All Publications

Publication database

Article TitleAuthorsAbstractDownloadsOutletKeywordsDate
The Myth of Achievement Tests: The GED and the Role of Character in American LifeJames J. Heckman, J. E. Humphries, and T. Kautz

Achievement tests play an important role in modern societies. They are used to evaluate schools, to assign students to tracks within schools, and to identify weaknesses in student knowledge. The GED is an achievement test used to grant the status of high school graduate to anyone who passes it. GED recipients currently account for 12 percent of all high school credentials issued each year in the United States. But do achievement tests predict success in life?

The Myth of Achievement Tests shows that achievement tests like the GED fail to measure important life skills. James J. Heckman, John Eric Humphries, Tim Kautz, and a group of scholars offer an in-depth exploration of how the GED came to be used throughout the United States and why our reliance on it is dangerous. Drawing on decades of research, the authors show that, while GED recipients score as well on achievement tests as high school graduates who do not enroll in college, high school graduates vastly outperform GED recipients in terms of their earnings, employment opportunities, educational attainment, and health. The authors show that the differences in success between GED recipients and high school graduates are driven by character skills. Achievement tests like the GED do not adequately capture character skills like conscientiousness, perseverance, sociability, and curiosity. These skills are important in predicting a variety of life outcomes. They can be measured, and they can be taught.

Using the GED as a case study, the authors explore what achievement tests miss and show the dangers of an educational system based on them. They call for a return to an emphasis on character in our schools, our systems of accountability, and our national dialogue.

Book (@UChicagoPress)

Chicago: University of Chicago Press, 2014.

2014 Jan
Giving Kids a Fair ChanceJames J. Heckman

In Giving Kids a Fair Chance, Nobel Prize-winning economist James Heckman argues that the accident of birth is the greatest source of inequality in America today. Children born into disadvantage are, by the time they start kindergarten, already at risk of dropping out of school, teen pregnancy, crime, and a lifetime of low-wage work. This is bad for all those born into disadvantage and bad for American society.

Book (@MITPress)

Cambridge, MA: MIT Press, 2013.

2013 Mar
Global Perspectives on the Rule of LawJames J. Heckman, R. Nelson and L. Cabatingan

Global Perspectives on the Rule of Law is a collection of original research on the rule of law from a panel of leading economists, political scientists, legal scholars, sociologists and historians. The chapters critically analyse the meaning and foundations of the rule of law and its relationship to economic and democratic development, challenging many of the underlying assumptions guiding the burgeoning field of rule of law development. The combination of jurisprudential, quantitative, historical/comparative, and theoretical analyses seeks to chart a new course in scholarship on the rule of law: the volume as a whole takes seriously the role of law in pursuing global justice, while confronting the complexity of instituting the rule of law and delivering its promised benefits.

Written for scholars, practitioners, and policymakers, Global Perspectives offers a unique combination of jurisprudential and empirical research that will be provocative and relevant to those who are attempting to understand and advance the rule of law globally. The chapters progress from broad questions regarding current rule of development efforts and the concept of rule of law to more specific issues pertaining to economic and democratic development. Specific countries, such as China, India, and seventeenth-century England and The Netherlands, serve as case studies in some chapters, while broad global surveys feature in other chapters. Indeed, this impressive scope of research ushers in the next generation of scholarship in this area.

Book (@Routledge)

New York: Routledge, 2010.

2010 Jul
Handbook of Econometrics, Vol 6BJames J. Heckman and E.L. Leamer

Book (@ScienceDirect)

Amsterdam: North-Holland, 2007.

2007 Jan
Handbook of Econometrics, Vol 6AJames J. Heckman and E.L. Leamer

Book (@ScienceDirect)

Amsterdam: North-Holland, 2007.

2007 Jan
Law and Employment: Lessons From Latin America and the CaribbeanJames J. Heckman and C. Pages

This book analyzes the effects of regulation and deregulation on Latin American labor markets and presents empirically grounded studies of the costs of regulation. Numerous labor regulations that have been introduced or reformed in Latin America in the past thirty years have had important economic consequences. The book documents the behavior of firms attempting to stay in business and be competitive while facing the high costs of complying with these labor laws. They challenge the prevailing view that labor market regulations affect only the distribution of labor incomes and have little or no impact on efficiency or the performance of labor markets. Using new micro-evidence, this book shows that labor regulations reduce labor market turnover rates and flexibility, promote inequality, and discriminate against marginal workers. Along with in-depth studies of Colombia, Peru, Brazil, Argentina, Chile, Uruguay, Jamaica, and Trinidad, this book provides comparative analysis of Latin American economies against a range of European countries and the United States.

Book (@UChicagoPress)

University of Chicago Press, for NBER, 2004.

2004 Jan
Inequality in America: What Role for Human Capital Policy?James J. Heckman and A. Krueger

The surge of inequality in income and wealth in the United States over the past twenty-five years has reversed the steady progress toward greater equality that had been underway throughout most of the twentieth century. This economic development has defied historical patterns and surprised many economists, producing vigorous debate. Inequality in America: What Role for Human Capital Policies? examines the ways in which human capital policies can address this important problem. Taking it as a given that potentially low-income workers would benefit from more human capital in the form of market skills and education, James Heckman and Alan Krueger discuss which policies would be most effective in providing it: should we devote more resources to the entire public school system, or to specialized programs like Head Start? Would relaxing credit restraints encourage more students to attend college? Does vocational training actually work? What is the best balance of private and public sector programs?

The book preserves the character of the symposium at which the papers were originally presented, recreating its atmosphere of lively debate. It begins with separate arguments by Krueger and Heckman (writing with Pedro Carneiro), which are followed by comments from other economists. Krueger and Heckman and Carneiro then offer separate responses to the comments and final rejoinders.

Book (@MITPress)

Cambridge, MA: MIT Press, 2003.

2003 Dec
Handbook of Econometrics, Vol 5James J. Heckman and E.L. Leamer

Book (@ScienceDirect)

(edited with E. L. Leamer). New York: North-Holland, 2001

2001 Jan
The Economics of Investing in Early Childhood: Importance of Understanding the Science of ScalingJames J. Heckman, J. Zhou, A. Baulos, and B. Liu

Book (@Routledge)

Forthcoming in The Scale-up Effect in Early Childhood and Public Policy: Why interventions lose impact at scale and what we can do about it, D. Suskind and J. List, eds. New York, NY: Taylor and Francis.

2021 May
Inference with Imperfect Randomization: The Case of the Perry Preschool ProgramJames J. Heckman, R. Pinto, and A. Shaikh

This paper considers the problem of making inferences about the effects of a program on multiple outcomes when the assignment of treatment status is imperfectly randomized. By imperfect randomization we mean that treatment status is reassigned after an initial randomization on the basis of characteristics that may be observed or unobserved by the analyst. We develop a partial identification approach to this problem that makes use of information limiting the extent to which randomization is imperfect to show that it is still possible to make nontrivial inferences about the effects of the program in such settings. We consider a family of null hypotheses in which each null hypothesis specifies that the program has no effect on one of several outcomes of interest. Under weak assumptions, we construct a procedure for testing this family of null hypotheses in a way that controls the familywise error rate – the probability of even one false rejection – in finite samples. We develop our methodology in the context of a reanalysis of the HighScope Perry Preschool program. We find statistically significant effects of the program on a number of different outcomes of interest, including outcomes related to criminal activity for males and females, even after accounting for the imperfectness of the randomization and the multiplicity of null hypotheses.

Working Paper (@NBER)

Forthcoming, Journal of Econometrics. (2021).

2020 Jul
Using a Satisficing Model of Experimenter Decision-Making to Guide Finite-Sample Inference for Compromised ExperimentsJames J. Heckman and G. Karapakula

This paper presents a simple decision-theoretic economic approach for analyzing social experiments with compromised random assignment protocols that are only partially documented. We model administratively constrained experimenters who satisfice in seeking covariate balance. We develop design-based small-sample hypothesis tests that use worst-case (least favorable) randomization null distributions. Our approach accommodates a variety of compromised experiments, including imperfectly documented re-randomization designs. To make our analysis concrete, we focus much of our discussion on the influential Perry Preschool Project. We reexamine previous estimates of program effectiveness using our methods. The choice of how to model reassignment vitally affects inference.

Working Paper (@NBER)

Forthcoming, Econometric Journal. (2021).

2020 Aug
Lessons from Denmark about Inequality and Social MobilityJames J. Heckman and R. Landersø

Many American policy analysts point to Denmark as a model welfare state with low levels of income inequality and high levels of income mobility across generations. It has in place many social policies now advocated for adoption in the U.S. Despite generous Danish social policies, family influence on important child outcomes in Denmark is about as strong as it is in the United States. More advantaged families are better able to access, utilize, and influence universally available programs. Purposive sorting by levels of family advantage create neighborhood effects. Powerful forces not easily mitigated by Danish-style welfare state programs operate in both countries.

Working Paper (@NBER)

Forthcoming, Labour Economics. (2021).

2021 Mar
Some Contributions of Economics to the Study of PersonalityJames J. Heckman, T. Jagelka, and T. Kautz

This paper synthesizes recent research in economics and psychology on the measurement and empirical importance of personality skills and preferences. They predict and cause important life outcomes such as wages, health, and longevity. Skills develop over the life cycle and can be enhanced by education, parenting, and environmental influences to different degrees at different ages. Economic analysis clarifies psychological studies by establishing that personality is measured by performance on tasks which depends on incentives and multiple skills. Identification of any single skill therefore requires isolation of confounding factors, accounting for measurement error using rich data and application of appropriate statistical techniques. Skills can be inferred not only by questionnaires and experiments but also from observed behavior. Economists advance the analysis of human differences by providing anchored measures of economic preferences and studying their links to personality and cognitive skills. Connecting the research from the two disciplines promotes understanding of the number and nature of skills and preferences required to characterize essential differences.

Working Paper (@IZA)

Forthcoming, Handbook of Personality. (2021).

behavioral economics, psychology, preferences, human diversity2019 Nov
Randomization and Social Policy Evaluation RevisitedJames J. Heckman

This chapter examines the case for randomized controlled trials in economics. It revisits the author’s previous paper “Randomization and Social Policy Evaluation” and updates its message. The chapter presents a brief summary of the history of randomization in economics. It identifies two waves of enthusiasm for the method as “Two Awakenings” because of the near-religious zeal associated with each wave. The First Wave substantially contributed to the development of microeconometrics because of the awed nature of the experimental evidence. The Second Wave has improved experimental designs to avoid some of the technical statistical issues identified by econometricians in the wake of the First Wave. However, the deep conceptual issues about parameters estimated, and the economic interpretation and the policy relevance of the experimental results have not been addressed in the Second Wave.

Paper (@OUP)

in Randomized Control Trials in the Field of Development: A Critical Perspective. F. Be ́de ́carrats, I. Gue ́rin, and F. Roubaud, eds. New York, NY: Oxford University Press. pp. 304-330. (2020).

field experiments, randomized control trials, dogma, faith, methodology2020 Oct
An Empirical Analysis of Racial Difference in Police Use of Force: A CommentJames J. Heckman and S. Durlauf

Paper (@UChicagoPress)

Journal of Political Economy, 128(10): 3998-4002. (2020).

2020 Oct
Quantifying the Life-cycle Benefits of an Influential Early Childhood ProgramJames J. Heckman, J.-L. Garcìa, D.-E. Leaf, and M.-J. Prados

This paper quantifies and aggregates the multiple lifetime benefits of an influential high-quality early-childhood program with outcomes measured through midlife. Guided by economic theory, we supplement experimental data with nonexperimental data to forecast the life-cycle benefits and costs of the program. Our point estimate of the internal rate of return is 13.7%, with an associated benefit/cost ratio of 7.3. We account for model estimation and forecasting error and present estimates from extensive sensitivity analyses. This paper is a template for synthesizing experimental and nonexperimental data using economic theory to estimate the long-run life-cycle benefits of social programs.

Paper (@UChicagoPress)

Journal of Political Economy, 128(7): 2502-2541. (2020).

2020 Jul
Publishing and Promotion in Economics: The Tyranny of the Top FiveJames J. Heckman and S. Moktan

This paper examines the relationship between placement of publications in top five (T5) journals and receipt of tenure in academic economics departments. Analyzing the job histories of tenure-track economists hired by the top 35 US economics departments, we find that T5 publications have a powerful influence on tenure decisions and rates of transition to tenure. A survey of the perceptions of young economists supports the formal statistical analysis. Pursuit of T5 publications has become the obsession of the next generation of economists. However, the T5 screen is far from reliable. A substantial share of influential publications appear in non-T5 outlets. Reliance on the T5 to screen talent incentivizes careerism over creativity.

Paper (@AEA)

Journal of Economic Literature, 58(2): 419-470. (2020).

2020 Jun
Sensitivity of Self-Reported Non-Cognitive Skills to Survey Administration ConditionsJames J. Heckman, Y. Chen, S. Feng, and T. Kautz

Noncognitive skills (e.g., persistence and self-control) are typically measured using self-reported questionnaires in which respondents rate their own skills. In many applications—including program evaluation and school accountability systems—such reports are assumed to measure only the skill of interest. However, self-reports might also capture other dimensions aside from the skill, such as aspects of a respondent’s situation, which could include incentives and the conditions in which they complete the questionnaire. To explore this possibility, this study conducted 2 experiments to estimate the extent to which survey administration conditions can affect student responses on noncognitive skill questionnaires. The first experiment tested whether providing information about the importance of noncognitive skills to students directly affects their responses, and the second experiment tested whether incentives tied to performance on another task indirectly affect responses. Both experiments suggest that self-reports of noncognitive skills are sensitive to survey conditions. The effects of the conditions are relatively large compared with those found in the program evaluation literature, ranging from 0.05 to 0.11 SDs. These findings suggest that the effects of interventions or other social policies on self-reported noncognitive skills should be interpreted with caution.

Paper (@PNAS)

Proceedings of the National Academy of Sciences, 117 (2) 931-935. (2020).

noncognitive skills, psychological assessment, personality traits, Big Five, incentives2020 Jan
The Race Between Demand and Supply: Tinbergen’s Pioneering Studies of Earnings In- equalityJames J. Heckman

Understanding inequality and devising policies to alleviate it was a central focus of Jan Tinbergen’s lifetime research. He was far ahead of his time in many aspects of his work. This essay places his work in the perspective of research on inequality in his time and now, focusing on his studies on the pricing of skills and the evolution of skill prices. In his most fundamental contribution, Tinbergen developed the modern framework for hedonic models as part of his agenda for integrating demand and supply for skills to study determination of earnings and its distribution and the design of effective policy. His lifetime emphasis on social planning caused some economists to ignore his fundamental work.

Paper (@SpringerLink)

De Economist, 167(3): 243-258. (2019).

2019 May
Econometric Mixture Models and More General Models for Unobservables in Duration AnalysisJames J. Heckman and Christopher R. Taber

This paper considers models for unobservables in duration models. It demonstrates how cross-section and time-series variation in regressors facilitates identification of single-spell, competing risks and multiple spell duration models. We also demonstrate the limited value of traditional identification studies by considering a case in which a model is identified in the conventional sense but cannot be consistently estimated.

Paper (@NBER)

National Bureau of Economic Research Technical Working Paper Series, No. 157

duration models, cross-section variation, time-series variation, single-spell models, competing risks models, multiple-spell duration models1994 Jun
Allander Series: Skill Policies for ScotlandJames J. Heckman and Dimitriy V. Masterov

This paper argues that skill formation is a life-cycle process and develops the implications of this insight for Scottish social policy. Families are major producers of skills, and a successful policy needs to promote effective families and to supplement failing ones. We present evidence that early disadvantages produce severe later disadvantages that are hard to remedy. We also show that cognitive ability is not the only determinant of education, labor market outcomes and pathological behavior like crime. Abilities differ in their malleability over the life-cycle, with noncognitive skills being more malleable at later ages. This has important implications for the design of policy. The gaps in skills and abilities open up early, and schooling merely widens them. Additional university tuition subsidies or improvements in school quality are not warranted by Scottish evidence. Company-sponsored job training yields a higher return for the most able and so this form of investment will exacerbate the gaps it is intended to close. For the same reason, public job training is not likely to help adult workers whose skills are rendered obsolete by skill-biased technological change. Targeted early interventions, however, have proven to be very effective in compensating for the effect of neglect.

Paper (@NBER)

National Bureau of Economic Research Working Paper Series, No. 11032

Scotland, intergenerational mobility, skill development2005 Jan
The Schooling Quality-Earnings Relationship: Using Economic Theory to Interpret Functional Forms Consistent with the EvidenceJames J. Heckman, Anne Layne-Farrar, and Petra Todd

This paper investigates the economic and empirical foundations of the evidence relating earnings to schooling quality. We replicate the Card-Krueger model for Census years 1970, 1980 and 1990 and find that it consistently produces a strong relationship between schooling quality and the rate of return to schooling. We test key identifying assumptions used by Card and Krueger and others. Several assumptions are rejected. When they are relaxed, the evidence for a strong effect of schooling quality on earning is greatly weakened. A crucial identifying assumption is the absence of selective migration on the basis of earnings. Nonparametric tests strongly reject this hypothesis. The conventional assumption of linearity of the earnings- schooling relationship widely used in the literature is also rejected. The only surviving evidence of any schooling quality effect is in the return to college education. We also test and reject conventional efficiency unit models of the pricing of labor services. The empirically concordant model of earnings is a model of heterogeneous human capital in which regional shocks affect the prices of less- skilled labor.

Paper (@NBER)

National Bureau of Economic Research Working Paper Series, No. 5288

Census, rate of return to schooling, return to college education, efficiency unit models1995 Oct
Assessing Clinton's Program on Job Training, Workfare, and Education in the WorkplaceJames J. Heckman

The Clinton administration has made job training and skill upgrading a major priority. Secretary of Labor Robert Reich has already presented a bold program for skill enhancement drawing on a new consensus in certain circles of the social science and policy communities about the need to upgrade the nation’s skills. An apparently new approach to training and education has been proposed and Secretary Reich is now busy selling it to the Congress and the Nation. This paper provides background on the problems in the labor market that motivate the new Clinton-Reich initiatives on training and schooling. It briefly summarizes the proposed strategies and the background philosophy for the Clinton-Reich agenda. It then considers the evidence that supports or contradicts assumptions of their plan. There is a lot of evidence about many of the ‘new’ proposals because some are reworked versions of old programs that have been carefully evaluated. Other proposals borrow ideas from Germany. I compare the rhetoric that accompanies these proposals in the context of the U.S. labor market. Still other proposals have been evaluated in demonstration projects but the lessons from these evaluations have not yet influenced administration thinking. This is unfortunate because many current plans are based on assumptions that have been discredited in careful empirical studies. This research has not yet caught the attention of the policy makers in Washington.

Paper (@NBER)

National Bureau of Economic Research Working Paper Series, No. 4428.

job training, skill training, government policy, education, labor market, policy evaluation1993 Aug
Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?Christopher J. Flinn and James J. Heckman

This paper formulates and tests the hypothesis that the categories unemployed and out of the labor force are behaviorally distinct labor force states. Our empirical results indicate that they are. In the empirically relevant range the exit rate from unemployment to employment exceeds the exit rate from out of the labor force to employment. This evidence is shown to be consistent with a simple job search model of productive unemployment with log concave wage offer distributions. We prove that if unemployed workers receive job offers more frequently than workers out of the labor force, and if wage offer distributions are log concave, the exit rate from unemployment to employment exceeds the exit rate from out of the labor force to employment.

Paper (@NBER)

National Bureau of Economic Research Working Paper Series, No. 979

exit rate, job search model1982 Sep
Removing the Veil of Ignorance in Assessing the Distributional Impacts of Social PoliciesPedro Carniero, Karsten T. Hansen, and James J. Heckman

This paper summarizes our recent research on evaluating the distributional consequences of social programs. This research advances the economic policy evaluation literature beyond estimating assorted mean impacts to estimate distributions of outcomes generated by different policies and determine how those policies shift persons across the distributions of potential outcomes produced by them. Our approach enables analysts to evaluate the distributional effects of social programs without invoking the ‘Veil of Ignorance’ assumption often used in the literature in applied welfare economics. Our methods determine which persons are affected by a given policy, where they come from in the ex-ante outcome distribution and what their gains are. We apply our methods to analyze two proposed policy reforms in American education. These reforms benefit the middle class and not the poor.

Paper (@NBER)

National Bureau of Economic Research Working Paper Series, No. 8840.

evaluation of social programs, education, inequality2002 Mar
Measuring the Effect of an Anti-Discrimination ProgramOrley Ashenfelter and James J. Heckman

Since 1941, six Executive Orders have been issued forbidding Federal government contractors from discriminating against minority workers. In principle, all prospective contractors are required to demonstrate compliance with the law before a contract is let. The potential penalties are severe: failure to comply with the law may result in revocation of current contracts and suspension of the right to bid on future contracts. Despite these provisions, doubts have been raised about the effectiveness of the Orders. Defenders of the Orders cite cases in which contract award dates have been postponed until firms have taken steps toward compliance with the law. In this paper, we investigate these competing claims using data from 40,445 establishments sampled in 1966 and 1970. In the first section of this paper, we distinguish what can be measured from what cannot. We develop a framework to measure and interpret program effects. In the second section we discuss the design of our sample and present results of an analysis of the randomness of this sample. In the third and concluding section, we present the estimates and discuss their plausibility.

Paper (@NBER)

National Bureau of Economic Research Working Paper Series, No. 50

federal contracts, racial discrimination, program effects1974 Aug
Policies To Promote Growth and Economic Efficiency in MexicoJavier Arias, Oliver Azuara, Pedro Bernal, James J. Heckman, and Cajeme Villarreal.

This paper discusses the problems facing the Mexican economy. It operates under a heavy burden of monopoly and regulation. We focus on two issues that should receive more attention in discussions of Mexican policy. (1) The family is under stress in Mexico and this retards the growth of skills of its workforce. (2) The informal sector is large, mostly due to the heavy burden of monopoly and regulation. We find little evidence that the introduction of social protection programs for workers outside the formal sector have promoted the growth of the informal sector.

Paper (@NBER)

National Bureau of Economic Research Working Paper Series, No. 16554.

monopoly, regulation, family, skills, informal sector2010 Nov
Gary Becker RememberedJames J. Heckman, E. P. Lazear, and K. M. Murphy

Paper (@UChicagoPress)

Journal of Political Economy, 126(S1): S1-S6. (2018).

2018 Oct
Returns to Education: The Causal Effects of Education on Earnings, Health, and SmokingJames J. Heckman, J. E. Humphries, and G. Veramendi

This paper estimates returns to education using a dynamic model of educational choice that synthesizes approaches in the structural dynamic discrete choice literature with approaches used in the reduced-form treatment effect literature. It is an empirically robust middle ground between the two approaches that estimates economically interpretable and policy-relevant dynamic treatment effects that account for heterogeneity in cognitive and noncognitive skills and the continuation values of educational choices. Graduating from college is not a wise choice for all. Ability bias is a major component of observed educational differentials. For some, there are substantial causal effects of education at all stages of schooling.

Paper (@UChicagoPress)

Journal of Political Economy, 126(S1): S197- S246. (2018).

2018 Oct
The Nonmarket Benefits of Education and AbilityJames J. Heckman, J. E. Humphries, and G. Veramendi

This paper analyzes the nonmarket benefits of education and ability. Using a dynamic model of educational choice, we estimate returns to education that account for selection bias and sorting on gains. We investigate a range of nonmarket outcomes, including incarceration, mental health, voter participation, trust, and participation in welfare. We find distinct patterns of returns that depend on the levels of schooling and ability. Unlike the monetary benefits of education, the benefits to education for many nonmarket outcomes are greater for low-ability persons. College graduation decreases welfare use, lowers depression, and raises self-esteem more for less-able individuals.

Paper (@UChicagoPress)

Journal of Human Capital, 12(2): 282-304. (2018).

2018 May
Evaluation of the Reggio Approach to Early EducationJames J. Heckman, P. Biroli, D. Del Boca, L. P. Heckman, Y. K. Koh, S. Kuperman, S. Moktan, C. Pronzato, and A. Ziff

We evaluate the Reggio Approach using non-experimental data on individuals from the cities of Reggio Emilia, Parma and Padova belonging to one of five age cohorts: ages 50, 40, 30, 18, and 6 as of 2012. The treated were exposed to municipally offered infant-toddler (ages 0–3) and preschool (ages 3–6) programs in Reggio Emilia. The control group either did not receive formal childcare or were exposed to programs offered by municipal systems (outside of Reggio Emilia), or by state or religious systems (in all three cities). We exploit the city-cohort structure of the data to estimate treatment effects using three strategies: difference-in-differences, matching, and matched-difference-in-differences. Most positive and significant effects are generated from comparisons of the treated with individuals who did not receive formal childcare. Relative to not receiving formal care, the Reggio Approach significantly boosts outcomes related to employment, socio-emotional skills, high school graduation, participation in elections, and obesity. Comparisons with individuals exposed to alternative forms of childcare do not yield strong patterns of positive and significant effects. This suggests that differences between the Reggio Approach and other alternatives are not sufficiently large to result in significant differences in outcomes. This interpretation is supported by a survey we conduct, which documents increasing similarities in the administrative and pedagogical practices of childcare systems in the three cities over time.

Paper (@ScienceDirect)

Research in Economics, 72(1): 1-32. (2018).

Reggio approach, Early childhood education, Childcare, Evaluation, Italian education2018 Mar
Unordered MonotonicityJames J. Heckman and R. Pinto

This paper defines and analyzes a new monotonicity condition for the identification of counterfactuals and treatment effects in unordered discrete choice models with multiple treatments, heterogeneous agents, and discrete‐valued instruments. Unordered monotonicity implies and is implied by additive separability of choice of treatment equations in terms of observed and unobserved variables. These results follow from properties of binary matrices developed in this paper. We investigate conditions under which unordered monotonicity arises as a consequence of choice behavior. We characterize IV estimators of counterfactuals as solutions to discrete mixture problems.

Paper (@Wiley)

Econometrica, 86(1): 1–35. (2018).

Instrumental variables, monotonicity, revealed preference, Generalized Roy model, binary matrices, discrete choice, selection bias, identification, discrete mixtures2018 Feb
Chicago Labor EconomicsJames J. Heckman

Commemorative essay in “The Past, Present, and Future of Economics: A Celebration of the 125 Year Anniversary of the JPE and of Chicago Economics,” edited by John List and Harald Uhlig. Journal of Political Economy 125(6): 1840- 1845. (2018).

2017 Dec
Abducting EconomicsJames J. Heckman and B. Singer

Abduction is the process of generating and choosing models, hypotheses, and data analyzed in response to surprising findings. All good empirical economists abduct. Explanations usually evolve as studies evolve. The abductive approach challenges economists to step outside the framework of received notions about the “identification problem” that rigidly separates the act of model and hypothesis creation from the act of inference from data. It asks the analyst to engage models and data in an iterative dynamic process, using multiple models and sources of data in a back and forth where both models and data are augmented as learning evolves.

Paper (@AEA)

American Economic Review: Papers and Proceedings, 107(5): 209-302. (2017).

