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Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility: Assessing the Impact of a School Subsidy Program in Mexico

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  • Petra Todd

    ()
    (Department of Economics, University of Pennsylvania)

  • Kenneth I. Wolpin

    ()
    (Department of Economics, University of Pennsylvania)

Abstract

This paper studies the performance of a methodology that can be used to evaluate the impact of new policies that radically depart from existing ones. It uses data gathered from a randomized schooling subsidy experiment in Mexico (i) to estimate and validate a dynamic behavioral model of parental decisions about fertility and child schooling, (ii) to forecast long-term program impacts that extend beyond the life of the experiment, and (iii) to assess the impact of a variety of counterfactual policies. The behavioral model is estimated using data on families in the randomized-out control group and in the treatment group prior to the experiment, both of which did not receive any subsidy. Child wages provide a valuable source of variation in the data for identifying subsidy effects. Using the estimated model, we predict the effects of school subsidies according to the schedule that was implemented under the Mexican PROGRESA program.

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File URL: http://economics.sas.upenn.edu/system/files/working-papers/03-022.pdf
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Bibliographic Info

Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 03-022.

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Length: 62 pages
Date of creation: 01 Apr 2002
Date of revision: 01 Sep 2003
Handle: RePEc:pen:papers:03-022

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Keywords: schooling; child labor; fertility; structural estimation; social experiments;

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References

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  1. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1992. "Pension Plan Provisions and Retirement: Men & Women, Medicare, and Models," NBER Working Papers 4201, National Bureau of Economic Research, Inc.
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  3. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2004. "Equilibrium Policy Experiments and the Evaluation of Social Programs," NBER Working Papers 10283, National Bureau of Economic Research, Inc.
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  5. James J. Heckman, 2000. "Causal Parameters And Policy Analysis In Economics: A Twentieth Century Retrospective," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(1), pages 45-97, February.
  6. V. Joseph Hotz & Robert A. Miller, 1992. "Conditional Choice Probabilities and the Estimation of Dynamic Models," Working Papers, Harris School of Public Policy Studies, University of Chicago 9202, Harris School of Public Policy Studies, University of Chicago.
  7. Willis, Robert J, 1973. "A New Approach to the Economic Theory of Fertility Behavior," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(2), pages S14-64, Part II, .
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  9. Keane, Michael P & Wolpin, Kenneth I, 2001. "The Effect of Parental Transfers and Borrowing Constraints on Educational Attainment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 1051-1103, November.
  10. Keane, Michael P & Wolpin, Kenneth I, 1994. "The Solution and Estimation of Discrete Choice Dynamic Programming Models by Simulation and Interpolation: Monte Carlo Evidence," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 648-72, November.
  11. Zvi Eckstein & Kenneth I. Wolpin, 1999. "Why Youths Drop Out of High School: The Impact of Preferences, Opportunities, and Abilities," Econometrica, Econometric Society, Econometric Society, vol. 67(6), pages 1295-1340, November.
  12. Daniel McFadden, 1987. "A Method of Simulated Moments for Estimation of Discrete Response Models Without Numerical Integration," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 464, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Wolpin, Kenneth I, 1996. "Public-Policy Uses of Discrete-Choice Dynamic Programming Models," American Economic Review, American Economic Association, American Economic Association, vol. 86(2), pages 427-32, May.
  14. Manski, Charles F, 1999. "Analysis of Choice Expectations in Incomplete Scenarios," Journal of Risk and Uncertainty, Springer, Springer, vol. 19(1-3), pages 49-66, December.
  15. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  16. Stinebrickner, Todd R, 2001. "Compensation Policies and Teacher Decisions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(3), pages 751-79, August.
  17. Keane, Michael P & Wolpin, Kenneth I, 2000. "Eliminating Race Differences in School Attainment and Labor Market Success," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 18(4), pages 614-52, October.
  18. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 105(3), pages 473-522, June.
  19. Schultz, T. Paul, 2001. "School subsidies for the poor," FCND briefs, International Food Policy Research Institute (IFPRI) 102, International Food Policy Research Institute (IFPRI).
  20. Behrman, Jere R & Sengupta, Piyali & Todd, Petra, 2005. "Progressing through PROGRESA: An Impact Assessment of a School Subsidy Experiment in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 54(1), pages 237-75, October.
  21. Behrman, Jere R & Pollak, Robert A & Taubman, Paul, 1986. "Do Parents Favor Boys?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 33-54, February.
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Cited by:
  1. Gautier, Pieter A & Moraga-González, José-Luis & Wolthoff, Ronald, 2007. "Structural Estimation of Search Intensity: Do Non-Employed Workers Search Enough?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6440, C.E.P.R. Discussion Papers.

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