Browsing by Subject "Labor market outcomes"

How households and individuals respond to adverse and unanticipated shocks is an important concern for both economists and policy makers. This is especially true in developing countries where poverty, weak infrastructure, and a lack of social safety nets often exacerbate the effects of adverse shocks on household welfare. My research addresses these issues in the context of three economic outcomes and behaviors - early life health and the accumulation of human capital, willingness to take on financial risk, and behavior in the labor market. The results of this research project both adds to our understanding of how life experiences shape individuals' well-being and behavior and how policy can help individuals achieve long-term improvements in the lives following adverse events.

My research focuses on households and individuals affected by a large-scale natural disaster, the 2004 Indian Ocean tsunami. I utilize data from the Study of the Tsunami Aftermath and Recovery (STAR), a unique longitudinal survey of individuals and households living in coastal communities in Aceh and North Sumatra, Indonesia, at the time of the tsunami. The STAR surveys were conducted annually for five years after the disaster and include a wide range of demographic, economic, and health measures.

In the first chapter, Child Height after a Natural Disaster, co-authored with Elizabeth Frankenberg, Duncan Thomas, and Jed Friedman, we investigate the immediate and long-run impacts on child health of in utero exposure to stress induced by the tsunami. We investigate whether in utero exposure to stress, as measured by tsunami-induced maternal posttraumatic stress, affected the growth of children born in the aftermath of the tsunami in the critical first five years of their lives. Although previous studies suggest that in utero exposure to stress is related to a number of adverse birth outcomes such as prematurity and lower birth weight, there is little evidence of the impact on linear growth, a strong correlate of later life income. We find evidence that children exposed to high levels of stress beginning in the second trimester experienced reduced growth in the first two years of their lives. We also find evidence that growth reductions largely disappear by age five. This suggests that significant catch-up growth is possible, particularly in the context of pronounced post-disaster reconstruction and economic rehabilitation.

In the second chapter, The Impact of a Natural Disaster on Observed Risk Aversion, I investigate the short and long-term impacts of the 2004 Indian Ocean tsunami on attitudes toward risk. Attitudes toward risk are important determinants of economic, demographic, and health-related behaviors, but how these attitudes evolve after an event like a natural disaster remains unclear because past research has been confounded by issues of selective exposure, mortality, and migration. My study is the first to directly address these problems by utilizing exogenous variation in exposure to a disruptive event in a sample of individuals that is representative of the population as it existed at the time of the event. In addition, intensive efforts were made to track migrants in the sample population, which is important for this study because migration is common following events like natural disasters and is likely related to attitudes toward risk. I find that physical exposure to the tsunami (e.g., seeing or hearing the tsunami or being caught up in the tsunami) causes significant short-term decreases in observed aversion to risk, especially for the poor, but few longer-term differences. This finding has important implications for the design of effective post-disaster assistance policies. In particular, it implies that post-disaster assistance programs should include aid that is consistent with the observed risk attitudes of the survivors such as job training and capital to start-up businesses.

In the last chapter, Labor Market Outcomes following the 2004 Indian Ocean Tsunami, I investigate how labor market outcomes changed in coastal communities in Aceh and North Sumatra following the tsunami and the post-disaster recovery efforts. Although restoring the livelihoods of survivors of adverse events is critical for their long-term recovery, there is little evidence from developing countries of how labor market outcomes change after such events. Using the STAR data, I find a significant and persistent increase in paid employment for younger women in urban communities. The increase occurred in communities that were heavily damaged by the tsunami and those that were not, suggesting that the impacts of the disaster on livelihoods are likely long-lasting and extend beyond the communities that were directly stuck by the disaster.