2017 May
Inequality in Human Capital and Endogenous Credit ConstraintsJames J. Heckman and R. Hai

This paper investigates the determinants of inequality in human capital with an emphasis on the role of the credit constraints. We develop and estimate a model in which individuals face uninsured human capital risks and invest in education, acquire work experience, accumulate assets, and smooth consumption. Agents can borrow from the private lending market and from government student loan programs. The private market credit limit is explicitly derived by extending the natural borrowing limit of Aiyagari (1994) to incorporate endogenous labor supply, human capital accumulation, psychic costs of working, and age. We quantify the effects of cognitive ability, noncognitive ability, parental education, and parental wealth on educational attainment, wages, and consumption. We conduct counterfactual experiments with respect to tuition subsidies and enhanced student loan limits and evaluate their effects on educational attainment and inequality. We compare the performance of our model with that of an influential ad hoc model in the literature with education-specific fixed loan limits. We find evidence of substantial life cycle credit constraints that affect human capital accumulation and inequality. The constrained fall into two groups: those who are permanently poor over their lifetimes and a group of well-endowed individuals with rising high levels of acquired skills who are constrained early in their life cycles. Equalizing cognitive and noncognitive ability has dramatic effects on inequality. Equalizing parental backgrounds has much weaker effects. Tuition costs have weak effects on inequality.

Paper (@ScienceDirect)

Review of Economic Dynamics, 25(Special Issue on Human Capital and Inequality): 4–36. (2017).

Human capital, Credit constraints, Natural borrowing limit, Education, Wealth2017 Apr
Targeting Programmes EffectivelyJames J. Heckman and J.-L. García

A study now shows that 20% of the population accounts for 60–80% of several adult social ills. Outcomes for this group can be accurately predicted from as early as age 3 years, using a small set of indicators of disadvantage. This finding supports policies that target children from disadvantaged families.

Paper (@Nature)

Nature Human Behavior, 1(1): Article 19. (2017).

2017 Jan
The Scandinavian Fantasy: The Sources of Intergenerational Mobility in Denmark and the U.S.James J. Heckman and R. Landersø

This paper examines the sources of differences in social mobility between the US and Denmark. Measured by income mobility, Denmark is a more mobile society, but not when measured by educational mobility. There are pronounced non‐linearities in income and educational mobility in both countries. Greater Danish income mobility is largely a consequence of redistributional tax, transfer, and wage compression policies. While Danish social policies for children produce more favorable cognitive test scores for disadvantaged children, they do not translate into more favorable educational outcomes, partly because of disincentives to acquire education arising from the redistributional policies that increase income mobility.

Paper (@Wiley)

Scandinavian Journal of Economics, 119(1): 178–230. (2017).

Comparative analysis of systems, Education, Inequality, Social mobility2017 Jan
Symposium on Child Development and Parental Investment: IntroductionJames J. Heckman and M. Francesconi

This article introduces the EJ Feature on Child Development by reviewing the literature and placing the contributions of the articles in the Feature in the context of a vibrant literature.

Paper (@Wiley)

Economic Journal, 126(Feature Issue): F1-F27. (2016).

2016 Dec
The Effects of Two Influential Early Childhood Interventions on Health and Healthy BehaviorsJames J. Heckman, G. Conti, and R. Pinto

This article examines the long‐term impacts on health and healthy behaviour of two of the oldest and most widely cited US early childhood interventions evaluated by the method of randomisation with long‐term follow‐up: the Perry Preschool Project (PPP) and the Carolina Abecedarian Project (ABC). There are pronounced gender effects strongly favouring boys, although there are also effects for girls. Dynamic mediation analyses show a significant role played by improved childhood traits, above and beyond the effects of experimentally enhanced adult socioeconomic status. These results show the potential of early life interventions for promoting health.

Paper (@Wiley)

Economic Journal, 126 (Feature Issue): F28—F65. (2016).

2016 Dec
Early Childhood EducationJames J. Heckman, S. Elango, A. Hojman, and J.-L. García

Paper (@DeGruyter)

In Moffitt, R. (Ed.), Economics of Means-Tested Transfer Programs in the United States II. Chapter 4, pp. 235-298. Chicago, IL: University of Chicago Press. (2016).

2016 Jun
Capabilities and SkillsJames J. Heckman and C. Corbin

This paper discusses the relevance of recent research on the economics of human development to the work of the Human Development and Capability Association. The recent economics of human development brings insights about the dynamics of skill accumulation to the literature on capabilities. Skills embodied in agents empower people. Enhanced skills enhance opportunities and hence promote capabilities. We address measurement problems common to both the economics of human development and the capability approach. The economics of human development analyzes the dynamics of preference formation, but is silent about which preferences should be used to evaluate alternative policies. This is both a strength and a limitation of the approach.

Paper (@TaylorFrancis)

Journal of Human Capabilities and Developmentt, 17(3): 342-359. (2016).

Skills, Capabilities, Freedom, Technology of skill formation2016 Jun
What grades and achievement tests measureJames J. Heckman, L. Borghans, B. H. H. Golsteyn, and J. E. Humphries

Intelligence quotient (IQ), grades, and scores on achievement tests are widely used as measures of cognition, but the correlations among them are far from perfect. This paper uses a variety of datasets to show that personality and IQ predict grades and scores on achievement tests. Personality is relatively more important in predicting grades than scores on achievement tests. IQ is relatively more important in predicting scores on achievement tests. Personality is generally more predictive than IQ on a variety of important life outcomes. Both grades and achievement tests are substantially better predictors of important life outcomes than IQ. The reason is that both capture personality traits that have independent predictive power beyond that of IQ.

Paper (@PNAS)

Proceedings of the National Academy of Sciences, 113(47): 13354–13359. (2016).

2016 Nov
Decomposing Trends in Inequality in Earnings into Forecastable and Uncertain ComponentsJames J. Heckman and F. Cunha

A substantial empirical literature documents the rise in wage inequality in the American economy. It is silent on whether the increase in inequality is due to components of earnings that are predictable by agents or whether it is due to greater uncertainty facing them. These two sources of variability have different consequences for both aggregate and individual welfare. Using data on two cohorts of American males, we find that a large component of the rise in inequality for less skilled workers is due to uncertainty. For skilled workers, the rise is less pronounced.

Paper (@UChicagoPress)

Journal of Labor Economics, 34(S2): S31-S65. (2016).

2016 Apr
Dynamic Treatment EffectsJames J. Heckman, J. E. Humphries, and G. Veramendi

This paper develops robust models for estimating and interpreting treatment effects arising from both ordered and unordered multi-stage decision problems. Identification is secured through instrumental variables and/or conditional independence (matching) assumptions. We decompose treatment effects into direct effects and continuation values associated with moving to the next stage of a decision problem. Using our framework, we decompose the IV estimator, showing that IV generally does not estimate economically interpretable or policy-relevant parameters in prototypical dynamic discrete choice models, unless policy variables are instruments. Continuation values are an empirically important component of estimated total treatment effects of education. We use our analysis to estimate the components of what LATE estimates in a dynamic discrete choice model.

Paper (@ScienceDirect)

Journal of Econometrics, 191(2): 276-292. (2016).

Choice theory, Dynamic treatment effects, Factor models, Marginal treatment effects, Regret, Conditional independence, Matching on mismeasured variables, Instrumental variables, Ordered choice models, Unordered choice models2016 Apr
Intergenerational Long Term Effects of Preschool: Structural Estimates from a Discrete Dynamic Programming ModelJames J. Heckman and L. Raut

This paper formulates a structural dynamic programming model of preschool investment choices of altruistic parents and then empirically estimates the structural parameters of the model using the NLSY79 data. The paper finds that preschool investment significantly boosts cognitive and non-cognitive skills, which enhance earnings and school outcomes. It also finds that a standard Mincer earnings function, by omitting measures of non-cognitive skills on the right-hand side, overestimates the rate of return to schooling. From the estimated equilibrium Markov process, the paper studies the nature of within generation earnings distribution, intergenerational earnings mobility, and schooling mobility. The paper finds that a tax-financed free preschool program for the children of poor socioeconomic status generates positive net gains to the society in terms of average earnings, higher intergenerational earnings mobility, and schooling mobility.

Paper (@ScienceDirect)

Journal of Econometrics, 191(1): 164-175. (2016).

Preschool investment, Early childhood development, Intergenerational social mobility, Structural dynamic programming2016 Mar
Early Health Shocks, Intrahousehold Resource Allocation, and Child OutcomesJames J. Heckman, J. Yi, J. Zhang, and G. Conti

In response to health shocks, parents make compensatory and reinforcing investments in different dimensions of human capital across children. Using household data on Chinese child twins whose average age is 11, we find that, compared with the twin sibling who did not suffer from negative early health shocks at age 0–3, the other twin sibling who did received 305 yuan more health investment, but received 182 yuan less educational investment. Overall, the family acts as a net equaliser in response to child early health shocks across children.

Paper (@Wiley)

Economic Journal, 125(588): F347-F371. (2015).

2015 Nov
Estimation of Dynamic Discrete Choice Models by Maximum Likelihood and the Simulated Method of MomentsJames J. Heckman, P. Eisenhauer, and S. Mosso

We compare the performance of maximum likelihood (ML) and simulated method of moments (SMM) estimators for dynamic discrete choice models. We construct and estimate a simplified dynamic structural model of education that captures some basic features of educational choices in the United States in the 1980s and early 1990s. We use estimates from our model to simulate a synthetic data set and assess the ability of ML and SMM to recover the model parameters on this sample. We investigate the performance of alternative tuning parameters for SMM.

Paper (@Wiley)

International Economic Review, 56(2): 331–357. (2015).

2015 Apr
Gary Becker: Model Economic ScientistJames J. Heckman

This paper presents Gary Becker’s approach to conducting creative, empirically fruitful economic research. It describes the traits and methodology that made him such a productive and influential scholar.

Paper (@AEA)

American Economic Review, 105(5): 74-79. (2015).

2015 May
Introduction to A Theory of the Allocation of Time by Gary S. BeckerJames J. Heckman

Paper (@OUP)

Economic Journal, 125(583): 403-409. (2015).

2015 Mar
Introduction to The Distribution of Earnings and of Individual Output by A. D. RoyJames J. Heckman and M. Sattinger

This article summarises the lasting contribution of Roy’s (1950) fundamental paper.

Paper (@OUP)

Economic Journal, 125(583): 378–402. (2015).

2015 Mar
The Generalized Roy Model and the Cost-Benefit Analysis of Social ProgramsJames J. Heckman, P. Eisenhauer, and E. Vytlacil

The literature on treatment effects focuses on gross benefits from program participation. We extend this literature by developing conditions under which it is possible to identify parameters measuring the cost and net surplus from program participation. Using the generalized Roy model, we nonparametrically identify the cost, benefit, and net surplus of selection into treatment without requiring the analyst to have direct information on costs. We apply our methodology to estimate the gross benefit and net surplus of attending college.

Paper (@JSTOR)

Journal of Political Economy, 123(2): 413-443. (2015).

2015 Apr
Causal Analysis After HaavelmoJames J. Heckman and R. Pinto

Haavelmo’s seminal 1943 and 1944 papers are the first rigorous treatment of causality. In them, he distinguished the definition of causal parameters from their identification. He showed that causal parameters are defined using hypothetical models that assign variation to some of the inputs determining outcomes while holding all other inputs fixed. He thus formalized and made operational Marshall’s (1890) ceteris paribus analysis. We embed Haavelmo’s framework into the recursive framework of Directed Acyclic Graphs (DAGs) commonly used in the literature of causality (Pearl, 2000) and Bayesian nets (Lauritzen, 1996). We compare the analysis of causality based on a methodology inspired by Haavelmo’s ideas with other approaches used in the causal literature of DAGs. We discuss the limitations of methods that solely use the information expressed in DAGs for the identification of economic models. We extend our framework to consider models for simultaneous causality, a central contribution of Haavelmo.

Paper (@Cambridge)

Econometric Theory, 31(01): 115-151 (2015).

2015 Feb
Econometric Mediation Analyses: Identifying the Sources of Treatment Effects from Ex- perimentally Estimated Production Technologies with Unmeasured and Mismeasured InputsJames J. Heckman and R. Pinto

This paper presents an econometric mediation analysis. It considers identification of production functions and the sources of output effects (treatment effects) from experimental interventions when some inputs are mismeasured and others are entirely omitted.

Paper (@TaylorFrancis)

Econometric Reviews, 34(1-2): 6-31. (2015).

Measurement error, Mediation analysis, Missing inputs, Production function2015 Jan
Bayesian Exploratory Factor AnalysisJames J. Heckman, G. Conti, S. Fru ̈hwirth-Schnatter, and R. Piatek

This paper develops and applies a Bayesian approach to Exploratory Factor Analysis that improves on ad hoc classical approaches. Our framework relies on dedicated factor models and simultaneously determines the number of factors, the allocation of each measurement to a unique factor, and the corresponding factor loadings. Classical identification criteria are applied and integrated into our Bayesian procedure to generate models that are stable and clearly interpretable. A Monte Carlo study confirms the validity of the approach. The method is used to produce interpretable low dimensional aggregates from a high dimensional set of psychological measurements.

Paper (@ScienceDirect)

Journal of Econometrics, 183(1): 31–57. (2014).

Bayesian factor models, Exploratory factor analysis, Identifiability, Marginal data augmentation, Model expansion, Model selection2014 Nov
Human Capital, Economic Growth, and Inequality in ChinaJames J. Heckman and J. Yi

This chapter discusses the rapid economic growth initiated by the complementarity between a solid base of labour with a medium level of skill and a huge inflow of foreign direct investment. It explains how this was sustained by rapid physical capital accumulation and rapid human capital formation. It then calls on the Chinese government to enhance public expenditure on education and to equalize educational opportunities between coastal and inland areas, and between urban and rural areas. It should enhance the quality of education and foster a highly-skilled labour force, remove inefficient institutional barriers, and develop an integrated and efficient labour market.

Chapter (@OUP)

In The Oxford Companion to the Economics of China on Human Capital, Shenggen Fan, Ravi Kanbur, Shang-Jin Wei and Xiaobo Zhang, editors. Oxford, UK: Oxford University Press. pp. 459– 464. (2014).

economic policy, economic development, Chinese economy, skilled labour, labour force, foreign indirect investment, education policy2014 Aug
Fostering and Measuring Skills: Improving Cognitive and Non-Cognitive Skills to Pro- mote Lifetime SuccessJames J. Heckman, T. Kautz, R. Diris, B. ter Weel, and L. Borghans

Report (@OECD)

Report prepared for the Organisation of Economic Co-operation and Development, Paris. (2014).

2014 Aug
The Economics of Human Development and Social MobilityJames J. Heckman and S. Moso

This article distills and extends recent research on the economics of human development and social mobility. It summarizes the evidence from diverse literatures on the importance of early life conditions in shaping multiple life skills and the evidence on critical and sensitive investment periods for shaping different skills. It presents economic models that rationalize the evidence and unify the treatment effect and family influence literatures. The evidence on the empirical and policy importance of credit constraints in forming skills is examined. There is little support for the claim that untargeted income transfer policies to poor families significantly boost child outcomes. Mentoring, parenting, and attachment are essential features of successful families and interventions that shape skills at all stages of childhood. The next wave of family studies will better capture the active role of the emerging autonomous child in learning and responding to the actions of parents, mentors, and teachers.

Paper (@AnnualReviews)

Annual Reviews of Economics, 6: 689-733. (2014).

capacities , dynamic complementarity , parenting , scaffolding , attachment , credit constraints2014 Aug
Labor Market Returns to an Early Childhood Stimulation Intervention in JamaicaJames J. Heckman, P. Gertler, R. Pinto, A. Zanolini, C. Vermeerch, S. Walker, S. Chang, S. Grantham-McGregor

A substantial literature shows that U.S. early childhood interventions have important long-term economic benefits. However, there is little evidence on this question for developing countries. We report substantial effects on the earnings of participants in a randomized intervention conducted in 1986–1987 that gave psychosocial stimulation to growth-stunted Jamaican toddlers. The intervention consisted of weekly visits from community health workers over a 2-year period that taught parenting skills and encouraged mothers and children to interact in ways that develop cognitive and socioemotional skills. The authors reinterviewed 105 out of 129 study participants 20 years later and found that the intervention increased earnings by 25%, enough for them to catch up to the earnings of a nonstunted comparison group identified at baseline (65 out of 84 participants).

Paper (@Science)

Science. 344(6187): 998-1001. (2014).

2014 May
Understanding Conscientiousness Across the Lifecourse: An Economic PerspectiveJames J. Heckman and G. Conti

We discuss recent developments in the literature on the role of conscientiousness on healthy aging within an economic framework that helps to systematize and interpret the existing evidence. (PsycInfo Database Record (c) 2020 APA, all rights reserved)

Paper (@NIH)

Developmental Psychology, 50(5): 1451-1459. (2014).

2014 May
Early Childhood Investments Substantially Boost Adult HealthJames J. Heckman, F. Campbell, G. Conti, S. Moon, E. Pungello, R. Pinto, and Y. Pan

High-quality early childhood programs have been shown to have substantial benefits in reducing crime, raising earnings, and promoting education. Much less is known about their benefits for adult health. We report on the long-term health effects of one of the oldest and most heavily cited early childhood interventions with long-term follow-up evaluated by the method of randomization: the Carolina Abecedarian Project (ABC). Using recently collected biomedical data, we find that disadvantaged children randomly assigned to treatment have significantly lower prevalence of risk factors for cardiovascular and metabolic diseases in their mid-30s. The evidence is especially strong for males. The mean systolic blood pressure among the control males is 143 millimeters of mercury (mm Hg), whereas it is only 126 mm Hg among the treated. One in four males in the control group is affected by metabolic syndrome, whereas none in the treatment group are affected. To reach these conclusions, we address several statistical challenges. We use exact permutation tests to account for small sample sizes and conduct a parallel bootstrap confidence interval analysis to confirm the permutation analysis. We adjust inference to account for the multiple hypotheses tested and for nonrandom attrition. Our evidence shows the potential of early life interventions for preventing disease and promoting health.

Paper (@Science)

Science, 343(6178): 1478–1485. (2014).

2014 Mar
What Should be Done?James J. Heckman, J.E. Humphries, and T. Kautz

Paper (@DeGruyter)

In The Myth of Achievement Tests: The GED and the Role of Character in American Life, edited by J. Heckman, J.E. Humphries and T. Kautz. Chicago, IL: University of Chicago Press. pp. 431-436. (2014).

2014 Jan
Fostering and Measuring Skills: Interventions that Improve Character and CognitionJames J. Heckman and T. Kautz

Paper (@DeGruyter)

In The Myth of Achievement Tests: The GED and the Role of Character in American Life, edited by J. Heckman, J.E. Humphries and T. Kautz. Chicago, IL: University of Chicago Press. pp. 341-430. (2014).

2014 Jan
The GED Testing Program Induces Students to Drop OutJames J. Heckman, J.E. Humphries, P. La-Fontaine, and P. Rodríguez

Paper (@DeGruyter)

In The Myth of Achievement Tests: The GED and the Role of Character in American Life, edited by J. Heckman, J.E. Humphries and T. Kautz. Chicago, IL: University of Chicago Press. pp. 293-317. (2014).

2014 Jan
The Economic and Social Benefits of GED CertificationJames J. Heckman, J. E. Humphries, and T. Kautz

Paper (@DeGruyter)

In The Myth of Achievement Tests: The GED and the Role of Character in American Life, edited by J. Heckman, J.E. Humphries and T. Kautz. Chicago, IL: University of Chicago Press. pp. 171-267. (2014).

2014 Jan
Who Are The GEDs?James J. Heckman, J.E. Humphries, and T. Kautz

In The Myth of Achievement Tests: The GED and the Role of Character in American Life, edited by J. Heckman, J.E. Humphries and T. Kautz. Chicago, IL: University of Chicago Press. pp. 139-170. (2014).

2014 Jan
Achievement Tests and the Role of Character in American LifeJames J. Heckman and T. Kautz

Paper (@DeGruyter)

In The Myth of Achievement Tests: The GED and the Role of Character in American Life, edited by J. Heckman, J.E. Humphries and T. Kautz. Chicago, IL: University of Chicago Press. pp. 3-56. (2014).

2014 Jan
IntroductionJames J. Heckman, J. E. Humphries, and T. Kautz

In The Myth of Achievement Tests: The GED and the Role of Character in American Life, edited by J. Heckman, J.E. Humphries and T. Kautz. Chicago, IL: University of Chicago Press. pp. xi-xiii. (2014).

2014 Jan
Older Siblings’ Contributions to Young Child’s Cognitive SkillsJames J. Heckman and X. Dai

This work finds that older siblings as well as early parenting influence young children’s cognitive skills directly or indirectly, for example, Mathematics, and English. Our findings challenge a pervasive view in the economical literatures that early parenting plays a dominant role in explaining child development. In economics, early environmental conditions are important to demonstrate the evolution of adolescent and adult cognitive skills (Cunha and Heckman, 2007, Knudsen et al., 2006), and it establishes causal impacts of early parental inputs and other environmental factors on cognitive and non-cognitive skills (Borghans et al., 2006, Cunha et al., 2010, Heckman et al., 2006b). Early parenting as well as older siblings should explain a diverse array of academic and social outcomes, for example, Mathematics, English, maritage and pregnancy. In fact, older siblings’ characteristics are as important, if not more important, than as parenting for child development. Our analysis addresses the problems of measurement error, imperfect proxies, and reverse causality that plague conventional approach in psychology. We find that older brother contributes much more than older sister to child’s mathematical achievement, while older sister contributes much more to child’s English achievement. Our evidence is consistent with psychology literature, for example, Hetherington (1988), Jenkins (1992), Zukow-Goldring (1995), Marshall et al. (1997), Maynard (2002), and Brody et al. (2003) for siblings’ direct contributions to child development, Bronfenbrenner (1977), East (1998), Whiteman and Buchanan (2002), and Brody et al. (2003) for siblings’ indirect contributions, and Reiss et al. (2000), Feinberg and Hetherington (2001), and Kowal et al. (2002) for parental differential treatment.

Paper (@ScienceDirect)

Economic Modelling, 35(September): 235-248. (2013).

2013 Sep
Estimating the Technology of Cognitive and Noncognitive Skill Formation: The Linear CaseJames J. Heckman and F. Cunha

Handbook of Developmental Systems Theory and Methodology, 44,
P. C. M. Molenaar, R. M. Lerner and K. M. Newell, eds. London, UK: The Guilford Press. pp. 221-269. (2013).

2013 Dec
Treatment Effects: A Bayesian PerspectiveJames J. Heckman, H. Lopes, and R. Piatek

This paper contributes to the emerging Bayesian literature on treatment effects. It derives treatment parameters in the framework of a potential outcomes model with a treatment choice equation, where the correlation between the unobservable components of the model is driven by a low-dimensional vector of latent factors. The analyst is assumed to have access to a set of measurements generated by the latent factors. This approach has attractive features from both theoretical and practical points of view. Not only does it address the fundamental identification problem arising from the inability to observe the same person in both the treated and untreated states, but it also turns out to be straightforward to implement. Formulae are provided to compute mean treatment effects as well as their distributional versions. A Monte Carlo simulation study is carried out to illustrate how the methodology can easily be applied.

Paper (@NIH)

Econometric Reviews: Bayesian Inference and Information: In Memory of Arnold Zellner, 33(1–4):36– 67. (2014).

2014 Jan
Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult OutcomesJames J. Heckman, R. Pinto, and P. Savelyev

A growing literature establishes that high quality early childhood interventions targeted toward disadvantaged children have substantial impacts on later life outcomes. Little is known about the mechanisms producing these impacts. This paper uses longitudinal data on cognitive and personality skills from an experimental evaluation of the influential Perry Preschool program to analyze the channels through which the program boosted both male and female participant outcomes. Experimentally induced changes in personality skills explain a sizable portion of adult treatment effects.

Paper (@AEA)

American Economic Review, 103(6): 2052–2086 (2013).

2013 Oct
The Developmental Approach to Child and Adult HealthJames J. Heckman and G. Conti

Pediatricians should consider the costs and benefits of preventing rather than treating childhood diseases. We present an integrated developmental approach to child and adult health that considers the costs and benefits of interventions over the life cycle. We suggest policies to promote child health that are currently outside the boundaries of conventional pediatrics. We discuss current challenges to the field and suggest avenues for future research.

Paper (@PEDIATRICS)

Pediatrics, 131(Supplement 2): S133–S141. (2013).

health, prevention, remediation, capabilities, technology of capability formation2013 Apr
The Economics of Child Well-BeingJames J. Heckman and G. Conti

This paper presents an integrated economic approach that organizes and interprets the evidence on child development. It also discusses the indicators of child well-being that are used in international comparisons. Recent evidence on child development is summarized, and policies to promote child well-being are discussed. The paper concludes with some open questions and suggestions for future research.

Working Paper (@NBER)

Handbook of Child Well-Being: Theories, Methods and Policies in Global Perspective, Ben-Arieh, Asher, Casas, Ferran, Frones, Ivar. and Korbin, Jill E. (Eds.) Dordrecht: Springer-Verlag. pp. 363–402. (2013).

2013 Sep
Transcriptional modulation of the developing immune system by early life social adversityJames J. Heckman, S. Cole, G. Conti, J. Arevalo, A. Ruggiero, and S. Suomi

To identify molecular mechanisms by which early life social conditions might influence adult risk of disease in rhesus macaques (Macaca mulatta), we analyze changes in basal leukocyte gene expression profiles in 4-mo-old animals reared under adverse social conditions. Compared with the basal condition of maternal rearing (MR), leukocytes from peer-reared (PR) animals and PR animals provided with an inanimate surrogate mother (surrogate/peer reared, SPR) show enhanced expression of genes involved in inflammation, cytokine signaling, and T-lymphocyte activation, and suppression of genes involved in several innate antimicrobial defenses including type I interferon (IFN) antiviral responses. Promoter-based bioinformatic analyses implicate increased activity of CREB and NF-κB transcription factors and decreased activity of IFN response factors (IRFs) in structuring the observed differences in gene expression. Transcript origin analyses identify monocytes and CD4+ T lymphocytes as primary cellular mediators of transcriptional up-regulation and B lymphocytes as major sources of down-regulated genes. These findings show that adverse social conditions can become embedded within the basal transcriptome of primate immune cells within the first 4 mo of life, and they implicate sympathetic nervous system-linked transcription control pathways as candidate mediators of those effects and potential targets for health-protective intervention.

Paper (@PNAS)

Proceedings of the National Academy of Sciences. 109(50): 20578–20583 (2012).

2012 Dec
An Effective Strategy for Promoting Social MobilityJames J. Heckman

Article (@BostonReview)

Lead Article, Forum on Promoting Social Mobility, Boston Review, September/October. (2012).

2012 Sep
Taking the Easy Way Out: How the GED Testing Program Induces Students to Drop OutJames J. Heckman, P. LaFontaine, P. Rodríguez, and J.E. Humphries

The option to obtain a General Educational Development (GED) certificate changes the incentives facing high school students. This article evaluates the effect of three different GED policy innovations on high school graduation rates. A 6-point decrease in the GED pass rate produced a 1.3-point decline in high school dropout rates. The introduction of a GED certification program in high schools in Oregon produced a 4% decrease in high school graduation rates. Introduction of GED certificates for civilians in California increased the dropout rate by 3 points. The GED program induces students to drop out of high school.

Paper (@UCPress)

Journal of Labor Economics, 30 (3): 495-520.(2012).

2012 Jul
Primate Evidence on the Late Health Effects of Early-Life AdversityJames J. Heckman, G. Conti, C. Hansman, M. Novak, A. Ruggiero, and S. Suomi

This paper exploits a unique ongoing experiment to analyze the effects of early rearing conditions on physical and mental health in a sample of rhesus monkeys (Macaca mulatta). We analyze the health records of 231 monkeys that were randomly allocated at birth across three rearing conditions: mother rearing, peer rearing, and surrogate peer rearing. We show that the lack of a secure attachment relationship in the early years engendered by adverse rearing conditions has detrimental long-term effects on health that are not compensated for by a normal social environment later in life.

