking program payroll records, the national social registry, and employer-employee administrative data, we exploit the 2023 increase in the income-eligibility threshold to compare households just below the new cutoff with households in the adjacent income band above it. Newly eligible households became about 12 percentage points more likely to receive benefits. Reduced-form estimates show persistent declines in formal employment and formal earnings, while self-reported work changes little. LATE estimates imply that receiving the benefit reduces formal employment by roughly 13-20 percentage points, depending on age and gender, and lowers formal earnings among prime-age adults by about one-quarter to one-third of an annual minimum wage. The decline is weaker among parents than among non-parents. Young beneficiaries also reduce formal employment, but increasing school attendance by about 8 percentage points, consistent with a shift from formal work toward human-capital accumulation. Worker-flow evidence shows that the fall in formal employment is driven by fewer admissions into new formal jobs. We also find moderate effects on fertility, driven by both men and young women.
Peer reviewed in publications
Peer reviewed in publications
Duque, D. V. A., Arnold, J. M. 2025. "Brazil: Social protection and incentives for formal job creation", in "Expanding Social Protection and Addressing Informality in Latin America". OECD Publishing, Paris. [PDF]
Kundu, T., Duque, D. V. A., Pero, V., Terra, C. 2025. "Labor market inequality of opportunity: A comparative analysis of Brazil and India". Revue Economique, Forthcoming
Kugler, M., Viollaz, M., Duque, D., Gaddis, I., Newhouse, D., Palacios-Lopez, A., & Weber, M. (2023). "How Did the COVID-19 Crisis Affect Different Types of Workers in the Developing World?". World Development [PDF]
Additional Working Papers
Additional Working Papers
"Social Subjective Food Poverty Lines in Brazil: Combining Minimal Income Question with Food Security Status"; Joint with Alysson Portella; presented at the 51st National Meeting of Economics/Anpec (2023) [PDF]
Lara Ibarra, G., Paffhausen, A. L., & Duque, D. (2021). "Estimating a Poverty Line for Brazil Based on the 2017/18 Household Budget Survey". World Bank Policy Research Working Paper 9878 [PDF]
"Early Schooling and Maternal Labor Market Outcomes: Evidence from a New School Entry Policy Using Exact Date of Birth in Brazil"; Joint with Gabriel Nemer Tenoury; presented at the IZA/World Bank/UNU-WIDER Jobs and Development Conference & 42nd Meeting of the Brazilian Econometric Society/SBE (2020) [PDF]
Policy Briefs
Policy Briefs
Confereces and Seminars
Confereces and Seminars
39th meeting of the European Economic Association (EEA), 2024
37th European Society for Population Economics (ESPE) Annual Conference, 2024
Equality of Opportunity and Intergenerational Mobility A Global Perspective, 2024
5th Nordic PhD workshop on the Economics of Education, 2024
Conference of the European Association of Labour Economists (EALE), 2023
XXXI Meeting of the Economics of Education Association, 2023
38th meeting of the European Economic Association (EEA), 2023
Opportunity and Mobility Workshop, 2023
51st National Meeting of Economics/Anpec, 2023
Lund PhD Workshop in the Economics of Education, 2022
IZA/World Bank/UNU-WIDER Jobs and Development Conference, 2020
42nd Meeting of the Brazilian Econometric Society/SBE, 2020
WIDER Development Conference: Transforming economies – for better jobs, 2019
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