This dissertation presents three essays on topics in development economics. Drawing on rich longitudinal data as well as measures of cognitive skills adapted from cognitive neuroscience, the chapters focus on health and human capital through the life course. The first essay isolates the causal impact of public health insurance on child health, measured by height-for-age, by exploiting the roll-out of Seguro Popular, a large-scale program that provides public health insurance to about half of Mexico’s population. Drawing on insights from the biology of human linear growth and using population-representative longitudinal data, we establish that Seguro Popular has had a modest impact on child nutritional status. These effects were larger after the program had been established for several years, suggesting that supply-side factors may have been critical impediments. The second essay turns to the relationship between executive function and labor market outcomes. This project describes how a widely used measure of executive function with foundations in cognitive neuroscience was implemented as part of a large-scale, population-representative survey in Indonesia. I find that higher cognitive functioning is associated with rewards in the labor market, particularly for women, and that executive function is related to labor force participation and the choice between wage work and self-employment. Motivated by the importance of executive function and human capital in later life, the third essay turns to the relationship between parental executive functioning and child outcomes. I find that parental executive function is strongly related to child executive function, and that better parental executive function is associated with better child nutritional outcomes, as measured by height-for-age and weight-for-height. The relationship between parents’ executive functioning and child outcomes depends both on the gender of the child and whether the child is first born or has older siblings. These results suggest that the relationships I observe between parental executive functioning and child development are not simply genetic but reflect parental choices and behaviors. Together, these chapters demonstrate the importance of bringing the tools from cognitive neuroscience to economics to further examine the role that specific cognitive skills like executive function play for success and well-being. They also highlight the critical importance of the early childhood household and environment for development, with long-lasting consequences for later life.

Longitudinal surveys have revolutionized empirical research and our understanding of the dynamic processes that affect the economic prosperity, health and well-being of the population. This dissertation explores and provides evidence, through three empirical applications, on the costs and benefits of designing, implementing and using data from a new, innovative longitudinal survey, the Mexican Family Life Survey (MxFLS). The survey, which is representative of the Mexican population living in Mexico in 2002, is designed to follow movers within Mexico and also those who move to the United States. This design lies at the center of the contributions of my research to the scientific literature.

Attrition is the Achilles heel of longitudinal surveys. The first essay of the dissertation focuses on the cost of attrition for scientific knowledge. Following the same individual through time allows a researcher to trace the evolution of a respondent's behaviors and outcomes in a dynamic framework; however, if attrition is selected on unobserved characteristics, the advantage of using panel data could be severely hindered. Exploring different methods to adjust for attrition, this essay provides evidence of limitations of standard post-survey adjustments strategies that are the standard in the literature. These approaches, exploit only baseline characteristics of the respondents and, conditional on those characteristics, treat attriters as missing at random. I provide evidence that this assumption is substantively important and rejected in the MxFLS in spite of the fact that attrition in that survey is low relative to other nationally-representative surveys conducted in the United States and abroad.

The second essay in this dissertation exploits the fact that MxFLS follows movers within Mexico and those who move across the Mexico-US border to provide new insights into the mechanisms that underlie the selectivity of migrants within Mexico, how they differ from migrants who move from Mexico to the U.S. and how those who return contrast with the migrants who remain in the U.S. more permanently. The results provide evidence that human capital is predictive of migration within Mexico and to the United States, but that there is little indication that the decision to stay in the United States is highly correlated with education. In contrast, having relatives in the United States is not only a powerful predictor of migration to the United States, but it is also predictive of successful economic assimilation.

The third essay exploits a different dimension of the longitudinal survey in order to address an important question regarding the impact of unanticipated crime and violence on population well-being. To wit, the essay rigorously examines the impact of the recent surge in violent crime in Mexico on the labor market outcomes, migration, and wealth of the Mexican population. The timing of the last two waves of the MxFLS paired with the panel nature of the survey, allows the comparison of outcomes of the same individual in periods of low and high violence, which removes the potentially endogenous time-invariant unobserved heterogeneity between respondents. Moreover, due to the fact that the MxFLS was designed to follow migrant respondents, this study is able to directly test whether there is a systematic migratory response to crime. The results from this analysis find that crime predicts migration and it negatively affects the labor outcomes of self-employed individuals. In addition, the negative effects on the labor outcomes have translated into reductions in per capita expenditure at the household level, which suggests that the recent wave of violence in Mexico may have long-term consequences on the wealth and well-being of Mexican households.