Paper (@PNAS)

Proceedings of the National Academy of Sciences, 109(23): 8866-8871. (2012).

2012 Jun
Hard evidence on soft skillsJames J. Heckman and T. Kautz

This paper summarizes recent evidence on what achievement tests measure; how achievement tests relate to other measures of “cognitive ability” like IQ and grades; the important skills that achievement tests miss or mismeasure, and how much these skills matter in life.

Achievement tests miss, or perhaps more accurately, do not adequately capture, soft skills—personality traits, goals, motivations, and preferences that are valued in the labor market, in school, and in many other domains. The larger message of this paper is that soft skills predict success in life, that they causally produce that success, and that programs that enhance soft skills have an important place in an effective portfolio of public policies.

Paper (@ScienceDirect)

Adam Smith Lecture, Labour Economics, 19(4): 451-464. (2012).

Personality, Achievement tests, IQ, Cognition2012 Jan
The Developmental Origins of HealthJames J. Heckman

This paper argues that health economists should consider the costs and benefits of preventing rather than treating disease. It sketches a developmental approach to health that examines the costs and benefits of interventions over the life cycle.

Paper (@NIH)

Health Economics. 21(1): 24-29. (2012).

Health, Prevention, Remediation, Capabilities, Technology of Capability Formation2012 Jan
Effective Child Development StrategiesJames J. Heckman

In E. Zigler, W. Gilliam, and W. S. Barnett, eds., The Pre-K Debates: Current Controversies and Issues. Baltimore MD: Paul H. Brookes Publishing Company, Inc. pp. 2-8. (2011).

2011 Nov
Editorial: The measurement of progress—some achievements and challenges.James J. Heckman, P. Anand and M. Durand

Paper (@JSTOR)

Journal of the Royal Statistical Society, A, 174(4):851-855. (2011).

2011 Oct
Personality Psychology and EconomicsJames J. Heckman, A. Duckworth, M. Almlund and T. Kautz

This chapter explores the power of personality traits both as predictors and as causes of academic and economic success, health, and criminal activity. Measured personality is interpreted as a construct derived from an economic model of preferences, constraints, and information. Evidence is reviewed about the “situational specificity” of personality traits and preferences. An extreme version of the situationist view claims that there are no stable personality traits or preference parameters that persons carry across different situations. Those who hold this view claim that personality psychology has little relevance for economics.

The biological and evolutionary origins of personality traits are explored. Personality measurement systems and relationships among the measures used by psychologists are examined. The predictive power of personality measures is compared with the predictive power of measures of cognition captured by IQ and achievement tests. For many outcomes, personality measures are just as predictive as cognitive measures, even after controlling for family background and cognition. Moreover, standard measures of cognition are heavily influenced by personality traits and incentives.

Measured personality traits are positively correlated over the life cycle. However, they are not fixed and can be altered by experience and investment. Intervention studies, along with studies in biology and neuroscience, establish a causal basis for the observed effect of personality traits on economic and social outcomes. Personality traits are more malleable over the life cycle compared with cognition, which becomes highly rank stable around age 10. Interventions that change personality are promising avenues for addressing poverty and disadvantage.

Paper (@ScienceDirect)

In E. Hanushek, S. Machin, and L. Woessman, eds., Handbook of the Economics of Education, Amsterdam: Elsevier. pp. 1-181. (2011).

Personality, Behavioral Economics, Cognitive Traits, Wages, Economic Successm, Human Development, Person-situation Debate2011 Oct
Estimating Marginal Returns to EducationJames J. Heckman, P. Carneiro, and E. Vytlacil

Paper (@JSTOR)

American Economic Review. 101(6):2754-2871. (2011).

2011 Oct
Identification Problems in Personality PsychologyJames J. Heckman, L. Borghans, B. Golsteyn, and J.E. Humphries

This paper discusses and illustrates identification problems in personality psychology. The measures used by psychologists to infer traits are based on behaviors, broadly defined. These behaviors are produced from multiple traits interacting with incentives in situations. In general, measures are determined by these multiple traits and do not identify any particular trait unless incentives and other traits are controlled for. Using two data sets, we show, that substantial portions of the variance in achievement test scores and grades, which are often used as measures of cognition, are explained by personality variables.

Paper (@ScienceDirect)

Personality and Individual Differences, 51(3):315–320. (2011).

Identification problem, Personality, Psychology, Achievement test, Grades2011 Aug
Editorial: Personality and Economics: Overview and Proposed FrameworkJames J. Heckman, E. Ferguson, and P. Corr

We sketch a framework for exploring the overlap between, and integration of, personality/temperament/character traits and economics. This integrative framework incorporates the study of the evolution and biology of personality, and an investment model from economics. We offer models of the development of traits and the expression of behavior associated with traits that are environmentally contingent. We demonstrate how economic games offer a well-defined and constrained social context to explore and test predictions concerning traits derived from evolutionary theory. We discuss open areas of research in the integration of personality and economics, such as fundamental identification problems in identifying traits. We finish by proposing an agenda for collaborative research on the personality–economics interface (e.g., examining anti-social behavior, psychometrics of preferences, etc.).

Paper (@ScienceDirect)

Personality and Individual Differences, 51(3):201–209. (2011).

2011 Aug
The American Family in Black & White: A Post-Racial Strategy for Improving Skills to Promote EqualityJames J. Heckman

In contemporary America, racial gaps in achievement are primarily due to gaps in skills. Skill gaps emerge early, before children enter school. Families are major producers of skills, thus inequality in school performance is strongly linked to inequality in family environments. Schools do little to reduce or enlarge the skill gaps that are present when children enter school. Parenting matters, and the true measure of child advantage and disadvantage is the quality of parenting received. A growing fraction of American children across all race and ethnic groups is being raised in dysfunctional families. Investment in the early lives of children from disadvantaged families will help close achievement gaps. America currently relies too heavily on schools and adolescent remediation strategies to solve problems that start in the preschool years. Policy should prevent rather than remediate. Voluntary, culturally sensitive support for parenting is a politically and economically palatable strategy that addresses problems common to all racial and ethnic groups.

Paper (@MITPress)

Daedalus, 140(2):70–89. (2011).

2011 Apr
The Economics of Inequality: The Value of Early Childhood EducationJames J. Heckman

Educational equity is often discussed as a moral issue. Another way to think about equity is as a way to promote productivity and economic efficiency. Traditionally, equity and efficiency are viewed as competing goals. One can be fair in devising a policy, but it often happens that what is fair is not economically efficient. Conversely, what is efficient may not be fair. What is remarkable is that there are some policies that both are fair–i.e., promote equity–and promote economic efficiency. Investing in the early years of disadvantaged children’s lives is one such policy. A large body of data from economics, biology, and psychology shows that educational equity is more than a social justice imperative; it is an economic imperative that has far-reaching implications for the nation. Taking a hard look at the economic value of efforts to create human capital helps people see where best to invest their resources in education to achieve its ideal–equalizing opportunity to build greater and enduring value for all. The evidence is quite clear that inequality in the development of human capabilities produces negative social and economic outcomes that can and should be prevented with investments in early childhood education, particularly targeted toward disadvantaged children and their families.

Paper (@ERIC)

American Educator, Spring:31–47. (2011).

Evidence, Social Justice, Human Capital, Equal Education, Early Childhood Education, Disadvantaged Youth, Children, Productivity, Efficiency, Economics, Economic Factors, Achievement Gap, Family Structure, Child Rearing, Family Characteristics2011 Mar
A New Cost-Benefit and Rate of Return Analysis for the Perry Preschool Program: A SummaryJames J. Heckman, S.H. Moon, R. Pinto, P. Savelyev, and A. Yavitz

In Arthur Reynolds, Arthur Rolnick, Michelle Englund, and Judy A. Temple, (eds.) Cost-Effective Programs in Children’s First Decade: A Human Capital Integration. New York: Cambridge University Press. pp. 366-380. (2010).

2010 Dec
Investing in Our Young PeopleJames J. Heckman and F. Cunha

Paper (@JSTOR)

in Arthur Reynolds, Arthur Rolnick, Michelle Englund, and Judy A. Temple, (eds.) Cost-Effective Programs in Children’s First Decade: A Human Capital Integration. New York: Cambridge University Press. pp. 381- 414. (2010).

2010 Dec
The GEDJames J. Heckman, J. E. Humphries and N. S. Mader

The General Educational Development (GED) credential is issued on the basis of an eight hour subjectbased test. The test claims to establish equivalence between dropouts and traditional high school graduates, opening the door to college and positions in the labor market. In 2008 alone, almost 500,000 dropouts passed the test, amounting to 12% of all high school credentials issued in that year. This chapter reviews the academic literature on the GED, which finds minimal value of the certificate in terms of labor market outcomes and that only a few individuals successfully use it as a path to obtain post-secondary credentials. Although the GED establishes cognitive equivalence on one measure of scholastic aptitude, recipients still face limited opportunity due to deficits in noncognitive skills such as persistence, motivation and reliability. The literature finds that the GED testing program distorts social statistics on high school completion rates, minority graduation gaps, and sources of wage growth. Recent work demonstrates that, through its availability and low cost, the GED also induces some students to drop out of school. The GED program is unique to the United States and Canada, but provides policy insight relevant to any nation’s educational context.

Paper (@ScienceDirect)

in, E. A. Hanushek, S. Machin, and L. Wößmann (eds.) Handbook of the Economics Of Education, Volume 3. Amsterdam: North-Holland. pp. 423-484. (2011).

Returns to Education, GED, Dropouts, Graduation Rate, Noncognitive Skills2011 Jan
Tests of Hypotheses Arising in the Correlated Random Coefficient ModelJames J. Heckman and D. Schmierer

This paper examines the correlated random coefficient model. It extends the analysis of Swamy (1971, 1974), who pioneered the uncorrelated random coefficient model in economics. We develop the properties of the correlated random coefficient model and derive a new representation of the variance of the instrumental variable estimator for that model. We develop tests of the validity of the correlated random coefficient model against the null hypothesis of the uncorrelated random coefficient model.

Paper (@ScienceDirect)

Economic Modelling, 27(6): 1355-1367. (2010).

Random coefficient models, Correlated random coefficient models, Instrumental variables2010 Nov
Understanding the Early Origins of the Education-Health Gradient: A Framework that can also be Applied to Analyze Gene-Environment InteractionsJames J. Heckman and G. Conti

In this article, we develop a framework for analyzing the causal effects of interventions in the presence of latent factors that could affect outcomes, even in the absence of interventions. This framework will be useful in situations in which genes are included among the latent factors. We estimate the model and study the early origins of observed later-life disparities by education. We determine the role played by cognitive, noncognitive, and early health endowments. We identify the causal effect of education on health and health-related behaviors. We show that family background characteristics and cognitive, noncognitive, and health endowments developed by age 10 are important determinants of health disparities at age 30. We also show that not properly accounting for personality traits results in overestimation of the importance of cognitive ability in determining later health. Selection on preexisting traits explains more than half of the observed differences in poor health and obesity. Education has an important causal effect in explaining differences in smoking rates. There are significant gender differences. We go beyond the current literature, which typically estimates mean effects, to compute distributions of treatment effects. We show that the effect of education on health varies among individuals who are similar in their observed characteristics, and how a mean effect can hide gains and losses for different individuals. This analysis highlights the crucial role played by promotion of good health at an early age and the importance of prevention in the reduction of health disparities. We speculate about how the model can be applied to genetic studies.

Paper (@NIH)

Perspectives on Psychological Science, 5(5): 585–605. (2010).

health, education, genetics, treatment effects2010 Oct
Early Education and its Importance in Reducing ViolenceJames J. Heckman, A. P. de Arau ́jo, F. Cunha, and R. L. de Moura

In F. Giambiagi, R. Henriques, S. Pessoa, and F. Velloso (eds.), Educacaçao Básica no Brasil: Construindo um Futuro Melhor, Chapter 5. Rio de Janeiro: Elsevier. pp. 95–116. (2009).

2009 Dec
Nonparametric Identification of Nonadditive Hedonic ModelsJames J. Heckman, R.M. Matzkin, and L. Nesheim

This paper studies the identification and estimation of preferences and technologies in equilibrium hedonic models. In it, we identify nonparametric structural relationships with nonadditive heterogeneity. We determine what features of hedonic models can be identified from equilibrium observations in a single market under weak assumptions about the available information. We then consider use of additional information about structural functions and heterogeneity distributions. Separability conditions facilitate identification of consumer marginal utility and firm marginal product functions. We also consider how identification is facilitated using multimarket data.

Paper (@Wiley)

Econometrica, 78(5), 1569–1591. (2010).

Hedonic models, Hedonic equilibrium, Nonadditive models, Identification, Nonparametric estimation2010 Oct
Analyzing Social Experiments as Implemented: A Reexamination of the Evidence From the HighScope Perry Preschool ProgramJames J. Heckman, S. H. Moon, R. Pinto, P. A. Savelyev, and A. Q. Yavitz

Social experiments are powerful sources of information about the effectiveness of interventions. In practice, initial randomization plans are almost always compromised. Multiple hypotheses are frequently tested. “Significant” effects are often reported with p‐values that do not account for preliminary screening from a large candidate pool of possible effects. This paper develops tools for analyzing data from experiments as they are actually implemented.

We apply these tools to analyze the influential HighScope Perry Preschool Program. The Perry program was a social experiment that provided preschool education and home visits to disadvantaged children during their preschool years. It was evaluated by the method of random assignment. Both treatments and controls have been followed from age 3 through age 40.

Previous analyses of the Perry data assume that the planned randomization protocol was implemented. In fact, as in many social experiments, the intended randomization protocol was compromised. Accounting for compromised randomization, multiple‐hypothesis testing, and small sample sizes, we find statistically significant and economically important program effects for both males and females. We also examine the representativeness of the Perry study.

Paper (@Wiley)

Quantitative Economics, 1(1), 1–46. (July 2010).

Early childhood intervention, Compromised randomization, Social experiment Multiple‐hypothesis testing2010 Aug
Testing the Correlated Random Coefficient ModelJames J. Heckman, D. Schmierer, and S. Urzua

The recent literature on instrumental variables (IV) features models in which agents sort into treatment status on the basis of gains from treatment as well as on baseline-pretreatment levels. Components of the gains known to the agents and acted on by them may not be known by the observing economist. Such models are called correlated random coefficient models. Sorting on unobserved components of gains complicates the interpretation of what IV estimates. This paper examines testable implications of the hypothesis that agents do not sort into treatment based on gains. In it, we develop new tests to gauge the empirical relevance of the correlated random coefficient model to examine whether the additional complications associated with it are required. We examine the power of the proposed tests. We derive a new representation of the variance of the instrumental variable estimator for the correlated random coefficient model. We apply the methods in this paper to the prototypical empirical problem of estimating the return to schooling and find evidence of sorting into schooling based on unobserved components of gains.

Paper (@ScienceDirect)

Journal of Econometrics, 158, pp. 177–203, (2010).

Correlated random coefficient, Testing, Instrumental variables, Power of tests based on IV2010 Jul
Building Bridges Between Structural and Program Evaluation Approaches to Evaluating PolicyJames J. Heckman

This paper compares the structural approach to economic policy analysis with the program evaluation approach. It offers a third way to do policy analysis that combines the best features of both approaches. I illustrate the value of this alternative approach by making the implicit economics of LATE explicit, thereby extending the interpretability and range of policy questions that LATE can answer.

Paper (@AEA)

Journal of Economic Literature, 48(2), 356–398, (June 2010).

2010 Jun
The Education-Health GradientJames J. Heckman, G. Conti, and S. Urzua

In this paper, we determine the role played by early cognitive, noncognitive, and health endowments. We identify the causal effect of education on health and health-related behaviors. We develop an empirical model of schooling choice and post-schooling outcomes, where both schooling and the outcomes determined in part by schooling are influenced by measured early family environments and latent capabilities (cognitive, noncognitive and health). We show that family background characteristics, and cognitive, noncognitive, and health endowments developed by age 10, are important determinants of labor market and health disparities at age 30. Not properly accounting for personality traits overestimates the importance of cognitive ability in determining adult health. Selection on factors determined early in life explains more than half of the observed difference by education in poor health, depression, and obesity. Education has an important causal effect in explaining differences in many adult outcomes and healthy behaviors. We uncover significant gender differences. We go beyond the current literature which typically estimates mean effects to compute distributions of treatment effects. We show how the health returns to education can vary among individuals who are similar with respect to their observed characteristics, and how a mean effect can hide gains and losses for different individuals. Our research highlights the important role played by the early years in producing health.

Paper (@AEA)

American Economic Review: Papers & Proceedings, 100(2), 234–238, (May 2010).

cognitive endowments, noncognitive endowments, health production, education, schooling choice2010 May
The Effect of Prayer on God’s Attitude Toward MankindJames J. Heckman

This paper uses data available from the National Opinion Research Center’s (NORC) survey on religious attitudes and powerful statistical methods to evaluate the effect of prayer on the attitude of God toward human beings.

Paper (@Wiley)

Economic Inquiry, 48(1), 234– 235, (2010).

2010 Jan
Estimating the Technology of Cognitive and Noncognitive Skill FormationJames J. Heckman, F. Cunha, and S. Schennach

This paper formulates and estimates multistage production functions for children’s cognitive and noncognitive skills. Skills are determined by parental environments and investments at different stages of childhood. We estimate the elasticity of substitution between investments in one period and stocks of skills in that period to assess the benefits of early investment in children compared to later remediation. We establish nonparametric identification of a general class of production technologies based on nonlinear factor models with endogenous inputs. A by‐product of our approach is a framework for evaluating childhood and schooling interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of the same bundle of skills in different tasks. Using the estimated technology, we determine optimal targeting of interventions to children with different parental and personal birth endowments. Substitutability decreases in later stages of the life cycle in the production of cognitive skills. It is roughly constant across stages of the life cycle in the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For most configurations of disadvantage it is optimal to invest relatively more in the early stages of childhood than in later stages.

Paper (@Wiley)

Econometrica, 78(3), 883–931, (2010).

Cognitive skills, Noncognitive skills, Dynamic factor analysis, Endogeneity of inputs, Anchoring test scores, Parental influence2010 May
Comparing IV With Structural Models: What Simple IV Can and Cannot IdentifyJames J. Heckman and S. Urzua

This paper compares the economic questions addressed by instrumental variables estimators with those addressed by structural approaches. We discuss Marschak’s Maxim: estimators should be selected on the basis of their ability to answer well-posed economic problems with minimal assumptions. A key identifying assumption that allows structural methods to be more informative than IV can be tested with data and does not have to be imposed.

Paper (@ScienceDirect)

Journal of Econometrics, 156(1), 27–37, (2010).

Instrumental variables, Structural approaches, Marschak’s Maxim2010 May
The American High School Graduation Rate: Trends and LevelsJames J. Heckman and P. LaFontaine

This paper applies a unified methodology to multiple data sets to estimate both the levels and trends in U.S. high school graduation rates. We establish that (a) the true rate is substantially lower than widely used measures; (b) it peaked in the early 1970s; (c) majority/minority differentials are substantial and have not converged for 35 years; (d) lower post-1970 rates are not solely due to increasing immigrant and minority populations; (e) our findings explain part of the slowdown in college attendance and rising college wage premiums; and (f) widening graduation differentials by gender help explain increasing male-female college attendance gaps.

Paper (@NIH)

Review of Economics and Statistics, 92(2): 244–262, (2010).

high school dropout rate, high school graduation rates, educational attainment2010 May
The Rate of the Return to the HighScope Perry Preschool ProgramJames J. Heckman, S. H. Moon, R. Pinto, P. A. Savelyev, and A. Yavitz

This paper estimates the rate of return to the HighScope Perry Preschool Program, an early intervention program targeted toward disadvantaged African-American youth. Estimates of the rate of return to the Perry program are widely cited to support the claim of substantial economic benefits from preschool education programs. Previous studies of the rate of return to this program ignore the compromises that occurred in the randomization protocol. They do not report standard errors. The rates of return estimated in this paper account for these factors. We conduct an extensive analysis of sensitivity to alternative plausible assumptions. Estimated annual social rates of return generally fall between 7 and 10%, with most estimates substantially lower than those previously reported in the literature. However, returns are generally statistically significantly different from zero for both males and females and are above the historical return on equity. Estimated benefit-to-cost ratios support this conclusion.

Paper (@ScienceDirect)

Journal of Public Economics, 94: 114–128, (2010).

2010 Feb
Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the MarginJames J. Heckman, P. Carneiro, and E. Vytlacil

This paper develops methods for evaluating marginal policy changes. We characterize how the effects of marginal policy changes depend on the direction of the policy change, and show that marginal policy effects are fundamentally easier to identify and to estimate than conventional treatment parameters. We develop the connection between marginal policy effects and the average effect of treatment for persons on the margin of indifference between participation in treatment and nonparticipation, and use this connection to analyze both parameters. We apply our analysis to estimate the effect of marginal changes in tuition on the return to going to college.

Paper (@JSTOR)

Econometrica, 78(1): 377–394, (2010).

2010 Jan
A Note on Adapting Propensity Score Matching and Selection Models to Choice Based SamplesJames J. Heckman and P. Todd

Paper (@NIH)

Econometric Journal, 12(Supplement): S230–S234, (2009).

2009 Dec
Lab Experiments are a Major Source of Knowledge in the Social SciencesJames J. Heckman and A. Falk

Laboratory experiments are a widely used methodology for advancing causal knowledge in the physical and life sciences. With the exception of psychology, the adoption of laboratory experiments has been much slower in the social sciences, although during the past two decades the use of lab experiments has accelerated. Nonetheless, there remains considerable resistance among social scientists who argue that lab experiments lack “realism” and generalizability. In this article, we discuss the advantages and limitations of laboratory social science experiments by comparing them to research based on nonexperimental data and to field experiments. We argue that many recent objections against lab experiments are misguided and that even more lab experiments should be conducted.

Paper (@Science)

Science, 326(5952): 535–538, (2009).

2009 Oct
Comment on ‘Nietzsche and the Economics of Becoming,’ (by Richard Robb)James J. Heckman

Paper (@SSRN)

Capitalism and Society, 4(1): Article 4. (2009).

2009 Apr
Investing in Early Human Development: Timing and Economic EfficiencyJames J. Heckman, O. Doyle, C. Harmon, and R. Tremblay

Policy discussions to ameliorate socioeconomic (SES) inequalities are increasingly focused on investments in early childhood. Yet such interventions are costly to implement, and clear evidence on the optimal time to intervene to yield a high economic and social return in the future is meagre. The majority of successful early childhood interventions start in the preschool years. However socioeconomic gradients in cognitive skills, socio-emotional functioning and health can be observed by age three, suggesting that preventative programmes starting earlier in childhood may be even more effective. We discuss the optimal timing of early childhood intervention with reference to recent research in developmental neuroscience. We motivate the need for early intervention by providing an overview of the impact of adverse risk factors during the antenatal and early childhood periods on outcomes later in life. We provide a brief review of the economic rationale for investing early in life and propose the “antenatal investment hypothesis”. We conclude by discussing a suite of new European interventions that will inform this optimal timing debate.

Paper (@NIH)

Economics and Human Biology, 7(1):1-6. (2009).

Early childhood intervention, SES inequalities, brain development2009 Mar
The Many Contributions of Edmund Phelps: American Economic Association Luncheon Speech Honoring the 2006 Nobel Laureate in EconomicsJames J. Heckman

Paper (@SSRN)

Capitalism and Society, 3(3):Article 2 (2009).

2009 Apr
The Economics and Psychology of Inequality and Human DevelopmentJames J. Heckman and F. Cunha

Recent research on the economics of human development deepens understanding of the origins of inequality and excellence. It draws on and contributes to personality psychology and the psychology of human development. Inequalities in family environments and investments in children are substantial. They causally affect the development of capabilities. Both cognitive and noncognitive capabilities determine success in life but to varying degrees for different outcomes. An empirically determined technology of capability formation reveals that capabilities are self-productive and cross-fertilizing and can be enhanced by investment. Investments in capabilities are relatively more productive at some stages of a child’s life cycle than others. Optimal child investment strategies differ depending on target outcomes of interest and on the nature of adversity in a child’s early years. For some configurations of early disadvantage and for some desired outcomes, it is efficient to invest relatively more in the later years of childhood than in the early years.

Paper (@JSTOR)

Journal of the European Economic Association, 7(2-3): 320-364, (2009).

2009 Apr
Gender Differences in Risk Aversion and Ambiguity AversionJames J. Heckman, L. Borghans, B. Golsteyn, and H. Meijers

This paper demonstrates gender differences in risk aversion and ambiguity aversion. It also contributes to a growing literature relating economic preference parameters to psychological measures by asking whether variations in preference parameters among persons, and in particular across genders, can be accounted for by differences in personality traits and traits of cognition. Women are more risk-averse than men. Over an initial range, women require no further compensation for the introduction of ambiguity but men do. At greater levels of ambiguity, women have the same marginal distaste for increased ambiguity as men. Psychological variables account for some of the interpersonal variation in risk aversion. They explain none of the differences in ambiguity.

Paper (@JSTOR)

Journal of the European Economic Association, 7(2-3): 649-658, (2009).

2009 Jan
Instrumental Variables in Models with Multiple Outcomes: The General Unordered CaseJames J. Heckman, S. Urzua, and E. Vytlacil

This paper develops the method of local instrumental variables for models with multiple, unordered treatments when treatment choice is determined by a nonparametric version of the multinomial choice model. Responses to interventions are permitted to be heterogeneous in a general way and agents are allowed to select a treatment (e.g. participate in a program) with at least partial knowledge of the idiosyncratic response to the treatments. We define treatment effects in a general model with multiple treatments as differences in counterfactual outcomes that would have been observed if the agent faced different choice sets. We show how versions of local instrumental variables can identify the corresponding treatment parameters. Direct application of local instrumental variables identifies the marginal treatment effect of one option versus the next best alternative without requiring knowledge of any structural parameters from the choice equation or any large support assumptions. Using local instrumental variables to identify other treatment parameters requires either large support assumptions or knowledge of the latent index function of the multinomial choice model.

Paper (@JSTOR)

Les Annales d’Economie et de Statistique, 91-92, pp. 151- 174, (2008).

2008 Oct
The Principles Underlying Evaluation Estimators with an Application to MatchingJames J. Heckman

This paper has two objectives. The first is to review the basic principles underlying the identification of conventional econometric evaluation estimators and their recent extensions. The second is to apply the analysis to make explicit the implicit assumptions used in the method of matching. Cet article a deux objectifs. Le premier est de passer en revue les principes fondamentaux qui permettent l’identification des estimateurs économétriques habituellement utilisés en matière d’évaluation et leurs développements récents. Le second objectif est d’appliquer cette première analyse de façon à expliciter les hypothèses implicites aux techniques d’appariement.

Paper (@JSTOR)

Les Annales d’Economie et de Statistique, 91-92, pp. 9-74, (2008).

2008 Oct
Schools, Skills and SynapsesJames J. Heckman

This paper discusses (a) the role of cognitive and noncognitive ability in shaping adult outcomes, (b) the early emergence of differentials in abilities between children of advantaged families and children of disadvantaged families, (c) the role of families in creating these abilities, (d) adverse trends in American families, and (e) the effectiveness of early interventions in offsetting these trends. Practical issues in the design and implementation of early childhood programs are discussed. (JEL A12)

Paper (@Wiley)

Economic Inquiry, 46(3): 289-324, 2008.

2008 Sep
The Role of Income and Family Influence on Child OutcomesJames J. Heckman

This chapter examines the role of income and family background in models of capability formation that explains a variety of findings established in the child development and child intervention literatures.

Paper (@NIH)

Annals of the New York Academy of Sciences, 1136(Reducing the Impact of Poverty on Health and Human Develop- ment: Scientific Approaches): 307-323, 2008.

2008 Oct
Identification of Treatment Effects Using Control Functions in Models with Continuous, Endogenous Treatment and Heterogeneous EffectsJames J. Heckman, J.P. Florens, C. Meghir, and E. Vytlacil

We use the control function approach to identify the average treatment effect and the effect of treatment on the treated in models with a continuous endogenous regressor whose impact is heterogeneous. We assume a stochastic polynomial restriction on the form of the heterogeneity, but unlike alternative nonparametric control function approaches, our approach does not require large support assumptions.

Paper (@JSTOR)

Econometrica, 76(5): 1191-1206, 2008.

2008 Oct
Dynamic Policy AnalysisJames J. Heckman and J.H. Abbring

This chapter studies the microeconometric treatment-effect and structural approaches to dynamic policy evaluation. First, we discuss a reduced-form approach based on a sequential randomization or dynamic matching assumption that is popular in biostatistics. We then discuss two complementary approaches for treatments that are single stopping times and that allow for non-trivial dynamic selection on unobservables.The first builds on continuous-time duration and event-history models.The second extends the discrete-time dynamic discrete-choice literature.

Paper (@Springer)

in The Econometrics of Panel Data (3rd ed.), edited by L. Matyas and P. Sevestre, (Dordrecht: Springer), 2008.

Potential Outcome, Exclusion Restriction, Duration Model, Duration Dependence, Unemployment Spell2008 Oct
The Economics and Psychology of Personality TraitsJames J. Heckman, L. Borghans, A. L. Duckworth, and B. ter Weel

This paper explores the interface between personality psychology and economics. We examine the predictive power of personality and the stability of personality traits over the life cycle. We develop simple analytical frameworks for interpreting the evidence in personality psychology and suggest promising avenues for future research.

Paper (@UWPress)

Journal of Human Resources, 43(4): 972-1059. (2008).

2008 Oct
Formulating, Identifying and Estimating the Technology of Cognitive and Noncognitive Skill FormationJames J. Heckman and F. Cunha

This paper estimates models of the evolution of cognitive and noncognitive skills and explores the role of family environments in shaping these skills at different stages of the life cycle of the child. Central to this analysis is identification of the technology of skill formation. We estimate a dynamic factor model to solve the problem of endogeneity of inputs and multiplicity of inputs relative to instruments. We identify the scale of the factors by estimating their effects on adult outcomes. In this fashion we avoid reliance on test scores and changes in test scores that have no natural metric. Parental investments are generally more effective in raising noncognitive skills. Noncognitive skills promote the formation of cognitive skills but, in most specifications of our model, cognitive skills do not promote the formation of noncognitive skills. Parental inputs have different effects at different stages of the child’s life cycle with cognitive skills affected more at early ages and noncognitive skills affected more at later ages.

Paper (@UWPress)

Journal of Human Resources, 43(4): 738-782. (2008).

2008 Oct
A New Framework for the Analysis of InequalityJames J. Heckman and F. Cunha

This paper presents a new framework for analyzing inequality that moves beyond the anonymity postulate. We estimate the determinants of sectoral choice and the joint distributions of outcomes across sectors. We determine which components of realized earnings variability are due to uncertainty and which components are due to components of human diversity that are forcastable by agents. Using our tools, we can determine how policies shift persons across sectors and outcome distributions across sectors.

Paper (@Cambridge)

Macroeconomic Dynamics, 12(Supplement 2), pp. 315-354. (2008).

Inequality, Anonymity, Postulate Uncertainty, Policy Evaluation2008 Sep
The Roy ModelJames J. Heckman and C. Taber

The Roy (1951) model of self-selection on outcomes is one of the most important models in economics. It is a framework for analysing comparative advantage. The original model analysed occupational choice with heterogeneous skill levels and has subsequently been applied in many other contexts. We first discuss the model. We then summarize what is known about identification of the model. We end by describing some applications based on the model and its extensions.

Paper (@Springer)

in S. N. Durlauf and L. E. Blume (eds.), New Palgrave Dictionary of Economics (2nd ed.) Palgrave Macmillan. 2008.

Joint Distribution, Comparative Advantage, Exclusion Restriction, Occupational Choice, Earning Inequality2008 Mar
An Assessment of Causal Inference in Smoking Initiation Research and a Framework for Future ResearchJames J. Heckman, F. Flyer, and C. Loughlin

Reliably identifying the causal factors underlying youth smoking initiation is an important part of developing effective smoking prevention programs and shaping other types of smoking‐related policies. The establishment of reliable scientific evidence in support of a causal link between cigarette advertising and youth smoking initiation depends on both rich longitudinal data as well as careful empirical applications. We examine basic principles of empirical scientific investigation of potential causal relationships, discuss findings of recent research on causal factors of youth smoking, and evaluate evidence from the public health literature regarding the effects of cigarette advertising on youth smoking.

Paper (@Wiley)

Economic Inquiry, 46(1): 37-44 (2008).

2008 Mar
Econometric CausalityJames J. Heckman

This paper presents the econometric approach to causal modelling. It is motivated by policy problems. New causal parameters are defined and identified to address specific policy problems. Economists embrace a scientific approach to causality and model the preferences and choices of agents to infer subjective (agent) evaluations as well as objective outcomes. Anticipated and realized subjective and objective outcomes are distinguished. Models for simultaneous causality are developed. The paper contrasts the Neyman–Rubin model of causality with the econometric approach.

Paper (@Wiley)

International Statistical Review, 76(1): 1-27 (2008).

2008 Mar
Earnings Functions and Rates of ReturnJames J. Heckman, L. Lochner, and P. Todd

The internal rate of return to schooling is a fundamental economic parameter that is often used to assess whether expenditure on education should be increased or decreased. This article considers alternative approaches to estimating marginal internal rates of return for different schooling levels. We implement a general nonparametric approach to estimate marginal internal rates of return that take into account tuition costs, income taxes, and nonlinearities in the earnings‐schooling‐experience relationship. The returns obtained by the more general method differ substantially from Mincer returns in levels and in their evolution over time. They indicate relatively larger returns to graduating from high school than to graduating from college, although both have been increasing over time.

Paper (@UChicagoPress)

Journal of Human Capital, 2(1): 1-31 (2008).

2008 Mar
Use of Instrumental Variables in the Presence of Heterogeneity and Self-Selection: An Application to Treatments of Breast Cancer PatientsJames J. Heckman, A. Basu, S. Navarro-Lozano and S. Urzua

Instrumental variable (IV) methods are widely used in the health economics literature to adjust for hidden selection biases in observational studies when estimating treatment effects. Less attention has been paid in the applied literature to the proper use of IVs if treatment effects are heterogeneous across subjects and individuals select treatments based on expected idiosyncratic gains or losses from treatments. In this paper we compare conventional IV analysis with alternative approaches that use IVs to estimate treatment effects in models with response heterogeneity and self-selection. Instead of interpreting IV estimates as the effect of treatment at an unknown margin of patients, we identify the marginal patients and we apply the method of local IVs to estimate the average treatment effect and the effect on the treated on 5-year direct costs of breast-conserving surgery and radiation therapy compared with mastectomy in breast cancer patients. We use a sample from the Outcomes and Preferences in Older Women, Nationwide Survey which is designed to be representative of all female Medicare beneficiaries (aged 67 or older) with newly diagnosed breast cancer between 1992 and 1994. Our results reveal some of the advantages and limitations of conventional and alternative IV methods in estimating mean treatment effect parameters.

Paper (@PubMed)

Health Economics, 16(11): 1133-1157 (2007).

2007 Nov
The Identification and Economic Content of Ordered Choice Models with Stochastic ThresholdsJames J. Heckman, F. Cunha, and S. Navarro

This article extends the widely used ordered choice model by introducing stochastic thresholds and interval‐specific outcomes. The model can be interpreted as a generalization of the GAFT (MPH) framework for discrete duration data that jointly models durations and outcomes associated with different stopping times. We establish conditions for nonparametric identification. We interpret the ordered choice model as a special case of a general discrete choice model and as a special case of a dynamic discrete choice model.

Paper (@Wiley)

International Economic Review 48(4): 1273-1309 (2007).

2007 Dec
Identifying and Estimating the Distributions of Ex Post and Ex Ante Returns to SchoolingJames J. Heckman and F. Cunha

This paper surveys a recent body of research by Carneiro, Hansen, and Heckman [Carneiro, P., K. Hansen, and J.J. Heckman, 2001, Fall. Removing the veil of ignorance in assessing the distributional impacts of social policies. Swedish Economic Policy Review 8 (2), 273–301., Carneiro, P., K. Hansen, and J.J. Heckman, 2003, May. Estimating distributions of treatment effects with an application to the returns to schooling and measurement of the effects of uncertainty on college choice. International Economic Review 44 (2), 361–422. 2001 Lawrence R. Klein Lecture], Cunha and Heckman [Cunha, F. and J.J. Heckman, 2006. The evolution of earnings risk in the US economy. Presented at the 9th World Congress of the Econometric Society, London], Cunha, Heckman, and Navarro [Cunha, F., J.J. Heckman, and S. Navarro, 2004, March. Separating heterogeneity from uncertainty in an aiyagari–laitner economy. Presented at the Goldwater Conference on Labor Markets, Arizona., Cunha, F., J.J. Heckman, and S. Navarro, 2005, April. Separating uncertainty from heterogeneity in life cycle earnings, The 2004 Hicks Lecture. Oxford Economic Papers 57 (2), 191–261., Cunha, F., J.J. Heckman, and S. Navarro, 2006. Counterfactual analysis of inequality and social mobility. In S.L. Morgan, D.B. Grusky, and G.S. Fields (Eds.), Mobility and Inequality: Frontiers of Research in Sociology and Economics, Chapter 4, pp. 290–348. Stanford, CA: Stanford University Press], Heckman and Navarro [Heckman, J.J. and S. Navarro, 2007, February. Dynamic discrete choice and dynamic treatment effects. Journal of Econometrics 136 (2), 341–396] and Navarro [Navarro, S., 2005. Understanding Schooling: Using Observed Choices to Infer Agent’s Information in a Dynamic Model of Schooling Choice When Consumption Allocation is Subject to Borrowing Constraints. Ph.D. Dissertation, University of Chicago, Chicago, IL] that identifies and estimates the ex post distribution of returns to schooling and determines ex ante distributions of returns on which agents base their schooling choices. We discuss methods and evidence, and state a fundamental identification problem concerning the separation of preferences, market structures and agent information sets. For a variety of market structures and preference specifications, we estimate that over 50% of the ex post variance in returns to college are forecastable at the time agents make their schooling choices.

Paper (@ScienceDirect)

Labour Economics, 14(6): 870-893 (2007).

2007 Dec
The Productivity Argument for Investing in Young ChildrenJames J. Heckman and D. Masterov

This paper presents a productivity argument for investing in disadvantaged young children. For such investment, there is no equity-efficiency tradeoff.

Working Paper (@NBER)

Review of Agricultural Economics, 29(3): 446-493, (2007).

2007 Aug
The Economics, Technology and Neuroscience of Human Capability FormationJames J. Heckman

This article begins the synthesis of two currently unrelated literatures: the human capital approach to health economics and the economics of cognitive and noncognitive skill formation. A lifecycle investment framework is the foundation for understanding the origins of human inequality and for devising policies to reduce it.

Paper (@PNAS)

Proceedings of the National Academy of Sciences, 104(33): 13250-13255, (2007).

Barker hypothesis, Critical periods, Early childhood, Sensitive periods2007 Aug
The Technology of Skill FormationJames J. Heckman and F. Cunha

This paper develops a model of skill formation that explains a variety of findings established in the child development and child intervention literatures. At its core is a technology that is stage-specific and that features self productivity, dynamic complementarity and skill multipliers. Lessons are drawn for the design of new policies to alleviate the consequences of the accident of birth that is a major source of human inequality.

Paper (@AEA)

American Economic Review, 97(2):31- 47, (2007).

2007 Jan
Econometric Evaluation of Social Programs, Part III: Distributional Treatment Effects, Dynamic Treatment Effects, Dynamic Discrete Choice, and General Equilibrium Policy EvaluationJames J. Heckman and J. Abbring

This chapter develops three topics. (1) Identification of the distributions of treatment effects and the distributions of agent subjective evaluations of treatment effects. Methods for identifying ex ante and ex post distributions are presented and empirical examples are given. (2) Identification of dynamic treatment effects. The relationship between the statistical literature on dynamic causal inference based on sequential-randomization and the dynamic discrete-choice literature is exposited. The value of well posed economic choice models for decision making under uncertainty in analyzing and interpreting dynamic intervention studies is developed. A survey of the dynamic discrete-choice literature is presented. (3) The key ideas and papers in the recent literature on general equilibrium evaluations of social programs are summarized.

Paper (@ScienceDirect)

in Handbook of Econometrics, Volume 6B, edited by J. Heckman and E. Leamer. Amsterdam: Elsevier, pp. 5145-5303. 2007.

distributions of treatment effects, dynamic treatment effects, dynamic discrete choice, general equilibrium policy evaluation2007 Jan
Econometric Evaluation of Social Programs, Part II: Using the Marginal Treatment Effect to Organize Alternative Economic Estimators to Evaluate Social Programs and to Forecast Their Effects in New EnvironmentsJames J. Heckman and E. Vytlacil

This chapter uses the marginal treatment effect (MTE) to unify and organize the econometric literature on the evaluation of social programs. The marginal treatment effect is a choice-theoretic parameter that can be interpreted as a willingness to pay parameter for persons at a margin of indifference between participating in an activity or not. All of the conventional treatment parameters as well as the more economically motivated treatment effects can be generated from a baseline marginal treatment effect. All of the estimation methods used in the applied evaluation literature, such as matching, instrumental variables, regression discontinuity methods, selection and control function methods, make assumptions about the marginal treatment effect which we exposit. Models for multiple outcomes are developed. Empirical examples of the leading methods are presented. Methods are presented for bounding treatment effects in partially identified models, when the marginal treatment effect is known only over a limited support. We show how to use the marginal treatment in econometric cost benefit analysis, in defining limits of policy experiments, in constructing the average marginal treatment effect, and in forecasting the effects of programs in new environments.

Paper (@ScienceDirect)

in Handbook of Econometrics, Vol- ume 6B, edited by J. Heckman and E. Leamer. Amsterdam: Elsevier, pp. 4875-5144. 2007.

marginal treatment effect, policy evaluation, instrumental variables, forecasting new policies, econometric cost benefit analysis, regression discontinuity, matching bounds2007 Jan
Econometric Evaluation of Social Programs, Part I : Causal Models, Structural Models and Econometric Policy EvaluationJames J. Heckman and E. Vytlacil

This chapter relates the literature on the econometric evaluation of social programs to the literature in statistics on “causal inference”. In it, we develop a general evaluation framework that addresses well-posed economic questions and analyzes agent choice rules and subjective evaluations of outcomes as well as the standard objective evaluations of outcomes. The framework recognizes uncertainty faced by agents and ex ante and ex post evaluations of programs. It also considers distributions of treatment effects. These features are absent from the statistical literature on causal inference. A prototypical model of agent choice and outcomes is used to illustrate the main ideas.

Paper (@ScienceDirect)

Handbook of Econometrics, Volume 6B, edited by J. Heckman and E. Leamer. Amsterdam: Elsevier, pp. 4779-4874. 2007.

2007 Jan
Comments on Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence by David Howell, Dean Baker, Andrew Glyn and John SchmittJames J. Heckman

This paper is a comment on Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence by David Howell, Dean Baker, Andrew Glyn and John Schmitt.

Paper (@SSRN)

Capitalism and Society, 2(1, Article 5). (2007)

2007 Jan
Familias y habilidades como determinantes de logros economics y sociales (Family and Abilities as determinants of socio-economic successJames J. Heckman and S. Urzua

in Familia y Felicidad: Un Circulo Virtuoso, 2006, C. Larroulet and R. Camhi, eds. Santiago, Chile: Libertad y Desarrollo.

2006 Sep
Economic, Neurobiological and Behavioral Perspectives on Building America’s Future WorkforceJames J. Heckman, E. Knudsen, J. Cameron, and J. Shonkoff

A growing proportion of the U.S. workforce will have been raised in disadvantaged environments that are associated with relatively high proportions of individuals with diminished cognitive and social skills. A cross-disciplinary examination of research in economics, developmental psychology, and neurobiology reveals a striking convergence on a set of common principles that account for the potent effects of early environment on the capacity for human skill development. Central to these principles are the findings that early experiences have a uniquely powerful influence on the development of cognitive and social skills and on brain architecture and neurochemistry, that both skill development and brain maturation are hierarchical processes in which higher level functions depend on, and build on, lower level functions, and that the capacity for change in the foundations of human skill development and neural circuitry is highest earlier in life and decreases over time. These findings lead to the conclusion that the most efficient strategy for strengthening the future workforce, both economically and neurobiologically, and improving its quality of life is to invest in the environments of disadvantaged children during the early childhood years.

Paper (@PNAS)

World Economics, 7(3), (July- September, 2006).

2006 Sep
Understanding Instrumental Variables in Models with Essential HeterogeneityJames J. Heckman, S. Urzua, and E. Vytlacil

This paper examines the properties of instrumental variables
(IV) applied to models with essential heterogeneity, that is, models where
responses to interventions are heterogeneous and agents adopt treatments
(participate in programs) with at least partial knowledge of their idiosyncratic response. We analyze two-outcome and multiple-outcome models,
including ordered and unordered choice models. We allow for transitionspecific and general instruments. We generalize previous analyses by
developing weights for treatment effects for general instruments. We
develop a simple test for the presence of essential heterogeneity. We note
the asymmetry of the model of essential heterogeneity: outcomes of
choices are heterogeneous in a general way; choices are not. When both
choices and outcomes are permitted to be symmetrically heterogeneous,
the method of IV breaks down for estimating treatment parameters.

Paper (@MITPress)

Review of Economics and Statistics, 88(3): 389-432, (2006).

2006 Jul
The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social BehaviorJames J. Heckman, J. Stixrud, and S. Urzua

This article establishes that a low‐dimensional vector of cognitive and noncognitive skills explains a variety of labor market and behavioral outcomes. Our analysis addresses the problems of measurement error, imperfect proxies, and reverse causality that plague conventional studies. Noncognitive skills strongly influence schooling decisions and also affect wages, given schooling decisions. Schooling, employment, work experience, and choice of occupation are affected by latent noncognitive and cognitive skills. We show that the same low‐dimensional vector of abilities that explains schooling choices, wages, employment, work experience, and choice of occupation explains a wide variety of risky behaviors.

Paper (@UChicagoPress)

Journal of Labor Economics, 24(3): 411-482, (July, 2006).

2006 Jul
Bias Corrected Estimates of GED ReturnsJames J. Heckman and P. LaFontaine

Using three sources of data, this article examines the direct economic return to General Educational Development (GED) certification for both native and immigrant high school dropouts. One data source—the Current Population Survey (CPS)—is plagued by nonresponse and allocation bias from the hot deck procedure that biases the estimated return to the GED upward. Correcting for allocation bias and ability bias, there is no direct economic return to GED certification. An apparent return to GED certification with age found in the raw CPS data is due to dropouts becoming more skilled over time. These results apply to both native‐born and immigrant populations.

Paper (@UChicagoPress)

Journal of Labor Economics, 24(3): 661-700, (July, 2006)

2006 Jul
Dynamic Discrete Choice and Dynamic Treatment EffectsJames J. Heckman and S. Navarro

This paper considers semiparametric identification of structural dynamic discrete choice models and models for dynamic treatment effects. Time to treatment and counterfactual outcomes associated with treatment times are jointly analyzed. We examine the implicit assumptions of the dynamic treatment model using the structural model as a benchmark. For the structural model we show the gains from using cross-equation restrictions connecting choices to associated measurements and outcomes. In the dynamic discrete choice model, we identify both subjective and objective outcomes, distinguishing ex post and ex ante outcomes. We show how to identify agent information sets.

Paper (@ScienceDirect)

Journal of Econometrics, 136(2): 341-396, (February, 2007).

Dynamic Treatment Effects, Dynamic Discrete Choice, Semiparametric Identification2007 Feb
Interpreting the Evidence on Life Cycle Skill FormationJames J. Heckman, F. Cunha, L. Lochner, and D. Masterov

This paper presents economic models of child development that capture the essence of recent findings from the empirical literature on skill formation. The goal of this essay is to provide a theoretical framework for interpreting the evidence from a vast empirical literature, for guiding the next generation of empirical studies, and for formulating policy. Central to our analysis is the concept that childhood has more than one stage. We formalize the concepts of self-productivity and complementarity of human capital investments and use them to explain the evidence on skill formation. Together, they explain why skill begets skill through a multiplier process. Skill formation is a life cycle process. It starts in the womb and goes on throughout life. Families play a role in this process that is far more important than the role of schools. There are multiple skills and multiple abilities that are important for adult success. Abilities are both inherited and created, and the traditional debate about nature versus nurture is scientifically obsolete. Human capital investment exhibits both self-productivity and complementarity. Skill attainment at one stage of the life cycle raises skill attainment at later stages of the life cycle (self-productivity). Early investment facilitates the productivity of later investment (complementarity). Early investments are not productive if they are not followed up by later investments (another aspect of complementarity). This complementarity explains why there is no equity-efficiency trade-off for early investment. The returns to investing early in the life cycle are high. Remediation of inadequate early investments is difficult and very costly as a consequence of both self-productivity and complementarity.

Paper (@ScienceDirect)

in E. Hanushek and F. Welch, eds., Handbook of the Economics of Education, (North Holland: Amsterdam), pp. 697–812 (2006).

Skill Formation, Education, Government Policy, Educational Finance2006 Jul
Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and BeyondJames J. Heckman, L. Lochner, and P. Todd

Numerous studies regress log earnings on schooling and report estimated coefficients as “Mincer rates of return”. A more recent literature uses instrumental variables. This chapter considers the economic interpretation of these analyses and how the availability of repeated cross section and panel data improves the ability of analysts to estimate the rate of return. We consider under what conditions the Mincer model estimates an ex post rate of return. We test and reject the model on six cross sections of U.S. Census data. We present a general nonparametric approach for estimating marginal internal rates of return that takes into account tuition, income taxes and forms of uncertainty. We also contrast estimates based on a single cross-section of data, using the synthetic cohort approach, with estimates based on repeated cross-sections following actual cohorts. Cohort-based models fitted on repeated cross section data provide more reliable estimates of ex post returns.

Accounting for uncertainty affects estimates of rates of return. Accounting for sequential revelation of information calls into question the validity of the internal rate of return as a tool for policy analysis. An alternative approach to computing economic rates of return that accounts for sequential revelation of information is proposed and the evidence is summarized. We distinguish ex ante from ex post returns. New panel data methods for estimating the uncertainty and psychic costs facing agents are reviewed. We report recent evidence that demonstrates that there are large psychic costs of schooling. This helps to explain why persons do not attend school even though the financial rewards for doing so are high. We present methods for computing distributions of returns ex ante and ex post.

We review the literature on instrumental variable estimation. The link of the estimates to the economics is not strong. The traditional instruments are weak, and this literature has not produced decisive empirical estimates. We exposit new methods that interpret the economic content of different instruments within a unified framework.

Paper (@ScienceDirect)

in E. Hanushek and F. Welch, eds., Handbook of the Economics of Education, (North Holland: Amsterdam), pp. 307–458 (2006)

Rate of Return to Schooling; Internal Rate of Return; Uncertainty; Psychic Costs; Panel Data; Distribution2006 Jul
Economic, Neurobiological, and Behavioral Perspectives on Building America’s Future WorkforceJames J. Heckman, E. Knudsen, J. Cameron, and J. Shonkoff

A growing proportion of the U.S. workforce will have been raised in disadvantaged environments that are associated with relatively high proportions of individuals with diminished cognitive and social skills. A cross-disciplinary examination of research in economics, developmental psychology, and neurobiology reveals a striking convergence on a set of common principles that account for the potent effects of early environment on the capacity for human skill development. Central to these principles are the findings that early experiences have a uniquely powerful influence on the development of cognitive and social skills and on brain architecture and neurochemistry, that both skill development and brain maturation are hierarchical processes in which higher level functions depend on, and build on, lower level functions, and that the capacity for change in the foundations of human skill development and neural circuitry is highest earlier in life and decreases over time. These findings lead to the conclusion that the most efficient strategy for strengthening the future workforce, both economically and neurobiologically, and improving its quality of life is to invest in the environments of disadvantaged children during the early childhood years.

Paper (@PNAS)

Proceedings of the National Academy of Sciences, 103(27): 10155-10162 (July, 2006)

2006 Jul
Skill Formation and the Economics of Investing in Disadvantaged ChildrenJames J. Heckman

This paper summarizes evidence on the effects of early environments on child, adolescent, and adult achievement. Life cycle skill formation is a dynamic process in which early inputs strongly affect the productivity of later inputs.

Paper (@Science)

Science, 312 (5782): 1900-1902 (June, 2006)

2006 Jun
Counterfactual Analysis of Inequality and Social MobilityJames J. Heckman, F. Cunha, and S. Navarro

in S. Morgan, D. Grusky and G. Fields. eds., Mobility and Inequality: Frontiers of Research from Sociology and Economics, Palo Alto: Stanford University Press, Chapter 4, 2006.

2006 Jan
The Scientific Model of CausalityJames J. Heckman

Paper (@Wiley)

Sociological Methodology, 35: 1–97, 2005

2005 Jul
Contributions of Zvi GrilichesJames J. Heckman

This paper summarizes the major research contributions of Zvi Griliches.

Paper (@SSRN)

Annales d’Economie et Statistique, 79-80 (July-December, Special issue in tribute to Zvi Griliches), 2005

2005 Jul
Understanding the Sources of Ethnic and Racial Wage Gaps and Their Implications for PolicyJames J. Heckman, P. Carneiro, and D. Masterov

Previous studies show that controlling for ability measured in the teenage years eliminates young adult wage gaps for all groups except Black males, for whom the gap is reduced by approximately three-fourths. This suggests that disparity in skills, rather than the differential treatment of such skills in the market, produces racial and ethnic wage differentials. However, minority children and their parents may have pessimistic expectations about receiving fair rewards for their skills in the labor market and so they may invest less in skill formation. Poor schools may also depress cognitive achievement, even in the absence of any discrimination.

We find that the evidence on expectations is mixed. Although all groups are quite optimistic about the future schooling outcomes of their children, minority parents and children have more pessimistic expectations about child schooling relative to White children and their parents when the children are young. At later ages, expectations are more uniform across racial and ethnic groups. Gaps in ability across racial and ethnic groups also open up before the start of formal schooling, and the different trajectories of Hispanic and Black students indicate that differences in schooling cannot be the source of cognitive disparities. Finally, test scores depend on schooling attained at the time of the test. Adjusting for differences in schooling attainment at the age the test is taken reduces the power of measured ability to shrink wage gaps for Blacks, but not for Hispanics.

We also document the presence of disparities in noncognitive traits across racial and ethnic groups. These characteristics have been shown elsewhere to be important for explaining the labor market outcomes of adults. This evidence points to the importance of early (preschool) family factors and environments in explaining both cognitive and noncognitive ability differentials by ethnicity and race.

Paper (@Springer)

in R. Nelson and L. Nielsen, eds., Handbook of Research on Employment Discrimination: Rights and Realities, (Springer), 2005

2005 May
Structural Equations, Treatment, Effects and Econometric Policy EvaluationJames J. Heckman and E. Vytlacil

This paper uses the marginal treatment effect (MTE) to unify the nonparametric literature on treatment effects with the econometric literature on structural estimation using a nonparametric analog of a policy invariant parameter; to generate a variety of treatment effects from a common semiparametric functional form; to organize the literature on alternative estimators; and to explore what policy questions commonly used estimators in the treatment effect literature answer. A fundamental asymmetry intrinsic to the method of instrumental variables (IV) is noted. Recent advances in IV estimation allow for heterogeneity in responses but not in choices, and the method breaks down when both choice and response equations are heterogeneous in a general way.

Paper (@JSTOR)

Econometrica, 73(3): 669–738, 2005

2005 May
Labor Market Discrimination and Racial Differences in Premarket FactorsJames J. Heckman, P. Carneiro, and D. Masterov

This paper investigates the relative significance of differences in cognitive skills and discrimination in explaining racial/ethnic wage gaps. We show that cognitive test scores for exams taken prior to entering the labor market are influenced by schooling. Adjusting the scores for racial/ethnic differences in education at the time the test is taken reduces their role in accounting for the wage gaps. We also consider evidence on parental and child expectations about education and on stereotype threat effects. We find both factors to be implausible alternative explanations for the gaps we observe. We argue that policies need to address the sources of early skill gaps and to seek to influence the more malleable behavioral abilities in addition to their cognitive counterparts. Such policies are far more likely to be effective in promoting racial and ethnic equality for most groups than are additional civil rights and affirmative action policies targeted at the workplace.

Paper (@JSTOR)

Journal of Law and Economics, 48(1): 1–39, 2005

2005 Apr
Inequality in America: What role for human capital policies?James J. Heckman

Paper (@FOCUS)

Focus (University of Wisconsin–Madison, Institute for Research on Poverty), 23(3): 1–10, 2005.

2005 Apr
Skill Policies for ScotlandJames J. Heckman and D. Masterov

This paper argues that skill formation is a life-cycle process and develops the implications of this insight for Scottish social policy. Families are major producers of skills, and a successful policy needs to promote effective families and to supplement failing ones. We present evidence that early disadvantages produce severe later disadvantages that are hard to remedy. We also show that cognitive ability is not the only determinant of education, labor market outcomes and pathological behavior like crime. Abilities differ in their malleability over the life-cycle, with noncognitive skills being more malleable at later ages. This has important implications for the design of policy. The gaps in skills and abilities open up early, and schooling merely widens them. Additional university tuition subsidies or improvements in school quality are not warranted by Scottish evidence. Company-sponsored job training yields a higher return for the most able and so this form of investment will exacerbate the gaps it is intended to close. For the same reason, public job training is not likely to help adult workers whose skills are rendered obsolete by skill-biased technological change. Targeted early interventions, however, have proven to be very effective in compensating for the effect of neglect.

Paper (@IZA)

in D. Coyle, W. Alexander and B. Ashcroft, eds., New Wealth for Old Nations: Scotland’s Economic Prospects, (Princeton and Oxford: Princeton University Press), 119–165, 2005

2005 Apr
China’s Human Capital InvestmentJames J. Heckman

This paper discusses human capital investment in China. China’s current policies favor physical capital investment over schooling and urban human capital investment over rural human capital investment. Current migration policies discriminate against children of migrants. A more balanced investment strategy across rural and urban regions and types of capital is appropriate. Private funding for education through tuition and fees should be encouraged and can supplement government funding and make schools more financially self-sufficient. However, if this policy is enacted, capital markets for financing education need to be developed to avoid discouraging students from poor families from attending school.

Paper (@ScienceDirect)

China Economic Review, 16: 50–70, 2005

2005 Apr
Separating Heterogeneity from Uncertainty in Measuring Income InequalityJames J. Heckman, F. Cunha, and S. Navarro

This paper develops and applies a method for decomposing cross section variability of earnings into components that are forecastable at the time students decide to go to college (heterogeneity) and components that are unforecastable. About 60% of variability in returns to schooling is forecastable. This has important implications for using measured variability to price risk and predict college attendance.

Paper (@OUP)

Oxford Economic Papers, 57: 191–261, 2005

2005 Apr
Measuring Disparate Impacts and Extending Disparate Impact Doctrine to Organ Trans- plantation,James J. Heckman and R. Bornholz

Paper (@ProjectMuse)

Perspectives in Biology and Medicine, 48(1): S95–S122, 2005.

2005 Mar
Estimating treatment effects for discrete outcomes when responses to treatment vary: an application to Norwegian vocational rehabilitation programsJames J. Heckman, A. Aakvik, and E. Vytlacil

This paper analyzes the impact of interventions on discrete outcomes when responses to treatment vary among observationally identical persons. Using a latent variable model motivated by economics, we show how to define and identify various mean treatment effects as well as the distribution of treatment effects for discrete outcomes. The framework is based on discrete choice models with unobservables generated by factor structures. Responses to treatment vary among persons who are observationally identical, and agents participate in the program on the basis of their idiosyncratic response to treatment. We apply the model to study the Norwegian Vocational Rehabilitation training program.

Paper (@ScienceDirect)

Journal of Econometrics, Aigner Prize Paper, 125: 15–51, 2005.

Social program evaluation; Discrete-choice models; Vocational rehabilitation2005 Mar
Lessons from the Technology of Skill FormationJames J. Heckman

This paper discusses recent advances in our understanding of differences in human abilities and skills, their sources, and their evolution over the lifecycle.

Paper (@Wiley)

Annals of the New York Academy of Sciences, 1038: 1–22, 2004.

2004 May
Selection Bias, Comparative Advantage and Heterogeneous Returns to Education: Evidence from China in 2000James J. Heckman and Xuesong Li

This paper uses Chinese micro data and new semi‐parametric methods to estimate the current return to college education allowing for heterogeneous returns and for self‐selection into schooling based on them. OLS and IV methods do not properly account for this sorting. Our estimates suggest that, for a randomly selected young person from an urban area, college attendance leads to a 43% increase in lifetime earnings (nearly 11% annually) in 2000, compared with just 36% (nearly 9% annually) for those who do not attend. Our evidence suggests that the return to education has increased substantially in China since the early 1990s.

Paper (@Wiley)

Pacific Economic Review, 9(3), 2004.

2004 May
Identification and Estimation of Hedonic ModelsJames J. Heckman, I. Ekeland, and L. Nesheim

This paper considers the identification and estimation of hedonic models. We establish that in an additive version of the hedonic model, technology and preferences are generically nonparametrically identified from data on demand and supply in a single hedonic market. The empirical literature that claims that hedonic models estimated on data from a single market are fundamentally underidentified is based on arbitrary linearizations that do not use all the information in the model. The exact economic model that justifies linear approximations is unappealing. Nonlinearities are generic features of equilibrium in hedonic models and a fundamental and economically motivated source of identification.

Paper (@JSTOR)

Journal of Political Economy, 112(1), 2004.

2004 May
Simulation and Estimation of Hedonic ModelsJames J. Heckman, R. Matzkin, and L. Nesheim

Making use of restrictions imposed by equilibrium, theoretical progress has been made on the nonparametric and semiparametric estimation and identification of scalar additive hedonic models (Ekeland, Heckman, and Nesheim, 2002) and scalar nonadditive hedonic models (Heckman, Matzkin, and Nesheim, 2002). However, little is known about the practical aspects of estimating such models or of the characteristics of equilibrium in such models. This paper presents computational and analytical results that fill some of these gaps. We simulate and estimate examples of equilibrium in the additive hedonic models and provide evidence on the performance of several estimation techniques. We also simulate examples of equilibria in nonadditive models and provide evidence on the performance of the nonadditive estimation techniques developed in Heckman, Matzkin, and Nesheim (2002).

Paper (@IZA)

in T. Kehoe, T.N. Srinivasan, J. Whalley , eds., Frontiers in Applied General Equilibrium Modeling, (Cambridge University Press), 2004.

2004 May
Remarks on the Life and Work of Jacob MincerJames J. Heckman

Paper (@SpringerLink)

Review of Economics of the Household, 1(4), 2004

2004 Jan
Determinants of Participation in A Social ProgramJames J. Heckman, J. Smith

This paper decomposes the participation process of a prototypical program into eligibility, awareness, application, acceptance and enrollment. With this decomposition, we determine the sources of unequal participation for different groups, and demonstrate that variables often have very different effects at different stages in the participation process. Our analysis shows that personal choices substantially affect participation and that awareness of program eligibility is a major source of variation in participation.

Paper (@NBER)

Journal of Labor Economics, 22(2), April 2004

2004 Apr
The Effect of Schooling and Ability on Achievement Test ScoresJames J. Heckman, K. Hansen, K. Mullen

This paper develops two methods for estimating the effect of schooling on achievement test scores that control for the endogeneity of schooling by postulating that both schooling and test scores are generated by a common unobserved latent ability. These methods are applied to data on schooling and test scores. Estimates from the two methods are in close agreement. We find that the effects of schooling on test scores are roughly linear across schooling levels. The effects of schooling on measured test scores are slightly larger for lower latent ability levels. We find that schooling increases the AFQT score on average between 2 and 4 percentage points, roughly twice as large as the effect claimed by Herrnstein and Murray (1994) but in agreement with estimates produced by Neal and Johnson (1996) and Winship and Korenman (1997). We extend the previous literature by estimating the impact of schooling on measured test scores at various quantiles of the latent ability distribution.

Paper (@ScienceDirect)

Journal of Econometrics, 121: 39–98, 2004

2004 Jan
Using Matching, Instrumental Variables and Control Functions to Estimate Economic Choice ModelsJames J. Heckman, S. Navarro

This paper investigates four topics. (1) It examines the different roles played by the propensity score (probability of selection) in matching, instrumental variable and control functions methods. (2) It contrasts the roles of exclusion restrictions in matching and selection models. (3) It characterizes the sensitivity of matching to the choice of conditioning variables and demonstrates the greater robustness of control function methods to misspecification of the conditioning variables. (4) It demonstrates the problem of choosing the conditioning variables in matching and the failure of conventional model selection criteria when candidate conditioning variables are not exogenous.

Paper (@NBER)

Review of Economics and Statistics, 86(1): 30–57, 2004

2004 Jan
The Supply Side of the Race Between Supply and Demand: Policies to Foster Skill in the Modern EconomyJames J. Heckman

In his celebrated book on income inequality, Jan Tinbergen (1975) wrote about the race between demand and supply in determining the evolution of wages and inequality. The demand side of the recent labor market is well understood. Skill-biased technical change favors skilled workers in many different economic environments. The supply side is less well understood. In the Netherlands, until recently, the supply side was winning and the returns to education were declining or stagnant. The exact reasons for this phenomenon are not well understood. Recently, however, there is evidence that suggests that the returns to schooling are increasing and that demand is outstripping supply, as it has done in most developed countries around the world. This has produced rising wage inequality. Unless more active supply side measures are undertaken, this trend is likely to continue. This problem, joined with the persistent problem of immigrant assimilation and the growing role of immigrants in the Dutch economy, renews interest in the supply side of the labor market. This lecture examines the determinants of the supply of skills in the short run and the long run. It examines the roles of short- term credit constraints and long-term family factors in fostering or retarding skill accumulation. It summarizes the evidence on a number of policy proposals to foster skills including early childhood programs, programs to alleviate short-term financial pressure, job training and second chance programs, and tax policies. This lecture stresses the cumulative dynamic nature of skill production and the importance of recognizing that skill begets skill in designing suitable policies to reduce inequality and foster economic growth. While the evidence is based on American data, the lessons are relevant for economies around the world. Specific lessons for the Netherlands are emphasized.

Paper (@SpringerLink)

Quarterly Review of the Royal Netherlands Economic Association, March 2003, Tinbergen Lecture (October 2002)

2002 Oct
Flexibility and Job Creation: Lessons from GermanyJames J. Heckman

This paper examines the performance of the German economy and the role of the regulation and welfare state policies in affecting its performance. While the German economy is still strong, incentives in place are likely to impair future German competitiveness and productivity.

Paper (@NBER)

Knowledge, Information, and Expectations in Modern Macroeconomics, (Princeton and Oxford: Princeton University Press), 2003

2003 Jan
Conditioning, causality and policy analysisJames J. Heckman

The causality and invarience between health status and socioeconomic status were discussed. An extension of conventional selection bias models, which is based on a Hermite orthogonal polynomial expansion of densities, was presented for the causality analysis. It was observed that health status affected innovations in components of socioeconomic status. The use of the relationship information between health and socioeconomic status in forecasting effects of new policies was also analyzed.

Paper (@ResearchGate)

Journal of Econometrics, 112, 2003

2003 Jan
Simple Estimators for Treatment Parameters within a Latent Variable FrameworkJames J. Heckman, J. Tobias, E. Vytlacil

This note derives simply computed closed-form expressions for the average treatment effect, the effect of treatment on the treated, the local average treatment effect, and the marginal treatment effect in a latent-variable framework for both normal and nonnormal models. Asymptotic standard errors for versions of these parameters that average over observed characteristics are also obtained. The performances of the derived estimators are also evaluated in Monte Carlo experiments under correct specification and misspecification.

Paper (@JSTOR)

Review of Economics and Statistics, 85(3), 2003

2003 Jan
China’s Investment in Human CapitalJames J. Heckman

This paper discusses evidence on human capital investment in China. Policies through the mid 1990s favor physical investment over schooling.

Paper (@NBER)

Economic Development and Cultural Change, 51(4), 2003

2003 Jan
Wage Subsidies and Skill Formation: A Study of the Earned Income Tax CreditJames J. Heckman, R. Cossa, L. Lochner

Paper (@ResearchGate)

Designing Inclusion, (Cambridge University Press), 2003

2003 Jan
Human Capital PolicyJames J. Heckman, P. Carneiro

This paper considers alternative policies for promoting skill formation that are targetted to different stages of the life cycle. We demonstrate the importance of both cognitive and noncognitive skills that are formed early in the life cycle in accounting for racial, ethnic and family background gaps in schooling and other dimensions of socioeconomic success. Most of the gaps in college attendance and delay are determined by early family factors. Children from better families and with high ability earn higher returns to schooling. We find only a limited role for tuition policy or family income supplements in eliminating schooling and college attendance gaps. At most 8% of American youth are credit constrained in the traditional usage of that term. The evidence points to a high return to early interventions and a low return to remedial or compensatory interventions later in the life cycle. Skill and ability beget future skill and ability. At current levels of funding, traditional policies like tuition subsidies, improvements in school quality, job training and tax rebates are unlikely to be effective in closing gaps.

Paper (@NBER)

Inequality in America: What Role for Human Capital Policy?, (MIT Press), 2003

2003 Jan
Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College ChoiceJames J. Heckman, P. Carneiro, K. Hansen

This paper uses factor models to identify and estimate distributions of counterfactuals. We extend LISREL frameworks to a dynamic treatment effect setting, extending matching to account for unobserved conditioning variables. Using these models, we can identify all pairwise and joint treatment effects. We apply these methods to a model of schooling and determine the intrinsic uncertainty facing agents at the time they make their decisions about enrollment in school. Reducing uncertainty in returns raises college enrollment. We go beyond the Veil of Ignorance’ in evaluating educational policies and determine who benefits and who loses from commonly proposed educational reforms.

Paper (@NBER)

International Economic Review, 44(2): 361–422, 2003

2003 Jan
Adverse Selection and Moral Hazard in Insurance: Can Dynamic Data Help to Distinguish?James J. Heckman, J. Abbring, P.-A. Chiappori, J. Pinquet

A standard problem of applied contracts theory is to empirically distinguish between adverse selection and moral hazard. We show that dynamic insurance data allow to distinguish moral hazard from dynamic selection on unobservables. In the presence of moral hazard, experience rating implies negative occurrence dependence: individual claim intensities decrease with the number of past claims. We discuss econometric tests for the various types of data that are typically available. Finally, we argue that dynamic data also allow to test for adverse selection, even if it is based on asymmetric learning.

Paper (@Wiley)

Journal of the European Economic Association, 1(2-3): 512-521, 2003

2003 Jan
The Performance of Performance StandardsJames J. Heckman, C. Heinrich, J. Smith

This paper examines the performance of the JTPA performance system, a widely emulated model for inducing efficiency in government organizations. We present a model of how performance incentives may distort bureaucratic decisions. We define cream skimming within the model. Two major empirical findings are (a) that the short run measures used to monitor performance are weakly, and sometimes perversely, related to long run impacts and (b) that the efficiency gains or losses from cream skimming are small. We find evidence that centers respond to performance standards.

Paper (@NBER)

Journal of Human Resources, 37(4): 778–811, 2002

2002 Jan
The Evidence on Credit Constraints in Post-Secondary SchoolingJames J. Heckman, P. Carneiro

This paper examines the family income — college enrollment relationship and the evidence on credit constraints in post-secondary schooling. We distinguish short-run liquidity constraints from the long-term factors that promote cognitive and noncognitive ability. Long-run factors crystallized in ability are the major determinants of the family income — schooling relationship, although there is some evidence that up to 8% of the U.S. population is credit constrained in a short-run sense. Evidence that IV estimates of the returns to schooling exceed OLS estimates is sometimes claimed to support the existence of substantial credit constraints. This argument is critically examined.

Paper (@NBER)

Economic Journal, 112(482):705–734, 2002

2002 Jan
Identifying Hedonic ModelsJames J. Heckmanm I. Ekeland, L. Nesheim

Paper (@JSTOR)

American Economic Review, 92(2): 304–309, 2002

2002 Jan
The Schooling of Southern Blacks: The Roles of Legal Activism and Private Philanthropy, 1910-1960James J. Heckman, J. Donohue, P. Todd

Improvements in education and educational quality are widely acknowledged to be major contributors to black economic progress in the Twentieth Century. This paper investigates the sources of improvement in black education in the South in the first half of the century and demonstrates the important roles of social activism, especially NAACP litigation and private philanthropy, in improving the quality and availability of public schooling. Many scholars view education as a rival to social activism in explaining black economic progress, but such a view misses the important role of philanthropic and legal interventions in promoting education.

Paper (@SSRN)

The Quarterly Journal of Economics, 117(1): 225–268, 2002

2002 Jan
Flessibilità, Creazione del Lavoro e Globalizzazione: Il Caso ItaliaJames J. Heckman

Global and Local Economic Review, 5(2): 7–32, 2002

2002 Jan
Three Observations on Wages and Measured Cognitive AbilityJames J. Heckman, J. Cawley, E. Vytlacil

This paper summarizes our recent research on the relationship between wages and measured cognitive ability. In it, we make three main points. First, we find that wage payment by ability does vary across race and gender in the US, and that the fraction of wage variance explained by cognitive ability is modest. Second, measured cognitive ability and schooling are so highly correlated that one cannot separate their effects without imposing strong, arbitrary parametric structure in estimation which, when tested, is rejected by the data. Third, controlling for cognitive ability, personality traits (socialization skills) are correlated with earnings, although they primarily operate through schooling attainment.

Paper (@ScienceDirect)

Labour Economics, 2001

2001 Jan
Removing the Veil of Ignorance in Accessing the Distributional Impacts of Social PoliciesJames J. Heckman, P. Carneiro and K. Hansen

This paper summarizes our recent research on evaluating the distributional consequences of social programs. This research advances the economic policy evaluation literature beyond estimating assorted mean impacts to estimate distributions of outcomes generated by different policies and determine how those policies shift persons across the distributions of potential outcomes produced by them. Our approach enables analysts to evaluate the distributional effects of social programs without invoking the ‘Veil of Ignorance’ assumption often used in the literature in applied welfare economics. Our methods determine which persons are affected by a given policy, where they come from in the ex-ante outcome distribution and what their gains are. We apply our methods to analyze two proposed policy reforms in American education. These reforms benefit the middle class and not the poor.

Paper (@NBER)

Swedish Policy Review, Vol 8, (2001)

2001 Jan
Micro Data, Heterogeneity, and the Evaluation of Public Policy: Nobel LectureJames J. Heckman

This paper summarizes the contributions of microeconometrics to economic knowledge. Four main themes are developed. (1) Microeconometricians developed new tools to respond to econometric problems raised by the analysis of the new sources of micro data produced after the Second World War. (2) Microeconometrics improved on aggregate time‐series methods by building models that linked economic models for individuals to data on individual behavior. (3) An important empirical regularity detected by the field is the diversity and heterogeneity of behavior. This heterogeneity has profound consequences for economic theory and for econometric practice. (4) Microeconometrics has contributed substantially to the scientific evaluation of public policy.

Paper (@JSTOR)

Journal of Political Economy, (2001) 109(4), 673-748

2001 Jan
Four Parameters of Interest in the Evaluation of Social ProgramsJames J. Heckman, J.L. Tobias, E. Vytlacil

This paper reviews four treatment parameters that have become commonly used in the program evaluation literature: the average treatment effect, the effect of treatment on the treated, the local average treatment effect, and the marginal treatment effect. We derive simply computed closed-form expressions for these treatment parameters in a latent variable framework with Gaussian error terms. These parameters can be estimated using nothing more than output from a standard two-step procedure. We also briefly describe recent work that seeks to go beyond mean effects and estimate the distributions associated with various outcome gains. The techniques presented in the paper are applied to estimate the return to some form of college education for various populations using data from the National Longitudinal Survey of Youth.

Paper (@JSTOR)

Southern Economic Journal, (2001), 68 (2), 210-223

2001 Jan
The Importance of Noncognitive Skills: Lessons from the GED Testing ProgramJames J. Heckman, Y. Rubinstein

Paper (@JSTOR)

AEA Papers and Proceedings, (May, 2001)

2001 May
Policy Relevant Treatment EffectsJames J. Heckman, E. Vytlacil

Paper (@JSTOR)

American Economic Review, 91(2), (2001), 107-111

2001 Jan
Essays: Econometrics and Empirical EconomicsJames J. Heckman

Journal of Econometrics, (2001), 100(3- 5)

2001 Jan
Instrumental Variables, Selection Models, and Tight Bounds on the Average Treatment EffectJames J. Heckman, E. Vytlacil

This paper exposits and relates two distinct approaches to bounding the average treatment effect. One approach, based on instrumental variables, is due to Manski (1990, 1994), who derives tight bounds on the average treatment effect under a mean independence form of the instrumental variables (IV) condition. The second approach, based on latent index models, is due to Heckman and Vytlacil (1999, 2000a), who derive bounds on the average treatment effect that exploit the assumption of a nonparametric selection model with an exclusion restriction. Their conditions imply the instrumental variable condition studied by Manski, so that their conditions are stronger than the Manski conditions. In this paper, we study the relationship between the two sets of bounds implied by these alternative conditions. We show that: (1) the Heckman and Vytlacil bounds are tight given their assumption of a nonparametric selection model; (2) the Manski bounds simplify to the Heckman and Vytlacil bounds under the nonparametric selection model assumption.

Paper (@NBER)

Econometric Evaluations of Active Labor Market Policies in Europe, edited by M. Lechner and F. Pfeiffer, (2001)

2001 Jan
The Dynamics of Educational Attainment for Blacks, Whites and HispanicsJames J. Heckman, S. Cameron

This paper estimates a dynamic model of schooling attainment to investigate the sources of racial and ethnic disparity in college attendance. Parental income in the child’s adolescent years is a strong predictor of this disparity. This is widely interpreted to mean that credit constraints facing families during the college‐going years are important. Using NLSY data, we find that it is the long‐run factors associated with parental background and family environment, and not credit constraints facing prospective students in the college‐going years, that account for most of the racial‐ethnic college‐going differential. Policies aimed at improving these long‐term family and environmental factors are more likely to be successful in eliminating college attendance differentials than short‐term tuition reduction and family income supplement policies aimed at families with college age children.

Paper (@JSTOR)

Journal of Political Economy, (June 2001), 109(3), 455-499

2001 Jun
Identifying The Role of Cognitive Ability in Explaining The Level of and Change In the Return to EducationJames J. Heckman, E. Vytlacil

This paper considers two problems that arise in determining the role of cognitive ability in explaining the level of and change in the rate of return to schooling. The first problem is that ability and schooling are so strongly dependent that it is not possible, over a wide range of variation in schooling and ability, to independently vary these two variables and estimate their separate impacts. The second problem is that the structure of panel data makes it difficult to identify main age and time effects or to isolate crucial education-ability-time interactions which are needed to assess the role of ability in explaining the rise in the return to education.

Paper (@JSTOR)

Review of Economics and Statistics, (February, 2001), 83(1),1-12

2001 Feb
Accounting for Heterogeneity, Diversity and Social Policy EvaluationJames J. Heckman

This paper considers the problem of policy evaluation in a modern society with heterogeneous agents and diverse groups with conflicting interests. Several different approaches to the policy evaluation problem are compared including the approach adopted in modern welfare economics, the classical representative agent approach adopted in macroecononomics and the microeconomic treatment effect approach. A new approach to the policy evaluation problem is developed and applied that combines and extends the best features of these earlier approaches.Evidence on the importance of heterogeneity is presented. Using an empirically based dynamic general equilibrium model of skill formation with heterogeneous agents, the benefits of the more comprehensive approach to policy evaluation are examined in the context of examining the impact of tax reform on skill formation and the political economy aspects of such reform. A parallel analysis of tution policy is presented.

Paper (@NBER)

Economic Journal, (2001)

2001 Jan
The Cost of Job Security Regulation: Evidence from the Latin American Labor MarketsJames J. Heckman, C. Pages-Serra

This paper documents the high level of job security protection in Latin American labor markets and analyzes its impact on employment. We show that job security policies have substantial impact on the level and the distribution of employment in Latin America. They reduce employment and promote inequality. The institutional organization of the labor market affects both employment and inequality.

Paper (@JSTOR)

Journal of the Latin American and Caribbean Economic Association, 1(1), (Fall 2000), 109-154

2000 Oct
Understanding Black-White Wage Differentials 1960-1990James J. Heckman, T. Lyons, P. Todd

Paper (@JSTOR)

American Economic Review, (May 2000)

2000 May
Policies to Foster Human CapitalJames J. Heckman

This paper considers the sources of skill formation in a modern economy and emphasizes the importance of both cognitive and noncognitive skills in producing economic and social success and the importance of both formal academic institutions and families and firms as sources of learning. Skill formation is a dynamic process with strong synergistic components. Skill begets skill. Early investment promotes later investment. Noncognitive skills and motivation are important determinants of success and these can be improved more successfully and at later ages than basic cognitive skills. Methods currently used to evaluate educational interventions ignore these noncogntive skills and therefore substantially understate the benefits of early intervention programs and mentoring and teenage motivation programs. At current levels of investment, American society underinvests in the very young and overinvests in mature adults with low skills.

Paper (@NBER)

Research in Economics, (2000), 54(1), 3-56

2000 Jan
Rethinking Myths about Education and Training: Understanding the Sources of Skill Formation in a Modern EconomyJames J. Heckman, L. Lochner

Paper (@SCIRP)

Securing the Future: Investing in Children from Birth to College, Chapter 2, 47-83, (New York: Russell Sage Foundation, 2000)

2000 Jan
Local Instrumental VariablesJames J. Heckman, E. Vytlacil

This paper unites the treatment effect literature and the latent variable literature. The economic questions answered by the commonly used treatment effect parameters are considered. We demonstrate how the marginal treatment effect parameter can be used in a latent variable framework to generate the average treatment effect, the effect of treatment on the treated and the local average treatment effect, thereby establishing a new relationship among these parameters. The method of local instrumental variables directly estimates the marginal treatment effect parameters, and thus can be used to estimate all of the conventional treatment effect parameters when the index condition holds and the parameters are identified. When they are not, the method of local instrumental variables can be used to produce bounds on the parameters with the width of the bounds depending on the width of the support for the index generating the choice of the observed potential outcome.

Paper (@NBER)

Essays in Nonlinear Econometrics, (Cambridge: Cambridge University Press), (2000)

2000 Jan
Substitution and Dropout Bias in Social Experiments: A Study of an Influential Social ExperimentJames J. Heckman, N. Hohmann

This paper considers the interpretation of evidence from social experiments when persons randomized out of a program being evaluated have good substitutes for it, and when persons randomized into a program drop out to pursue better alternatives. Using data from an experimental evaluation of a classroom training program, we document the empirical importance of control group substitution and treatment group dropping out. Evidence that one program is ineffective relative to close substitutes is not evidence that the type of service provided by all of the programs is ineffective, although that is the way experimental evidence is often interpreted.

Paper (@JSTOR)

Quarterly Journal of Economics, (May 2000), 651-690

2000 May
The Relationship Between Treatment Parameters within a Latent Variable FrameworkJames J. Heckman, E. Vytlacil

If responses to a treatment vary among people, a variety of parameters can be defined [Heckman, J., Robb, R. 1985. Alternative methods for evaluating the impact of interventions. In: Heckman J., Singer B. (Eds.), Longitudinal Analysis of Labor Market Data. Cambridge University Press, New York, pp. 156–245; Heckman, J., 1997, first draft 1995, Instrumental variables: a study of implicit behavioral assumptions used in making program evaluations. Journal of Human Resources 32, 441–462]. We show a simple relationship between various treatment parameters when the treatment parameters are defined within a common, latent variable framework.

Paper (@ScienceDirect)

Economic Letters, (January 2000), 66(1), 33-39

2000 Jan
Causal Parameters and Policy Analysis In Economics: A Twentieth Century RetrospectiveJames J. Heckman

The major contributions of twentieth century econometrics to knowledge were the definition of causal parameters within well-defined economic models in which agents are constrained by resources and markets and causes are interrelated, the analysis of what is required to recover causal parameters from data (the identification problem), and clarification of the role of causal parameters in policy evaluation and in forecasting the effects of policies never previously experienced. This paper summarizes the development of these ideas by the Cowles Commission, the response to their work by structural econometricians and VAR econometricians, and the response to structural and VAR econometrics by calibrators, advocates of natural and social experiments, and by nonparametric econometricians and statisticians.

Paper (@JSTOR)

Quarterly Journal of Economics, (2000), 45-97

2000 Jan
General Equilibrium Cost Benefit Analysis of Education and Tax PoliciesJames J. Heckman, L. Lochner, C. Taber

This paper formulates and estimates an open-economy overlapping generation general-equilibrium model of endogenous heterogeneous human capital in the form of schooling and on-the-job training. Physical capital accumulation is also analyzed. We use the model to explain rising wage inequality in the past two decades due to skill-biased technical change and to estimate investment responses. We compare an open economy version with a closed economy version. Using our empirically grounded general equilibrium model that explains rising wage inequality, we evaluate two policies often suggested as solutions to the problem of rising wage inequality: (a) tuition subsidies to promote skill formation and (b) tax policies. We establish that conventional partial equilibrium policy evaluation methods widely used in labor economics and public finance give substantially misleading estimates of the impact of national tax and tuition policies on skill formation. Conventional microeconomic methods for estimating the schooling response to tuition overestimate the response by an order of magnitude. Simulations of our model also reveal that move to a flat consumption tax raises capital accumulation and the real wages of all skill groups and barely affects overall measures of income inequality.

Paper (@NBER)

Trade, Growth and Development: Essays in Honor of T.N Srinivasan, Chapter 14, (Elsevier Science, B.V., Amsterdam, 2000), 291-393

2000 Jan
Understanding the Role of Cognitive Ability in Accounting for the Recent Rise in the Economic Return to EducationJames J. Heckman, J. Cawley, L. Lochner, E. Vytlacil

This paper examines the contribution of the rise in the return to ability to the rise in the economic return to education. All of the evidence on this question comes from panel data sets in which a small collection of adjacent birth cohorts is followed over time. The structure of the data creates an identification problem that makes it impossible to identify main age and time effects and to isolate all possible age-time interactions. In addition, many education-ability cells are empty due to the stratification of ability with educational attainment. These empty cells or identification problems are literature and produce a variety of different estimates. We test and reject widely used linearity assumptions invoked to identify the contribution of the return to ability on the return to schooling. Using nonparametric methods find little evidence that the rise in the return to education is centered among the most able.

Paper (@NBER)

Meritocracy and Economic Inequality, (Princeton University Press: Princeton, NJ, 1999)

1999 Jan
Micro Data and General Equilibrium ModelsJames J. Heckman, M. Browning, L. Hansen

In order to be both specific and constructive, in this essay we limit ourselves to two prototypical general equilibrium models: (a) a stochastic growth model and (b) a perfect foresight overlapping generations model. The first model is sufficiently rich to enable us to explore implications of uncertainty, market structure and some forms of heterogeneity in the preferences and opportunities of microeconomic agents. The second model introduces explicit life cycle heterogeneity and demographic structures in appealing and tractable ways. We consider a recent version of the second model that introduces human capital formation, heterogeneity in skills and comparative advantage in the labor market. These attributes are introduced to provide a framework for analyzing labor market policies, to account for a major source of wealth formation in modern economies, and to account for the phenomenon of rising wage inequality observed in many countries. The plan of this paper is as follows. We first present two basic theoretical models analyzed in this chapter and the parameters required to implement them. We summarize the main lessons from the micro literature that pertain to each model and their consequences for the models we consider. The models are presented in Parts I and II, respectively with some accompanying discussion of the relevant micro literature. Part III presents further discussion of the micro evidence on intertemporal substitution elasticities.

Paper (@SemanticScholar)

Handbook of Macroeconomics, (Amsterdam: Elsevier. 1999), Chapter 8, 543-633

1999 Jan
On Policies to Reward the Value Added by EducatorsJames J. Heckman, J. Cawley, E. Vytlacil

One current educational reform seeks to reward the “value added” by teachers and schools based on the average change in pupil test scores over time. In this paper, we outline the conditions under which the average change in scores is sufficient to rank schools in terms of value added. A key condition is that socioeconomic outcomes be a linear function of test scores. Absent this condition, one can still derive the optimal value-added policy if one knows the relationship between test scores and socioeconomic outcomes, and the distribution of test scores both before and after the intervention.

Using the National Longitudinal Survey of Youth, we find a nonlinear relationship between test scores and one important outcome: log wages. We find no consistent pattern in the curvature of log wage returns to test scores (whether percentiles, scaled, or raw scores). This implies that, used alone, the average gain in test scores is an inadequate measure of school performance and current value-added methodology may misdirect school resources.

Paper (@MIT)

Review of Economics and Statistics, (November 1999), 81(4), 720-728

1999 Nov
The Pre-Programme Earnings Dip and the Determinants of Participation in A Social Programme Implications For Simple Programme Evaluation StrategiesJames J. Heckman, J. Smith

The key to estimating the impact of a programme is constructing the counterfactual outcome representing what would have happened in its absence. This problem becomes more complicated when agents, such as individuals, firms or local governments, self-select into the programme rather than being exogenously assigned to it. This paper uses data from a major social experiment to identify what would have happened to the earnings of self-selected participants in a job training programme had they not participated in it. We investigate the implications of these earnings patterns for the validity of widely-used before-after and difference-in-differences estimators.

Paper (@JSTOR)

Economic Journal, 109, 1-37, (July 1999)

1999 Jul
Local Instrumental Variables and Latent Variable Models for Identifying an Bounding Treatment EffectsJames J. Heckman, E. Vytlacil

This paper examines the relationship between various treatment parameters within a latent variable model when the effects of treatment depend on the recipient’s observed and unobserved characteristics. We show how this relationship can be used to identify the treatment parameters when they are identified and to bound the parameters when they are not identified.This paper uses the latent variable or index model of econometrics and psychometrics to impose structure on the Neyman –Fisher –Cox–Rubin model of potential outcomes used to define treatment effects. We demonstrate how the local instrumental variable (LIV) parameter can be used within the latent variable framework to generate the average treatment effect (ATE), the effect of treatment on the treated (TT) and the local ATE (LATE) of Imbens and Angrist, thereby establishing a relationship among these parameters. LIV can be used to estimate all of the conventional treatment effect parameters when the index condition holds and the parameters are identified. When they are not, LIV can be used to produce bounds on the parameters with the width of the bounds depending on the width of the support for the index generating the choice of the observed potential outcome.

Paper (@PNAS)

Proceedings of the National Academy of Sciences, (April 1999), 96, 4730-4734

1999 Apr
The Economics and Econometrics of Active Labor Market ProgramsJames J. Heckman, R. LaLonde, J. Smith

Policy makers view public sector-sponsored employment and training programs and other active labor market policies as tools for integrating the unemployed and economically disadvantaged into the work force. Few public sector programs have received such intensive scrutiny, and been subjected to so many different evaluation strategies. This chapter examines the impacts of active labor market policies, such as job training, job search assistance, and job subsidies, and the methods used to evaluate their effectiveness. Previous evaluations of policies in OECD countries indicate that these programs usually have at best a modest impact on participants’ labor market prospects. But at the same time, they also indicate that there is considerable heterogeneity in the impact of these programs. For some groups, a compelling case can be made that these policies generate high rates of return, while for other groups these policies have had no impact and may have been harmful. Our discussion of the methods used to evaluate these policies has more general interest. We believe that the same issues arise generally in the social sciences and are no easier to address elsewhere. As a result, a major focus of this chapter is on the methodological lessons learned from evaluating these programs. One of the most important of these lessons is that there is no inherent method of choice for conducting program evaluations. The choice between experimental and non-experimental methods or among alternative econometric estimators should be guided by the underlying economic models, the available data, and the questions being addressed. Too much emphasis has been placed on formulating alternative econometric methods for correcting for selection bias and too little given to the quality of the underlying data. Although it is expensive, obtaining better data is the only way to solve the evaluation problem in a convincing way. However, better data are not synonymous with social experiments.

Paper (@ScienceDirect)

Handbook of Labor Economics, (North Holland, Vol. 3, 1999), 1865-2086

1999 Jan
Should College Attendance be Further Subsidized to Reduce Rising Wage Inequality?James J. Heckman, S. Cameron

Financing College Tuition: Government Policies and Educational Priorities, (AEI: Washington, DC., 1999)

1999 Jan
Meritocracy in America: An Examination of Wages Within and Across OccupationsJames J. Heckman, J. Cawley, E. Vytlacil

In The Bell Curve, Herrnstein and Murray argue that the U.S. economy is a meritocracy in which differences in wages (including differences across race and gender) are explained by differences in cognitive ability. In this paper we test their claim for wages conditional on occupation using a simultaneous model of occupation choice and wage determination. Our results contradict Herrnstein and Murray’s claim that the U.S. labor market operates only on meritocratic principles.

Paper (@SSRN)

Industrial Relations, 38(3), 250-296, (1999) Also published as National Bureau of Economic Research Working Paper #63

1999 Jan
Doing it Right: Job Training and EducationJames J. Heckman

Current policies and programs aimed at helping unskilled workers acquire socially productive skills are not the right answer to the problem of growing wage gap between the skilled and the unskilled. The conventional belief held by most politicians and pundits is that formal education is critical to skill formation. This approach ignores the important role of families and the private sector in fostering skills. Policymakers are therefore advised to recognize the value of noncognitive skills, the crucial role of informal sources of learning, the importance of incentives in formal education and the cumulative nature of learning in trying to improve the skills of the nation’s workers.

Paper (@GALE)

The Public Interest, 135, (Spring 1999)

1999 Apr
Human Capital Formation and General Equilibrium Treatment Effects: A Study of Tax and Tuition PolicyJames J. Heckman, L. Lochner, C. Taber

Policies to promote human capital formation have been advocated as a remedy for reducing the economy-wide problem of rising wage inequality. These policies are national in character and are designed to substantially alter the proportion of the work-force that is skilled. Yet the methods used to evaluate these policies are partial equilibrium in nature and do not take account of the consequences of the changes in skill prices that are produced by the policies. This paper summarises our research on general equilibrium evaluation of tuition and tax policies. We compare estimates of policy impact from our approach with those obtained from conventional partial equilibrium ‘treatment effect’ approaches to policy evaluation, and find substantial differences. Conventional partial equilibrium approaches present an overly optimistic view of what tax and tuition policy can achieve because they ignore the change in human capital investment levels induced by the change in prices due to the policy. In addition, conventional partial equilibrium approaches fail to provide an accurate assessment of the welfare consequences of these policies.

Paper (@JSTOR)

Fiscal Studies, 20(1), 25-40, (March 1999)

1999 Mar
Instrumental Variables Methods For the Correlated Random Coefficient Model: Estimating The Average Rate of Return to Schooling When the Return Is Correlated With SchoolingJames J. Heckman, E. Vytlacil

This paper considers the use of instrumental variables to identify a correlated random coefficients model in which coefficients are correlated with (or stochastically dependent on) the regressors. A correlated random coefficients model is central to the human capital earnings model. Conditions are given under which instrumental variables identify the average rate of return. These conditions are applied to David Card’s version of Gary Becker’s Woytinsky lecture.

Paper (@JSTOR)

Journal of Human Resources, 33(4), (Fall 1998), 974-1002

1998 Oct
What Should Be Our Human Capital Investment Policy?James J. Heckman

This paper considers the magnitude of the human capital investment required to offset the increase in the inequality in labour earnings in the US economy since 1979. It considers the ineffectiveness of government training policies, the effectiveness of private sector training and the conflict between economic efficiency and the work ethic. It also considers revisions of the tax code. The importance of the distinction between the long view and the short view in analysing human resource policies is emphasised.

Paper (@JSTOR)

Fiscal Studies, 19(2), (Spring 1998)

1998 May
Detecting DiscriminationJames J. Heckman

The evidence on discrimination produced from the audit method is examined. Audits survey the average firm and not the marginal firm which determines the level of market discrimination. Taken on its own terms, there is little evidence of labor market discrimination from audit methods. The validity of audit methods is critically dependent on unverified assumptions about equality across race/gender groups of the distributions of unobserved (by audit designers) productivity components acted on by firms and about the way labor markets work. Audits can find discrimination when none exists and can disguise it when it does.

Paper (@JSTOR)

Journal of Economic Perspectives, (Spring 1998), 12(2)

1998 May
Human Capital PolicyJames J. Heckman, P. Klenow

This paper considers alternative policies for promoting skill formation that are targetted to different stages of the life cycle. We demonstrate the importance of both cognitive and noncognitive skills that are formed early in the life cycle in accounting for racial, ethnic and family background gaps in schooling and other dimensions of socioeconomic success. Most of the gaps in college attendance and delay are determined by early family factors. Children from better families and with high ability earn higher returns to schooling. We find only a limited role for tuition policy or family income supplements in eliminating schooling and college attendance gaps. At most 8% of American youth are credit constrained in the traditional usage of that term. The evidence points to a high return to early interventions and a low return to remedial or compensatory interventions later in the life cycle. Skill and ability beget future skill and ability. At current levels of funding, traditional policies like tuition subsidies, improvements in school quality, job training and tax rebates are unlikely to be effective in closing gaps.

Paper (@NBER)

Capital Formation, Hoover Economic Growth Conference, Hoover Institution, (1998)

1998 Jan
Explaining Rising Wage Inequality: Explorations With A Dynamic General Equilibrium Model of EarningsJames J. Heckman, L. Lochner, C. Taber

This paper develops and estimates an overlapping generations general equilibrium model of labor earnings, skill formation and physical capital accumulation with heterogeneous human capital. The model analyzes both schooling choices and post-school on-the-job investment in skills in a framework in which different schooling levels index different skills. A key insight in the model is that accounting for the distinction between skill prices and measured wages is important for analyzing the changing wage structure, as they often move in different directions. New methods are developed and applied to estimate the demand for unobserved human capital and to determine the substitution relationships in aggregate technology among skills and capital. We estimate skill-specific human capital accumulation equations that are consistent with the general equilibrium predictions of the model. Using our estimates, we find that a model of skill-biased technical change with a trend estimated from our aggregate technology is consistent with the central feature of rising wage equality measured by the college-high school wage differential and by the standard deviation of log earnings over the past 15 years. Immigration of low skill workers contributes little to rising wage inequality. When the model is extended to account for the enlarged cohorts of the Baby Boom, we find that the same parameter estimates of the supply functions for human capital that are used the explain the wage history of the last 15 years also explain the last 35 years of wage inequality as documented by Katz and Murphy (1992).

Paper (@NBER)

Review of Economic Dynamics, (1998), 1, 1-58

1998 Jan
Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American MalesJames J. Heckman, S. Cameron

This paper examines an empirical regularity found in many societies: that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education. We examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it. We show that the implicit economic model assumes myopia. The intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data. We produce an alternative choice‐theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions.

Paper (@JSTOR)

Journal of Political Economy, (April 1998), 106(2), 262- 311

1998 Apr
Tax Policy and Human Capital FormationJames J. Heckman, L. Lochner, C. Taber

Missing from recent discussions of tax reform is any systematic analysis of the effects of various tax proposals on skill formation. This gap in the literature in empirical public finance is due to the absence of any empirically based general equilibrium models with both human capital formation and physical capital formation that are consistent with observations on modern labor markets. This paper is a progress report on our ongoing research on formulating and estimating dynamic general equilibrium models with endogenous heterogeneous human capital accumulation. Our model explains many features of rising wage inequality in the U.S. economy (James Heckman, Lance Lochner and Christopher Taber, 1998). In this paper, we use our model to study the impacts on skill formation of proposals to switch from progressive taxes to flat income and consumption taxes. For the sake of brevity, we focus on steady states in this paper, although we study both transitions and steady states in our research.

Paper (@JSTOR)

American Economic Review, (May 1998), 88(2), 293-297

1998 May
General Equilibrium Treatment Effects: A Study of Tuition PolicyJames J. Heckman, L. Lochner, C. Taber

This paper defines and estimates general equilibrium treatment effects. The conventional approach in the literature on treatment effects ignores interactions among individuals induced by the policy interventions being studied. Focusing on the impact of tuition policy, and using estimates from our dynamic overlapping generations general equilibrium model of capital and human capital formation, we find that general equilibrium impacts of tuition on college enrollment are an order of magnitude smaller than those reported in the literature on microeconomic treatment effects. The assumptions used to justify the LATE parameter in a partial equilibrium setting do not hold in a general equilibrium setting. Policy changes induce two way flows. We extend the LATE concept to a general equilibrium setting. We present a more comprehensive evaluation to program evaluation by considering both the tax and benefit consequences of the program being evaluated and placing the analysis in a market setting.

Paper (@JSTOR)

American Economic Review, (May 1998), 88(2), 381-386

1998 May
Evaluating The Welfare StateJames J. Heckman, J. Smith

A variety of criteria are relevant for evaluating alternative policies in democratic societies composed of persons with diverse values and perspectives. In this paper, we consider alternative criteria for evaluating the welfare state, and the data required to operationalize them. We examine sets of identifying assumptions that bound, or exactly produce, these alternative criteria given the availability of various types of data. We consider the economic questions addressed by two widely-used econometric evaluation estimators and relate them to the requirements of a comprehensive cost-benefit analysis. We present evidence on how the inference from the most commonly used econometric evaluation estimator is modified when the direct costs of a program are fully assessed, including the welfare costs of the taxes required to support the program. Finally, we present evidence of the empirical inconsistency of alternative criteria derived from evaluations based on on self-selection and attrition decisions, and on self-reported evaluations from questionnaires when applied to a prototypical job training program.

Paper (@NBER)

Econometrics and Eco- nomic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium, Econometric Society Monograph Series, 16, (Cambridge University Press, 1998), Chapter 8, 241-318

1998 Jan
The Sensitivity of Experimental Impact Estimates: Evidence From The JTPA StudyJames J. Heckman, J. Smith

The recent experimental evaluation of the U.S. Job Training Partnership Act (JTPA) program found negative effects of training on the earnings of disadvantaged male youth and no effect on the earnings of disadvantaged female youth. These findings provided justification for Congress to cut the budget of JTPA’s youth component by over 80 percent. In this paper, we examine the sensitivity of the experimental impact estimates along several dimensions of construction and interpretation. We find that the statistical significance of the male youth estimates is extremely fragile and that the magnitudes of the estimates for both youth groups are sensitive to nearly all the factors we consider. In particular, accounting for experimental control group members who substitute training from other providers leads to a much more positive picture regarding the effectiveness of JTPA classroom training. Our study indicates the value of sensitivity analyses in experimental evaluations and illustrates that experimental impact estimates, like those from nonexperimental analyses, require careful interpretation if they are to provide a reliable guide to policymakers.

Paper (@NBER)

Youth Unemployment, August, 1993, revised, May, 1996 and presented at a conference on Youth Transitions, Konstanz, Germany, University of Chicago and NBER, 1998

1998 Jan
The Effects of Government Policies on Human Capital Investment, Unemployment and Earnings InequalityJames J. Heckman

German-American Academic Council Foundation, Bonn, Germany, (1998)

1998 Jan
Accounting For Dropouts in the Evaluation of Social ExperimentsJames J. Heckman, J. Smith, C. Taber

This paper explores issues that arise in the evaluation of social programs using experimental data in the frequently encountered case where some of the experimental treatment group members drop out of the program prior to receiving treatment. We begin with the standard estimator for this case and the identifying assumption upon which it rests. We then examine the behavior of the estimator when the dropouts receive a partial “dose” of the program treatment prior to dropping out of the program. In the case of partial treatment, the identifying assumption is typically violated, thereby making the estimator inconsistent for the conventional parameter of interest: the impact of full treatment on the fully treated. We develop a test of the identifying assumption underlying the standard estimator and consider whether exclusion restrictions produce identification of the mean impact of the program when this assumption fails to hold. Finally, we discuss alternative parameters of interest in the presence of partial treatment among the dropouts and argue that the conventional parameter is not always the economically interesting one. We apply our methods to data from a recent experimental evaluation of the Job Training Partnership Act (JTPA) program.

Paper (@JSTOR)

Review of Economics and Statistics, (February 1998), 80(1), 1-14

1998 Feb
Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training ProgrammeJames J. Heckman, H. Ichimura, P. Todd

Paper (@JSTOR)

Review of Economic Studies, (October 1997), 64, 605-654

1997 Oct
Characterizing Selection Bias Using Experimental DataJames J. Heckman, H. Ichimura, J. Smith, P. Todd

Semiparametric methods are developed to estimate the bias that arises from using nonexperimental comparison groups to evaluate social programs and to test the identifying assumptions that justify matching, selection models, and the method of difference-in-differences. Using data from an experiment on a prototypical social program and data from nonexperimental comparison groups, we reject the assumptions justifying matching and our extensions of it. The evidence supports the selection bias model and the assumptions that justify a semiparametric version of the method of difference-in-differences. We extend our analysis to consider applications of the methods to ordinary observational data.

Paper (@JSTOR)

Econometrica, 1998, 66(5): 1017-1098

1998 Jan
Making The Most Out of Programme Evaluations and Social Experiments: Accounting For Heterogeneity in Programme ImpactsJamesJ. Heckman, J. Smith, N. Clements

The conventional approach to social programme evaluation focuses on estimating mean impacts of programmes. Yet many interesting questions regarding the political economy of programmes, the distribution of programme benefits and the option values conferred on programme participants require knowledge of the distribution of impacts, or features of it. This paper presents evidence that heterogeneity in response to programmes is empirically important and that classical probability inequalities are not very informative in producing estimates or bounds on the distribution of programme impacts. We explore two methods for supplementing the information in these inequalities based on assumptions about participant decision-making processes and about the strength in dependence between outcomes in the participation and non-participation states. Dependence is produced as a consequence of rational choice by participants. We test for stochastic rationality among programme participants and present and implement methods for estimating the option values of social programmes.

Paper (@JSTOR)

Review of Economic Studies, (October 1997), 64, 487-535

1997 Oct
Instrumental Variables: A Study of Implicit Behavioral Assumptions Used in Making Program EvaluationsJames J. Heckman

This paper considers the use of instrumental variables to estimate the mean effect of treatment on the treated, the mean effect of treatment on randomly selected persons and the local average treatment effect. It examines what economic questions these parameters address. When responses to treatment vary, the standard argument justifying the use of instrumental variables fails unless person-specific responses to treatment do not influence decisions to participate in the program being evaluated. This requires that individual gains from the program that cannot be predicted from variables in outcome equations do not influence the decision of the persons being studied to participate in the program. In the likely case in which individuals possess and act on private information about gains from the program that cannot be fully predicted by variables in the outcome equation, instrumental variables methods do not estimate economically interesting evaluation parameters. Instrumental variable methods are extremely sensitive to assumptions about how people process information. These arguments are developed for both continuous and discrete treatment variables and several explicit economic models are presented.

Paper (@JSTOR)

Journal of Human Resources, (Summer 1997), 32(3), 441-462

1997 Jul
The Effects of Government Policy on Human Capital Investment and Wage InequalityJames J. Heckman, L. Lochner, J. Smith, C. Taber

Chicago Policy Review, (Spring 1997), 1(2), 1-40

1997 Apr
Intellectual Roots of the Law and Economics MovementJames J. Heckman

Paper (@JSTOR)

Law and History Review, (Fall 1997), 15(2), 327-332

1997 Oct
The Value of Quantitative Evidence on the Effect of the Past on the PresentJames J. Heckman

Paper (@JSTOR)

AEA Papers and Proceedings, (May 1997), 87(2), 404-408

1997 May
Cognitive Ability, Wages, and MeritocracyJames J. Heckman, J. Cawley, K. Conneely, E. Vytlacil

This paper presents new evidence from the NLSY on the importance of meritocracy in American society. In it, we find that general intelligence, or g — a measure of cognitive ability–is dominant in explaining test score variance. The weights assigned to tests by g are similar for all major demographic groups. These results support Spearman’s theory of g. We also find that g and other measures of ability are not rewarded equally across race and gender, evidence against the view that the labor market is organized on meritocratic principles. Additional factors beyond g are required to explain wages and occupational choice. However, both blue collar and white collar wages are poorly predicted by g or even multiple measures of ability. Observed cognitive ability is only a minor predictor of social performance. White collar wages are more g loaded than blue collar wages. Many noncognitive factors determine blue collar wages.

Paper (@ResearchGate)

Intelligence Genes, and Success: Scientists Respond to the Bell Curve, 179-192, (Copernicus:Springer-Verlag, 1997)

1997 May
Assessing the Performance of Performance Standards in Public BureaucraciesJames J. Heckman, C. Heinrich, J. Smith

Paper (@JSTOR)

AEA Papers and Proceedings, (May 1997), 389-395

1997 May
Linear Probability Models of the Demand for Attributes with an Empirical Application to Estimating The Preferences of LegislatorsJames J. Heckman, J. Snyder

We formulate and estimate a rigorously justified linear probability model of binary choices over alternatives characterized by unobserved attributes. We apply the model to estimate preferences of congressmen as expressed in their votes on bills. The effective dimension of the attribute space characterizing votes is larger than what has been estimated in recent influential studies of congressional voting by Poole and Rosenthal. Congressmen vote on more than ideology. Issue-specific attributes are an important determinant of congressional voting patterns. The estimated dimension is too large for the median voter model to describe congressional voting.

Paper (@JSTOR)

RAND Journal of Economics, (1997), 28(0), S142-S189

1997 Jan
The Empirical Foundations of CalibrationJames J. Heckman, L. Hansen

Interest in simulating recently developed dynamic stochastic general equilibrium models of the economy stimulated a demand for parameters. This has given rise to calibration as advocated by Finn E. Kydland and Edward C. Prescott (1982). This paper explores the implicit assumptions underlying their calibration method. The authors question that there is a ready supply of micro estimates available to calibrate macroeconomic models. Measures of parameter uncertainty and specification sensitivity should be routinely reported. They propose a more symbiotic role for calibration as providing signals to microeconomists about important gaps in knowledge, which when filled will solidify the empirical underpinning, improving the credibility of the quantitative output.

Paper (@American Economic Association)

Journal of Economic Perspectives, 10(1), (Winter 1996), 87-104

1996 Dec
On AIR: Identification of Causal Effects Using Instrumental VariablesJames J. Heckman

We outline a framework for causal inference in settings where assignment to a binary treatment is ignorable, but compliance with the assignment is not perfect so that the receipt of treatment is nonignorable. To address the problems associated with comparing subjects by the ignorable assignment-an “intention-to-treat analysis”-we make use of instrumental variables, which have long been used by economists in the context of regression models with constant treatment effects. We show that the instrumental variables (IV) estimand can be embedded within the Rubin Causal Model (RCM) and that under some simple and easily interpretable assumptions, the IV estimand is the average causal effect for a subgroup of units, the compliers. Without these assumptions, the IV estimand is simply the ratio of intention-to-treat causal estimands with no interpretation as an average causal effect. The advantages of embedding the IV approach in the RCM are that it clarifies the nature of critical assumptions needed for a causal interpretation, and moreover allows us to consider sensitivity of the results to deviations from key assumptions in a straightforward manner. We apply our analysis to estimate the effect of veteran status in the Vietnam era on mortality, using the lottery number that assigned priority for the draft as an instrument, and we use our results to investigate the sensitivity of the conclusions to critical assumptions.

Paper (@JSTOR)

Journal of The American Statistical Association, (June 1996)

1996 Jun
Sources of Selection Bias in Evaluating Programs: An Interpretation of Conventional Measures and Evidence on The Effectiveness of Matching as a Program Evaluation MethodJames J. Heckman, H. Ichimura, J. Smith, P. Todd

This paper decomposes the conventional measure of selection bias in observational studies into three components. The first two components are due to differences in the distributions of characteristics between participant and nonparticipant (comparison) group members: the first arises from differences in the supports, and the second from differences in densities over the region of common support. The third component arises from selection bias precisely defined. Using data from a recent social experiment, we find that the component due to selection bias, precisely defined, is smaller than the first two components. However, selection bias still represents a substantial fraction of the experimental impact estimate. The empirical performance of matching methods of program evaluation is also examined. We find that matching based on the propensity score eliminates some but not all of the measured selection bias, with the remaining bias still a substantial fraction of the estimated impact. We find that the support of the distribution of propensity scores for the comparison group is typically only a small portion of the support for the participant group. For values outside the common support, it is impossible to reliably estimate the effect of program participation using matching methods. If the impact of participation depends on the propensity score, as we find in our data, the failure of the common support condition severely limits matching compared with random assignment as an evaluation estimator.

Paper (@PNAS)

Proceedings of the National Academy of Sciences, (November 1996), 93, 13416-13420

1996 Nov
Social Experiments: Theory and EvidenceJames J. Heckman, J. Smith

Okonomie and Gesellschaft, Jahrbuch, 13, (1996), 186-214

1996 Nov
What Should be our Human Capital Investment Policy?James J. Heckman

This paper considers the magnitude of the human capital investment required to offset the increase in the inequality in labour earnings in the US economy since 1979. It considers the ineffectiveness of government training policies, the effectiveness of private sector training and the conflict between economic efficiency and the work ethic. It also considers revisions of the tax code. The importance of the distinction between the long view and the short view in analysing human resource policies is emphasised.

Paper (@Wiley Online Library)

Of Heart and Mind, (Upjohn, 1996), 323-342

1996 Nov
Consequences of Eligibility Rules for A Social Program: A Study of the Job Training Partnership Act (JTPA)James J. Heckman, T. Devine

This paper examines the structure and consequences of eligibility rules for a major social program in the U.S. – the Job Training Partnership Act. We find that temporal and geographic variation in written eligibility rules has little consequence for the size and composition of the eligible population, but stable rules are important. The stable eligibility rules are inequitable because they discriminate on the basis of income sources and family status. We examine whether this inequity is a consequence of efficient screening, given standard objectives for government intervention in human capital markets. Many – but not all – of the JTPA eligibility rules are consistent with an efficient screening strategy.

Paper (@United States Census Bureau)

Research in Labor Economics, (JAI Press, 1996), 15, 111-170

1996 Nov
Human Capital Pricing Equations with an Application to Estimating the Effect of Schooling Quality on EarningsJames J. Heckman, A. Layne-Farrar, P. Todd

This paper formulates and estimates alternative models for the pricing of labor services. We present economic models that rationalize empirical specifications in the literature and we offer evidence on the validity of those specifications. Widely used efficiency units models of labor services are inconsistent with evidence from the U.S. labor market. A model of heterogeneous skills provides a more accurate description of earnings data. We present evidence that the pursuit of comparative advantage and selective migration are important features of the U.S. labor market. When these features are included in the model, the only support for an effect of schooling quality on earnings is through the return to college education. Three interactions are empirically important in explaining log wage equations: (A) between schooling quality and education, (B) between regional labor market shocks and education and (C) between region-of-residence and region-of-birth. Because of this third interaction, which can arise from comparative advantage in the labor market, no unique quality effect on returns to education can be defined independently of the market in which it is used.

Paper (@JSTOR)

Review of Economics and Statistics, (November 1996), 562-610

1996 Nov
What Do Bureaucrats Do? The Effects of Performance Standards and Bureaucratic Preferences on Acceptance Into the JTPA ProgramJames J. Heckman, J. Smith, C. Taber

Bureaucratic performance standards are featured in many proposals to increase efficiency in government. These standards reward bureaucrats on the basis of measured outcomes. The performance standards system created under the Job Training Partnership Act (JTPA) of 1982 is often cited as a successful prototype. Under the JTPA system, local training centers receive monetary rewards based on the employment levels and wage rates attained by their trainees upon completion of the program. Critics of the JTPA performance standards system argue that it creates an incentive for program managers to encourage case workers to `cream-skim’ the most employable applicants into the program. We examine this issue by analyzing the determinants of acceptance into JTPA among applicants at a training center for which we have data on everyone who applied over a two year period. We find that case workers prefer to accept the least employable applicants, rather than the most employable as suggested by the cream-skimming story. This evidence indicates that concerns about cream-skimming in JTPA may be exaggerated. Instead, the performance standards system may operate as a countervailing force against the preferences of case workers. Using experimental data from the recent National JTPA Study, we also determine whether or not case workers accept those applicants with higher expected gains from the program. Our evidence only weakly supports this hypothesis.

Paper (@ResearchGate)

Advances in the Study of Entrepreneurship, Innovation and Growth, Vol. 7, 191-217, (JAI Press, 1996)

1996 Jul
Experimental and Non-experimental EvaluationJames J. Heckman, J. Smith

International Handbook of Labor Market Policy and Evaluation, (Elgar Publishing Company, 1996)

1996 Jun
Randomization As An Instrumental VariableJames J. Heckman

This paper discusses how randomized social experiments operate as an instrumental variable. For two types of randomization schemes, the fundamental experimental estimation equations are derived from the principle that experiments equate bias in control and experimental samples. Using conventional econometric representations, I derive the orthogonality conditions for the fundamental estimation equations. Randomization is a multiple instrumental variable in the sense that one randomization defines the parameter of interest expressed as a function of multiple endogenous variables in the conventional usage of that term. It orthogonalizes the treatment variable simultaneously with respect to the other regressors in the model and the disturbance term for the conditional population. However, conventional “structural” parameters are not in general identified by the two types of randomization schemes widely used in practice.

Paper (@JSTOR)

Review of Economics and Statistics, (May 1996), LXXVIII, 336-341

1996 May
Does Measured School Quality Really Matter? An Examination of the Earnings-Quality RelationshipJames J. Heckman, A. Layne-Farrar, P. Todd

This paper examines the economic and empirical foundations of the aggregate evidence on the effect of schooling quality on earnings. A common framework is presented which nests all previous studies as special cases. We discuss two crucial identifying assumptions and test them. The first assumption is the absence of region of birth – region of resident interactions in the return to schooling. This rules out patterns of migration on the basis of realized earnings in the destination state. Both parametric and nonparametric versions of this hypothesis are tested. Using 1970, 1980 and 1990 Census data, it is decisively rejected. A second assumption is that log earnings equations are linear – or nearly linear in schooling. This assumption is false. We find that estimated earnings-quality relationships are sensitive to specification of the earnings function. When false linearity assumptions are relaxed, the only effect of measured schooling quality is on the returns for college graduates. The evidence for an aggregate earnings-quality relationship is weak once false empirical restrictions are relaxed.

Paper (@SSRN)

Does Money Matter? The Effect of School Resources on Student Achievement and Success, (Brookings), (July 1996)

1996 Jul
Coleman’s Contribution to Education: Theory and Research Styles and Empirical ResearchJames J. Heckman, D. Neal

This essay describes an intellectual odyssey. The story begins more than thirty years ago when James Coleman began work on a study of high schools that formed the basis for The Adolescent Society (Coleman, 1961a) and followed this with the equally path-breaking Coleman Report (Coleman, Campbell et al., 1966). This research would be the beginning of a lifetime of productive and influential research on education. This chapter is an intellectual history of these major works and their aftermath. We place Coleman’s contributions in context. We consider how well his early work on education has stood the test of time and examine the impact of his research on public policy. Few social scientists have been as effective as Coleman in shaping public policy discussions about education. He has repeatedly mounted successful challenges to the conventional wisdom.

Paper (@Taylor & Francis Group)

The Contributions of James Coleman: Falmer Sociology Series, (Falmer Press: London/N.Y., Philadelphia), (1996), 81-102

1996 Jan
Lessons From The Bell CurveJames J. Heckman

This paper examines the argument presented in The Bell Curve. A central argument is that one factor–g–accounts for correlation across test scores and performance in society. Another central argument is that g cannot be manipulated. These arguments are combined to claim that social policies designed to improve social performance cannot be effective. A reanalysis of the evidence contradicts this story. The factors that explain wages receive different weights than the factors that explain test scores. More than g is required to explain either. Other factors besides g contribute to social performance, and they can be manipulated.

Paper (@JSTOR)

Journal of Political Economy, (October 1995), 103(5), 1091-1120

1995 Oct
The Economics of Eligibility Rules for a Social Program: A Study of the Job Training Partnership Act – A Summary ReportJames J. Heckman, T. Devine

Paper (@JSTOR)

Canadian Journal of Economics, (1995)

1995 May
Assessing The Case For Randomized Social ExperimentsJames J. Heckman, J. Smith

Paper (@JSTOR)

Journal of Economic Perspectives, (Spring 1995), 9(2), 85-110

1995 Apr
U. S. Education and Training Policy: A Reevaluation of The Underlying Assumptions Behind The New ConsensusJames J. Heckman, J. Smith, R. Roselius

In response to rising wage inequality and lower real wages for low-skill workers over the last decade, a “new consensus” has emerged that questions the ability of American schools and firms to educate and train workers, especially non-college bound youth. The remedies proposed by proponents of the new consensus include implementing an apprenticeship system patterned after programs in Germany, creating a nation-wide system of vocational credentialing and increasing the availability of government training programs. In this paper, we critically examine the assumptions underlying the current proposals. We do not find empirical or theoretical justification for many of the proposed programs. While some of these programs aim toward desirable ends, other more efficient, less costly means exist to attain their objectives.

Paper (@EconPapers)

Labor Markets, Employment Policy and Job Creation, (Santa Monica, CA: Milken Institute for Job and Capital Formation), (October 1994), 83-121

1994 Oct
Econometric Mixture Models and More General Models for UnobservablesJames J. Heckman, C. Taber

This paper considers models for unobservables in duration models. It demonstrates how cross-section and time-series variation in regressors facilitates identification of single-spell, competing risks and multiple spell duration models. We also demonstrate the limited value of traditional identification studies by considering a case in which a model is identified in the conventional sense but cannot be consistently estimated.

Paper (@SAGE Journals)

Statistical Methods in Medical Research: Frailty Models in Survival Analysis, (1994), 3(3), 279-299

1994 Jun
Is job training oversold?James J. Heckman

The Clinton administration should promote a job training program based on apprenticeship and productivity-enhancing activities to educate the country’s labor force and prevent the rise of new inequalities in the workplace. It should adopt a a more meaningful program that will result in long-term gains rather than invest on a learning plan based on continuous progression through schooling, training and work. In addition, the government must refrain from comparing the US labor market with that of Germany since the latter has a different set of social policies that govern its labor force.

Paper (@Gale)

The Public Interest, (Spring 1994), Number 115, 91-115

1994 May
Determinants of Young Male Schooling and Training ChoicesJames J. Heckman

This paper examines the determinants of GED acquisition. high school graduation and postsecondary training and schooling choices. Economic factors determining dropping out are considered. The determinants of high school certification by exam are fundamentally different from the determinants of ordinary high school graduation. GED graduates are more likely to take vocational and technical training while ordinary graduates are more likely to attend academic programs. GED recipients are much less likely to complete the post-secondary programs they begin. The GED exam does not measure the ability or motivation that predicts successful completion of post-secondary schooling and training programs. Participation in post-secondary nonacademic training is positively related to family resources. Thus both academic and non-academic training operate to reinforce initial family earnings inequalities.

Paper (@National Bureau of Economic Research)

Private Sector Skill Formation: International Comparisons, (Chicago: University of Chicago Press, 1994). 201-231

1994 Jan
Assessing The Case For Randomized Evaluation of Social ProgramsJames J. Heckman

Measuring Labor Market Program: Evaluating The Effects of Active Labor Market Initiatives, Ministry of Labor, (Copenhagen, DK., May 1993)

1993 May
What Has Been Learned About Labor Supply In The Past Twenty Years?James J. Heckman

Paper (@JSTOR)

AEA Papers and Proceedings, (May 1993), 83(2), 116-121

1993 May
Understanding The Economic Progress of Black AmericansJames J. Heckman

Business in the Contemporary World, (Summer 1990), 19-22

1990 Aug
The Impact of The Great Society on Social ScienceJames J. Heckman

Journal of Human Resources, (Spring, 1990), 25(2), 297-304

1990 Apr
A Nonparametric Method of Moments Estimator for the Mixture of Geometrics ModelJames J. Heckman

Panel Data and Labor Market Studies, (North Holland, 1990)

1990 Jan
A Method of Moments Estimator for The Mixing Distribution of a Mixture of Exponentials Model and A Mixture of Geometrics ModelJames J. Heckman

Nonparametric Estimation of Econometric Models, (Cambridge: Cambridge University, 1990)

1990 Jan
Affirmative Action and Black EmploymentJames J. Heckman

Proceedings Of The Industrial Relations Research Association, (1989), 41, 320-329

1989 Jan
The Nonequivalence of High School EquivalentsJames J. Heckman, S. Cameron

This article analyzes the causes and consequences of the growing proportion of high-school-certified persons who achieve that status by exam certification rather than through high school graduation. Examcertified high school equivalents are statistically indistinguishable from high school dropouts. Whatever differences are found among examcertified equivalents, high school dropouts and high school graduates are accounted for by their years of schooling completed. There is no cheap substitute for schooling. The only payoff to exam certification arises from its value in opening postsecondary schooling and training opportunities, but completion rates for exam-certified graduates are much lower in these activities than they are for ordinary graduates.

Paper (@JSTOR)

Journal of Labor Economics, (January 1993), 11(1), 1-47

1993 Jan
The Urban Institute Audit Studies: Their Methods and FindingsJames J. Heckman, P. Siegelman

Paper (@Semantic Scholar)

Clear and Convincing Evidence: Measurement of Discrimination in America, Chapter 5, 187-258, (Urban Institute, Fall 1993)

1993 Sep
Evaluating an Argument For Affirmative ActionJames J. Heckman, T. Philipson

Paper (@SAGE Journals)

Rationality and Society, (July 1992)

1992 Jul
Haavelmo and the Birth of Modern Econometrics: A Review of the History of Econometric Ideas by Mary MorganJames J. Heckman

Paper (@JSTOR)

Journal of Economic Literature, (June 1992), Vol. 30

1992 Jun
Randomization and Social Policy EvaluationJames J. Heckman

This paper considers the evidence on the effectiveness and limitations of randomized controlled trials in economics. I revisit my previous paper “Randomization and Social Policy Evaluation” and update its message. I present a brief history of randomization in economics and identify two waves of enthusiasm for the method as “Two Awakenings” because of the near-religious zeal associated with both waves. I briefly summarize the lessons of the first wave and forecast the same lessons will be learned in the second wave.

Paper (@National Bureau of Economic Research)

Evaluating Welfare and Training Programs, (Harvard University Press, 1992), 201-230

1992 Jan
Identifying the Hand of Past: Distinguishing State Dependence from HeterogeneityJames J. Heckman

A basic problem in social science is to ascertain the importance of initial endowments on subsequent outcomes of a dynamic process. Interest in this topic centers on two distinct issues: (a) Do initial endowments have a temporally persistent effect on outcomes (i.e., is there “heterogeneity”)?; (b) Are the effects of initial endowments attenuated or accentuated by subsequent experiences of the process being studied or by related processes (i.e., is there “state dependence”)? These two questions show up in a variety of contexts. 1) The importance of family background on a person’s subsequent education and earnings is a hotly debated topic. Do market or nonmarket mechanisms reinforce or diminish initial endowments? 2) The incidence of criminal activity is concentrated among a small population of repeated offenders. Are certain persons “prone” to criminality, or does crime breed crime? 3) Are persons who experience unemployment more likely to experience future unemployment due to loss of work experience or market stigma? 4) Does early entry into an industry confer an advantage of incumbency, or does it merely proxy the basic managerial and innovative ability of early entrants? Many formal models of state-dependent processes or processes with persistent effects of initial conditions have been formulated. Invariance of steady states to initial endowments was viewed as a desirable feature of an economic model in the 1960’s and 1970’s. Path-dependent synergism and nonergodicity are fashionable features of models today. Is the choice between models with long-run dependence on initial conditions and those without solely a matter of intellectual esthetics? Can data discriminate between these two classes of models? How many economically extraneous statistical “regularity conditions” have to be imposed in order to distinguish between these models? How many and what kind of maintained assumptions are required in order to let the data speak on these important questions? In this paper I focus on one nonergodic model that receives much attention in the literature-the model of “duration dependence” and “heterogeneity” discussed by Herbert Silcock (1954) and also examined by Tony Lancaster (1979), Chris Elbers and Geert Ridder (1982), myself and Burton Singer (1984), and myself and Bo Honore (1989).

Paper (@JSTOR)

American Economic Review, (May, 1991), 81(2), 75-79

1991 May
Reevaluating Federal Civil Rights PolicyJames J. Heckman, J. Donohue

Paper (@Yale Law School)

Georgetown Law Journal, (1991)

1991 Jan
Continuous vs. Episodic Change: The Impact of Affirmative Action and Civil Rights Policy on the Economic Status of BlacksJames J. Heckman, J. Donohue

This paper examines the available evidence on the causes of black economic advance in order to assess the contribution of federal policy. Over the period 1920-1990, there were only two periods of relative black economic improvement — during the 1940s and in the decade following the passage of the Civil Rights Act of 1964, the voting Rights Act of 1965, and the institution of the government contracts compliance program. Black migration from the South, a traditional source of economic gains for blacks, almost stopped at about this same time, and recent evidence on the impact of black schooling gains indicates that educational gains cannot explain the magnitude of black economic progress beginning in the mid-1960s.

Paper (@JSTOR)

Journal of Economic Literature, (December 1991), 29(4), 1603-1643

1991 Dec
Varieties of Selection BiasJames J. Heckman

Paper (@JSTOR)

American Economic Review, (May 1990), 80(2), 313-318

1990 May
The Central Role of the South in Accounting For The Economic Progress of Black AmericansJames J. Heckman

Paper (@JSTOR)

Papers and Proceedings Of The American Economic Association, (May 1990), 80(2), 242-246

1990 May
Testing The Mixture of Exponentials Hypothesis and Estimating The Mixing Distribution by the Method of MomentsJames J. Heckman, J. Walker, R. Robb

This article presents nonparametric methods for testing the hypothesis that duration data can be represented by a mixture of exponential distributions. Both Bayesian and classical tests are developed. A variety of apparently distinct models can be written in mixture of exponentials form. This raises a fundamental identification problem. A consistent estimator for the number of points of support of a discrete mixture is developed. A consistent method-of-moments estimator for the mixing distribution is derived from the testing criteria and is evaluated in a Monte Carlo study.

Paper (@Taylor & Francis Online)

Journal of The American Statistical Association, (June 1990), 85(410), 582-589

Duration model, Mixing models, Method-of-moments estimator for mixing distribution1990 Jun
Economic Models of Fertility Dynamics: A Study of Swedish FertilityJames J. Heckman, J. Walker

This paper estimates semiparametric reduced-form neoclassical models of life-cycle fertility in Sweden. Rising female wages delay times to all conceptions and reduce total conceptions. These results are robust across a variety of empirical specifications. We find a particular neoclassical model that predicts fertility attained at different ages as well as the aggregate time series of birth rates. A model that excludes wages and incomes predicts fertility attained at different ages but fails to predict the aggregate time series, and is dominated by the neoclassical model in terms of non-nested test criteria. Cohort drift found in estimated parameters is consistent with the expansion of pronatal social programs. The estimated neoclassical model produces strong short-run responses of birth rates to wages and incomes of the sort that have been found in the time series literature on fertility while generating the relatively weak long-run responses to economic variables found in the cross-sectional literature on completed fertility.

Paper (@PubMed)

Research in Population Economics, (Greenwich, CT: JAI Press, 1990), Vol. 7, 3-91

1990 Jan
The Relationship Between Wages and Income and the Timing and Spacing of Births: Evidence from Swedish Longitudinal DataJames J. Heckman, J. Walker

This paper estimates semiparametric reduced-form neoclassical models of life-cycle fertility in Sweden. Rising female wages delay times to all conceptions and reduce total conceptions. This result is robust across a variety of empirical specifications. In the best fitting models in which marital status is excluded, male incomes–defined to be zero for unmarried women without a cohabiting male partner–reduce times to conceptions and increase total conceptions. The results on female wages are robust across a variety of empirical specifications, but those on male incomes are not robust to the introduction of marital status and cohabitational status variables, even though models with such variables can be rejected by our model specification tests. We find a particular neoclassical model that predicts fertility attained at different ages as well as the aggregate time series of birth rates. A model that excludes wages and incomes predicts fertility attained at different ages but fails to predict the aggregate time series and is dominated by the neoclassical model in terms of non-nested test criteria. Cohort drift found in estimated parameters is consistent with the expansion of pronatal social programs. The estimated neoclassical model produces strong short-run responses of birth rates to wages and incomes of the sort that have been found in the time-series literature on fertility while generating the relatively weak long-run responses to economic variables found in the cross-sectional literature on completed fertility.

Paper (@JSTOR)

Econometrica, (November, 1990). 58(6): 1411-1441

1990 Nov
Estimating Fecundability from Data on Waiting Times to First ConceptionsJames J. Heckman, J. Walker

This article tests assumptions invoked in the demographic literature to estimate the population distribution of fecundability from data on waiting times to first conception. In continuous time, the key assumption is that waiting times are realizations from a mixture of exponentials distribution. In discrete time, the key assumption is that waiting times are realizations from a mixture of geometrics distribution. The Hutterite data analyzed by Sheps (1965) are consistent with this assumption. Various models, however, have one representation in mixture of exponentials form. A fundamental identification problem plagues the conventional estimation procedure. Our analysis calls into question the conventional practice of checking model specification by using goodness-of-fit tests. The practical importance of the identification problem in duration models is demonstrated.

Paper (@JSTOR)

The Journal of the American Statistical Association, (June, 1990), 85(410), 283-294

1990 Jun
The Third Birth in SwedenJames J. Heckman, J. Walker

This paper considers the formulation, estimation and interpretation of microdynamic models of fertility. Our model explains parity choices, sterility, childlessness, interbirth intervals and initiation of pregnancy within a unified framework. We develop a general methodology for estimating the determinants of transition times to births of different orders. Our procedure incorporates time-varying explanatory variables and unobservables. We present conditions that justify conventional formulae relating hazards to survivor functions when time-varying variables enter hazards. We also consider the validity of widely-used piecemeal estimation strategies that focus on one birth at a time. We consider methods for selecting a best model among a class of non-nested models. Two criteria are set forth and used to evaluate the determinants of third births in Sweden. We find that two models fit Swedish microdata equally well. One model is consistent with neoclassical economic theory. It assigns a central role to the wages of men and women in explaining the timing and spacing of births. The other model is purely demographic and excludes wages. Purely statistical criteria cannot distinguish these models although in other work we show that the economic models are more parsimonious in terms of the number of parameters that must be estimated and are better able to forecast aggregate time series. We demonstrate how to interpret the output of multistate fertility models. Wage effects on third births are decomposed into two components: (a) an indirect effect that determines whether a woman is at risk to have a third birth, and (b) a direct effect on the transition rate to the third birth given that a woman has had two births. We find that female wages play an important role in postponing first births but play only a minor role in explaining childlessness. Female wages substantially affect third births. Male wage effects are weaker. We find that female wage effects weaken for more recent cohorts of women. This evidence is consistent with the introduction of progressively more pronatal Swedish policies.

Paper (@JSTOR)

Journal of Population Economics, (1990), 3(4), 235-275.

1990 Jan
Causal Inference and Nonrandom SamplesJames J. Heckman

Wainer (1989) confuses two conceptually distinct problems in his discussion of the problems of statistical adjustment. Clarity would be served by distinguishing these problems. The first and stated main problem of the paper is that of making “causal inferences” about the impacts of “treatments” or “interventions” when persons self-select or are selected into treatment categories. The second problem is that of recovering population distributions from nonrandom samples. The paper is likely to confuse most readers because it switches from the first problem to the second problem in the “Modeling Nonresponse” section. A solution to the second problem in no way guarantees a solution to the first.

Paper (@SAGE Journals)

Symposium on Selection Bias Models, Journal of Educational Statistics, 14(2), (Summer 1989), 159-168, reprinted in J. Schaeffer, (ed.), The Role of Models in Non-experimental Social Science: Two Debates, 1991

1989 Jul
Self Selection and The Distribution of Hourly Wage RatesJames J. Heckman, G. Sedlacek

This article formulates and estimates alternative equilibrium models of industrial wage determination and self-selection. In explaining industrial wage differentials, we find that it is important to account for heterogeneous sector-specific skills and self-selection decisions by agents concerning their sector of employment. The classical Roy model is rejected. So is an efficiency units model of the labor market. A revised Roy model that accounts for comparative advantage in the choice of industrial sectors and choice between market and nonmarket work is much more successful in explaining cross-section wage distributions and their evolution over time.

Paper (@JSTOR)

Journal of Labor Economics, (January 1990), 8(1), Part 2, S329-S363

1990 Jan
The Empirical Content of the Roy ModelJames J. Heckman, Bo Honoré

This paper clarifies and extends the classical Roy model of self selection and earnings inequality. The original Roy model, based on the assumption that log skills are normally distributed, is shown to imply that pursuit of comparative advantage in a free market reduces earnings inequality compared to the earnings distribution that would result if workers were randomly assigned to sectors. Aggregate log earnings are right skewed even if one sectoral distribution is left skewed. Most major implications of the log normal Roy model survive if differences in skills are log concave. However few implications of the model survive if skills are generated from more general distributions. We consider the identifiability of the Roy model from data on earnings distributions. The normal theory version is identifiable without regressors or exclusion restrictions. Sectoral distributions can be identified knowing only the aggregate earnings distribution. For general skill distributions, the model is not identified and has no empirical content. With sufficient price variation, the model can be identified from multimarket data. Cross-sectional variation in regressors can substitute for price variation in restoring empirical content to the Roy model.

Paper (@JSTOR)

Econometrica, (September, 1990), 58(5), 1121-1149

1990 Sep
Forecasting Aggregate Period Specific Birth Rates: Time Series Properties of a Microdynamic Neoclassical Model of FertilityJames J. Heckman, J. Walker

This article demonstrates the value of microdata for understanding the effect of wages on life cycle fertility dynamics. Conventional estimates of neoclassical economic fertility models obtained from linear aggregate time series regressions are widely criticized for being nonrobust when adjusted for serial correlation. Moreover, the forecasting power of these aggregative neoclassical models has been shown to be inferior when compared with conventional time series models that assign no role to wages. This article demonstrates that, when neoclassical models of fertility are estimated on microdata using methods that incorporate key demographic restrictions and when they are properly aggregated, they have considerable forecasting power.

Paper (@JSTOR)

Journal of The American Statistical Association, (December, 1989), 84(408), 958-965

1989 Dec
Choosing Among Alternative Non-experimental Methods For Estimating The Impact of Social Programs: The Case of Manpower TrainingJames J. Heckman, V.J. Hotz

The recent literature on evaluating manpower training programs demonstrates that alternative nonexperimental estimators of the same program produce an array of estimates of program impact. These findings have led to the call for experiments to be used to perform credible program evaluations. Missing in all of the recent pessimistic analyses of nonexperimental methods is any systematic discussion of how to choose among competing estimators. This article explores the value of simple specification tests in selecting an appropriate nonexperimental estimator. A reanalysis of the National Supported Work Demonstration data previously analyzed by proponents of social experiments reveals that a simple testing procedure eliminates the range of nonexperimental estimators at variance with the experimental estimates of program impact.

Paper (@Taylor & Francis Online)

Journal of the American Statistical Association, (December 1989), 84(408), 862-874

Evaluation, Model-selection tests, Selection bias1989 Dec
The Identifiability Of The Competing Risks ModelJames J. Heckman, Bo Honore ́

This paper considers the consequences for identifiability of introducing regressors into the competing risks model of multistate duration analysis. We establish conditions under which access to regressors overturns the nonidentification theorem of Cox and Tsiatis for both proportional and accelerated failure time models.

Paper (@Oxford Academic)

Biometrika, (June 1989), 76(2), 325-30

1989 Jun
Determining The Impact of Federal Anti-discrimination Policy on The Economic Status of Blacks: A Study of South CarolinaJames J. Heckman and B. Payner

This paper assesses the contribution of federal antidiscrimination policy to the dramatic improvement of black economic status in manufacturing that occurred in South Carolina in the mid-1960s. Using a unique data source for South Carolina on wages and employment by race, sex, and industry we evaluate competing explanations. Human capital stories, supply shift stories, and tight labor market stories do not account for the black breakthrough. Our study documents a significant contribution of federal antidiscrimination programs.

Paper (@JSTOR)

American Economic Review, (March 1989), 79(1), 138-177.

1989 Mar
Intergenerational Effects of Early-Life Advantage: Lessons from a Primate StudyDettmer, Amanda M., James J. Heckman, Juan Pantano, Victor Ronda, Stephen J. Suomi

This paper uses three decades of studies with Rhesus monkeys to investigate the intergenerational effects of early life advantage. Monkeys and their offspring were both randomly assigned to be reared together or apart from their mothers. We document significant intergenerational effects of maternal presence. We also estimate, for the first time, the intergenerational complementarity of early life advantage, where the intergenerational effects of maternal rearing are only present for offspring that were mother-reared. This finding suggests that parenting is the primary mechanism driving the intergenerational effects. Our paper demonstrates how studies of primates can inform human development.

Paper (@NBER)

National Bureau of Economic Research, Working Paper No. 27737

maternal influence, animal studies, early-life adversity, intergenerational treatment effects, intergenerational complementarity2020 Aug
How Voluntary is Black Unemployment and Black Labor Force Withdrawal?James J. Heckman

in W. Darity and S. Schulman, (eds), The Question of Discrimination: Racial Inequality in the U.S. Labor Market, (Connecticut: Wesleyan University Press, 1989), 50-80.

1989 Jan
The Impact of the Economy and the State on the Economic Status of Blacks: A Study of South CarolinaJames J. Heckman, R. Butler, and B. Payner

in D. Galenson, (ed.), Markets and Institutions, (Cambridge: Cambridge University Press, 1989), 321-343.

1989 Jan
The Value of Longitudinal Data For Evaluating The Impact of Treatments on OutcomesJames J. Heckman and R. Robb

in G. Duncan and G. Kalton, (eds.), Panel Surveys, (Wiley: New York, 1988), 512-538.

1988 Mar
Natural Monopoly and The Bell System: A Response to Charnes, Cooper and SueyoshiJames J. Heckman and D. Evans

Our study of the Bell System cost function shows that it is possible to reject the hypothesis that AT&T was a natural monopoly. Our study is based on a regression analysis of a translog cost function estimated on 1947–1977 data. Charnes, Cooper, and Sueyoshi (Charnes, A., W. W. Cooper, T. Sueyoshi. 1988. A goal programming/constrained regression review of the bell system breakup. Management Sci. 34 1–26.) claim that they reverse our conclusion when they use goal programming estimators of a translog cost function estimated on exactly the same data that we use. This claim is false. There is no basis for comparing our estimates with their estimates because they, in fact, use different data than we use and estimate a different cost function than we estimate. Moreover, when goal programming estimates and regression estimates based on the same data and similar cost function specifications are compared, they yield similar estimates and produce the same inference about natural monopoly.

Paper (@REPEC)

Management Science, (January, 1988), 27-38

1988 Jan
Time Constraints and Household Demand FunctionsJames J. Heckman

in T. P. Schultz, (ed.), Research in Population Economics, (1988).

1988 Mar
Empirical Tests of Labor Market Equilibrium: A Microeconomic PerspectiveJames J. Heckman and T. MaCurdy

Carnegie- Rochester Conference Series on Public Policy, 28, (Spring 1988), 231- 258.

1988 Mar
Are Classical Experiments Necessary For Evaluating The Impact of Manpower Training Programs?: A Critical AssessmentJames J. Heckman, J. Hotz, and M. Dabos

Industrial Relations Research Association: Proceedings Of The Annual Meeting, (1987), 40, 291-302.

1988 Jul
Do We Need Experimental Data To Evaluate The Impact of Training on EarningsJames J. Heckman, J. Hotz, and M. Dabos

This article assesses several recent studies in the manpower training evaluation literature claiming that (1) nonexperimental methods of program evaluation produce unreliable estimates of program impacts and (2) randomized experiments are necessary to produce reliable ones. We present a more optimistic statement about the value of nonexperimental methods in analyzing the effects of training programs on earnings. Previous empirical demonstrations of the sensitivity of estimates of program impact to alternative non experimental procedures either do not test the validity of the testable assumptions that justify the nonexperimental procedures or else disregard the inference from such tests. We reanalyze data from the National Supported Work Demonstration experiment (NSW) utilized by LaLonde and Fraker and Maynard and reexamine the performance of nonexperimental estimates of the net impact of the NSW program on the posttraining earnings of young high school dropouts and adult women. Using several simple strategies for testing the appropriateness of alternative formulations of such estimators, we show that a number of the nonexperimental estimators used in these studies can be rejected. Although we eliminate a number of nonexperimental estimators by such tests, we are able to find estimators that are not rejected by these tests. Estimators not rejected by such tests yield net impact estimates that lead to the same inference about the impact of the program as the experimental estimates. The empirical results from our limited study provide tangible evidence that the recent denunciation of nonexperimental methods forevaluating manpower training effects is premature.

Chapter (@SAGE)

Evaluation Review, (August 1987), 28(4), 397-427.

1987 Aug
Selection Bias and The Economics of Self SelectionJames J. Heckman

The New Palgrave: A Dictionary of Economics, (MacMillan Press, Stockton, New York), 287-296. (1987)

1987 Feb
Using Goodness of Fit and Other Criteria to Choose Among Competing Duration Models: A Case Study of Hutterite DataJames J. Heckman and J. Walker

This paper demonstrates the value of goodness of fit and other criteria in choosing among competing specifications of duration models. Of special interest is the role of the proposed criteria in assessing the benefits of explicitly controlling for unobserved heterogeneity in duration studies. We use these criteria to evaluate competing models of the Hutterite reproductive process. The proposed model-selection criteria are stringent. Many simple models are rejected. Models that explicitly control for unobserved heterogeneity are preferred to models that do not. Models that use lengths of previous intervals to proxy unobserved heterogeneity are decisively rejected.

Paper (@JSTOR)

Sociological Methodology, (1987), Chapter 9, 248-307.

1987 Jan
Female Labor Supply: A SurveyJames J. Heckman and M. Killingsworth

Chapter 2, in O. Ashenfelter and R. Layard, Handbook of Labor Economics, (ed.), (North Holland, 1986)

1986 Dec
The Importance of Bundling in a Gorman-Lancaster Model of EarningsJames J. Heckman and J. Scheinkman

This paper considers a multisector Gorman-Lancaster linear characteristics model of earnings in which workers cannot unbundle their skills. Conditions are presented under which characteristics are uniformly priced across sectors. Empirical evidence is presented for the U.S. labour market that rejects the hypothesis of uniform pricing of characteristics.

Paper (@JSTOR)

Review of Economic Studies, (1987), LIV, 243-255.

1987 Apr
Alternative Identifying Assumptions in Econometric Models of Selection BiasJames J. Heckman and R. Robb

in G. Rhodes, (ed), Advances in Econometrics, Vol. 5, 243-287, (JAI Press, 1986)

1986 Feb
An Investigation of the Labor Market Earnings of Panamanian Males Evaluating the Sources of InequalityJames J. Heckman and J. Hotz

This paper presents empirical evidence on the determinants of labor market earnings and inequality for males in Panama. Using newly available microdata, we estimate earnings equations based on the measurement framework of Mincer (1974) and compare them with those for other countries at various stages of economic development. We present evidence on two aspects of inequality in less developed economies: labor market segmentation and social stratification. We present tests of the segmentation hypothesis, including several of the dual labor market hypotheses and discuss their inherent ambiguity. We also present evidence on the importance of family background for earnings determination and educational attainment.

Paper (@JSTOR)

Journal of Human Resources, September, 1986.

1986 Sep
Alternative Methods For Solving The Problem of Selection Bias in Evaluating The Impact of Treatments on OutcomesJames J. Heckman and R. Robb

Social scientists never have access to true experimental data of the type sometimes available to laboratory scientists. Our inability to use laboratory methods to independently vary treatments to eliminate or isolate spurious channels of causation places a fundamental limitation on the possibility of objective knowledge in the social sciences. In place of laboratory experimental variation, social scientists use subjective thought experiments. Assumptions replace data. In the jargon of modern econometrics, minimal identifying assumptions are invoked.

Chapter (@Springer)

in Howard Wainer, (ed), Drawing Inference From Self Selected Samples, (Springer-Verlag), (1986), 63-107.

Propensity Score, Decision Rule, Instrumental Variable, Training Status, Consistent Estimator1986 Jan
Early Childhood Education and Life-cycle HealthJames J. Heckman and Jorge Luis García

This paper forecasts the life-cycle treatment effects on health of a high-quality early childhood program. Our predictions combine microsimulation using non-experimental data with experimental data from a midlife long-term follow-up. The follow-up incorporated a full epidemiological exam. The program mainly benefits males and significantly reduces the prevalence of heart disease, stroke, cancer, and mortality across the life-cycle. For men, we estimate an average reduction of 3.8 disability-adjusted years (DALYs). The reduction in DALYs is relatively small for women. The gain in quality-adjusted life years (QALYs) is almost enough to offset all of the costs associated with program implementation for males and half of program costs for women.

Paper (@NBER)

Forthcoming, Health Economics. (2020).

2020 Mar
Some Contributions of Economics to the Study of PersonalityJames J. Heckman, T. Jagelka and T. Kautz

This paper synthesizes recent research in economics and psychology on the measurement and empirical importance of personality skills and preferences. They predict and cause important life outcomes such as wages, health, and longevity. Skills develop over the life cycle and can be enhanced by education, parenting, and environmental influences to different degrees at different ages. Economic analysis clarifies psychological studies by establishing that personality is measured by performance on tasks which depends on incentives and multiple skills. Identification of any single skill therefore requires isolation of confounding factors, accounting for measurement error using rich data and application of appropriate statistical techniques. Skills can be inferred not only by questionnaires and experiments but also from observed behavior. Economists advance the analysis of human differences by providing anchored measures of economic preferences and studying their links to personality and cognitive skills. Connecting the research from the two disciplines promotes understanding of the number and nature of skills and preferences required to characterize essential differences.

Paper (@NBER)

Forthcoming, Handbook of Personality. (2020).

2019 Nov
Econometric Analysis of Longitudinal DataJames J. Heckman and B. Singer

This paper considers the formulation and estimation of continuous time social science duration models. The focus is on new issues that arise in applying statistical models developed in biostatistics to analyze economic data and formulate economic models. Both single spell and multiple spell models are discussed. In addition, we present a general time inhomogeneous multiple spell model which contains a variety of useful models as special cases.

Chapter (@ScienceDirect)

in Z. Griliches and M.D. Intriligator (ed), Handbook of Econometrics, Vol. 3, Chapter 29, (Elsevier Science Publishers), (1986), 1690-1763.

1986 Jan
Labor EconometricsJames J. Heckman and T. MaCurdy

This paper presents and extends the index function model of Karl Pearson (1901) that underlies all recent models in labor econometrics. In this framework, censored, truncated and discrete random variables are interpreted as the manifestation of various sampling schemes for underlying index function models. A unified derivation of the densities and regression representations for index function models is presented. Methods of estimation are discussed with an emphasis on regression and instrumental variable procedures.

We demonstrate how a variety of substantive models in labor economics can be given an econometric representation within the index function framework. Models for the analysis of unemployment, labor force participation, job turnover, the impact of interventions on earnings (and other outcomes) and hours of work are formulated as special cases of the general index function model. By casting these diverse models in a common mold we demonstrate the essential commonalities in the econometric approach required for their formulation and estimation.

Chapter (@ScienceDirect)

in Z. Griliches and M.D. Intriligator (ed), Handbook of Econometrics, Vol. 3, Chapter 3, (Elsevier Science Publishers), (1986), 1918-1977

1986 Jan
The Influence of Early Fertility and Subsequent Births And The Importance of Controlling For Unobserved HeterogeneityJames J. Heckman, J. Hotz, and J. Walker

Bulletin of The International Statistical Institute, (1985), 51(2).

1985 Dec
Heterogeneity, Aggregation and Market Wage Functions: An Empirical Model of Self-Selection in the Labor MarketJames J. Heckman and G. Sedlacek

This paper presents an empirical equilibrium model of self-selection in the labor market that recognizes the existence of measured and unmeasured heterogeneous skills. We derive a model of the sectoral allocation of workers of different demographic types and present a new econometric procedure for combining micro and macro data to estimate supply and demand functions for unmeasured sector-specific productive attributes. Our model extends previous empirical work on wage equations by introducing determinants of aggregate market demand and supply into an explicit, economically interpretable estimating equation. These extensions are required to produce a model that fits the distribution of wages for the U.S. labor market.

Paper (@JSTOR)

Journal of Political Economy, (December, 1985), 93(6), 1077-1125

1985 Dec
Using Longitudinal Data to Estimate Age, Period and Cohort Effects in Earnings EquationsJames J. Heckman and R. Robb

in William M. Mason and Stephen E. Fienberg, (ed), Cohort Analysis in Social Research Beyond the Identification Problem, (Springer-Verlag New York Inc., 1985)

1985 May
New Evidence on the Timing and Spacing of BirthsJames J. Heckman, J. Hotz, and J. Walker

Paper (@JSTOR)

American Economic Review, (May, 1985), 179-184.

1985 May
Alternative Methods for Evaluating the Impact of Interventions: An OverviewJames J. Heckman and R. Robb

This paper presents methods for estimating the impact of training on earnings when non-random selection characterizes the enrollment of persons into training. We explore the benefits of cross-section, repeated cross-section and longitudinal data for addressing this problem by considering the assumptions required to use a variety of new and conventional estimators given access to various commonly encountered types of data. We investigate the plausibility of assumptions needed to justify econometric procedures when viewed in the light of prototypical decision rules determining enrollment into training. We examine the robustness of the estimators to choice-based sampling and contamination bias.

Paper (@ScienceDirect)

Journal of Econometrics, 30(1-2): 239-267. (1985)

1985 Feb
Alternative Methods for Estimating The Impact of InterventionsJames J. Heckman and R. Robb

presented at Social Science Research Council Conference, Mt. Kisco, N.Y., October, 1978. In J. Heckman and B. Singer (eds.), Longitudinal Analysis of Labor Market Data, (Cambridge University Press, 1985)

1985 Jan
A Simultaneous Equations Linear Probability ModelJames J. Heckman and T. MaCurdy

A computationally tractable, easily interpretable linear simultaneous equations model for dummy endogenous variables is presented. The reduced form of the model is more general than the multivariate linear probability model available in the literature. The model permits analysts to use familiar methods to distinguish between spurious and causal association among discrete endogenous variables. Such distinctions are not possible in the log linear discrete data models developed by Goodman and Nerlove and Press, and in other models widely used in econometrics.

Paper (@JSTOR)

Canadian Journal of Economics, (January, 1985), XVIII(1), 28-37

1985 Jan
Social Science Duration AnalysisJames J. Heckman and B. Singer

in Longitudinal Analysis of Labor Mar-
ket Data
, (University Press, 1985)

1985 Jan
Introduction to Longitudinal Analysis of Labor Market DataJames J. Heckman and B. Singer

in Longitudinal Analysis of Labor Market Data, (Cambridge: Cambridge University Press, 1985)

1985 Jan
A Test for Subadditivity of the Cost Function With An Application to the U.S. Bell SystemJames J. Heckman and D. Evans

Paper (@JSTOR)

American Economic Review, (September, 1984), 615-623

1984 Sep
The χ2 Goodness of Fit Statistic For Models with Parameters Estimated From MicrodataJames J. Heckman

Paper (@JSTOR)

Econometrica, (November, 1984), 52(6), 1543-1547

1984 Nov
Econometric Duration AnalysisJames J. Heckman and B. Singer

Paper (@ScienceDirect)

Journal of Econometrics, (January, 1984), 63-132.

1984 Jan
Comments on the Ashenfelter and Kydland PapersJames J. Heckman

Paper (@ScienceDirect)

Carnegie Rochester Conference Series on Public Policy, (1984), 209-224.

1984 Jan
Population Heterogeneity in Demographic ModelsJames J. Heckman and B. Singer

in A. Rodgers and K. Land (eds.), Multidimensional Mathematical Demography, (1984), 271-320

1984 Apr
The Identifiability of the Proportional Hazard ModelJames J. Heckman and B. Singer

This paper presents new identifiability conditions for the Cox proportional hazard model for duration data when unobserved person specific variables are present. We compare our conditions with those presented by Elbers and Ridder. We also present identifiability conditions for a rich class of parametric hazard models without regressor variables.

Paper (@JSTOR)

Review of Economic Studies, 231-241, (April, 1984)

1984 Apr
A Method for Minimizing the Impact of Distributional Assumption in Econometric Models for Duration DataJames J. Heckman and B. Singer

Conventional analyses of single spell duration models control for unobservables using a random effect estimator which the distribution of unobservables selected by ad hoc criteria. Both theoretical and empirical examples indicate that estimates of structural parameters obtained from conventional procedures are very sensitive to the choice of mixing distribution. Conventional procedures overparameterize duration models. We develop a consistent nonparametric maximum likelihood estimator for the distribution of unobservables and a computational strategy for implementing it. For a sample of unemployed workers our estimator produces estimates in concordance with standard search theory while conventional estimators do not.

Paper (@JSTOR)

Econometrica, 52(2): 271-320 (1984)

1984 Mar
Multiproduct Cost Function Estimates and Natural Monopoly Tests for the Bell SystemJames J. Heckman and D. Evans

in D. Evans, (ed.), Breaking Up Bell: Essays on Industrial Organization and Regulation, Chapter 10, 253-282, (North Holland, 1983)

1983 Jan
Natural MonopolyJames J. Heckman and D. Evans

in D. Evans (ed.), Breaking Up Bell: Essays on Industrial Organization and Regulation, 127-156, (North Holland, 1983

1983 Jan
The Likelihood Function For The Multistate-Multiepisode Model in ‘Models For The Analysis of Labor Force Dynamics’James J. Heckman and C. Flinn

in R. Bassman and G. Rhodes, (eds), Advances in Econometrics, 2, 225-231

1983 Jan
Are Unemployment and out of the Labor Force Behaviorally Distinct Labor Force States?James J. Heckman and C. Flinn

This paper tests the hypothesis that the classifications “unemployed” and “out of the labor force” are behaviorally meaningless distinctions. This hypothesis is rejected. Distinct behavioral equations govern transitions from out of the labor force to employment and from unemployment to employment. The evidence reported in this paper is broadly consistent with versions of search theory in which unemployment is a state that facilitates the job search process. In an Appendix, we demonstrate that log concavity of the wage-offer distribution implies that the exit rate from unemployment is an increasing function of the rate of arrival of job offers.

Paper (@JSTOR)

Journal of Labor Economics, 28-42, (January, 1983)

1983 Jan
New Methods for Analyzing Structural Models of Labor Force DynamicsJames J. Heckman and C. Flinn

The economic theory of decision-making under uncertainty is used to produce three econometric models of dynamic discrete choice: (1) for a single spell of unemployment; (2) for an equilibrium two-state model of employment and non-employment; (3) for a general three-state model with a non-market sector. The paper provides a structural economic motivation for the continuous time Markov (or more generally ‘competing risks’) model widely used in longitudinal analysis in biostatistics and sociology, and it extends previous work on dynamic discrete choice to a continuous time setting. An important feature of identification analysis is separation of economic parameters that can only be identified by assuming arbitrary functional forms from economic parameters that can be identified by non-parametric procedures. The paper demonstrates that most econometric models for the analysis of truncated data are non-parametrically under-identified. It also demonstrates that structural estimators frequently violate standard regularity conditions. The standard asymptotic theory is modified to account for this essential feature of many structural models of labor force dynamics. Empirical estimates of an equilibrium two-state model of employment and non-employment are presented.

Paper (@ScienceDirect)

Journal of Econometrics, 18 (1982): 115-68

1982 Jan
New Methods For Analyzing Individual Event HistoriesJames J. Heckman and C. Flinn

Paper (@JSTOR)

Sociological Methodology, 99-140, (Josey-Bass, 1982)

1982 Apr
Earnings and The Distribution of IncomeJames J. Heckman and R. Michael

in Part II, Behavioral and Social Science Research, A National Resource, (National Academy of Science Press, 1982)

1982 Mar
The Identification Problem in Econometric Models for Duration DataJames J. Heckman

Econometric models for the analysis of duration data have recently come into widespread use in economics. Recent studies of employment and nonemployment (Flinn & Heckman, 1982a; Heckman & Borjas, 1980), unemployment (Flinn & Heckman, 1982b; Kiefer & Neumann, 1981; Lancaster & Nickell, 1980; Toikka, 1976), fertility (Gomez, 1980), strike durations (Kennan, 1980; Lancaster, 1972), and infant mortality (Harris, 1980) have estimated econometric models for durations of events. All of these models have two features in common: they are nonlinear in an essential way, and the methods used to secure estimates of structural models require strong a priori assumptions about the functional forms of estimating equations. Most of these studies have also assumed that the distributions of the unobserved variables in these models are of a simple parametric form. The choice of these distributions usually is justified on the basis of familiarity, ease of manipulation, and considerations of computational cost.

Because of the novelty of the new methods, it is not yet widely appreciated that empirical estimates obtained from these models are extremely sensitive to the choice of a priori identifying assumptions. This chapter will demonstrate this point and present an analysis of identification problems in models for the analysis of duration data. We shall demonstrate that current practice overparameterizes econometric duration models.

Chapter (@CambridgeUP)

in W. Hildenbrand (ed), Advances in Econometrics, Proceedings of Fourth World Congress of Econometric Society, (Cambridge University Press, 1982)

1982 Feb
Models for the Analysis of Labor Force DynamicsJames J. Heckman and C. Flinn

This paper presents new econometric methods for the empirical analysis of individual labor market histories. The techniques developed here extend previous work on continuous time models in four ways: (1) A structural economic interpretation of these models is presented. (2) Time varying explanatory variables are introduced into the analysis in a general way. (3) Unobserved heterogeneity components are permitted to be correlated across spells. (4) A flexible model of duration dependence is presented that accommodates many previous models as a special case and that permits tests among competing specifications within a unified framework. We contrast our methods with more conventional discrete time and regression procedures. The parameters of continuous time models are in- variant to the sampling time unit used to record observations. Problems plague the regression approach to analyzing duration data which do not plague the likelihood approach advocated in this paper. The regression approach cannot be readily adopted to accommodate time varying explanatory variables. The functional forms of regression functions depend on the time paths of the explanatory variables. Ad hoc solutions to this problem can make exogenous variables endogenous to the model and so can induce simultaneous equations bias. Two sets of empirical results are presented. A major conclusion of the first analysis is that the discrete time Markov model widely used in labor market analysis is inconsistent with the data. The second set of empirical results is a test of the hypothesis that “unemployment” and “out of the labor force” are behaviorally different labor market states. Contrary to recent claims, we find that they are separate states for our sample of young men.

Working Paper (@NBER)

Advances in Econo-
metrics
, 1, 35-95, (New York: JAI Press, 1982).

1982 Jan
The Impact of the Minimum Wage on the Employment and Earnings of Workers in South CarolinaJames J. Heckman and Sedlacek

in Vol. 5, Report of the Minimum Wage Study Commission, U.S. Government Printing Office, 225-272, (June 1981).

1981 Jun
Recent Theoretical and Empirical Studies of Labor Supply: A Partial SurveyJames J. Heckman, M. KIllingsworth, and T. MaCurdy

presented at Oxford, 1979, in Z. Hornstein (ed), Studies of The Labor Market, HMS Treasury, (1981).

1981 Apr
Heterogeneity and State DependenceJames J. Heckman

Paper (@NBER)

in S. Rosen (ed.), Studies in Labor Markets, (University of Chicago Press, 1981), 91-139.

1981 Feb
The Incidental Parameters Problem and the Problem of Initial Conditions in Estimating a Discrete Time-Discrete Data Stochastic Process and Some Monte Carlo EvidenceJames J. Heckman

Paper

read at the National Bureau of Economic Research Conference on Panel Data, Harvard University, (August 1978). In C.Manski and D. McFadden (eds.), Structural Analysis of Discrete Data With Econometric Applications, (M.I.T. Press), (originally scheduled for 1979; due to delays, published in 1981).

1981 Jan
Statistical Models for Discrete Panel DataJames J. Heckman

Paper

in C. Manski and D. McFadden (eds.), Structural Analysis of Discrete Data With Econometric Applications, (M.I.T. Press).

1981 Jan
A Life Cycle Model of Family Labor SupplyJames J. Heckman

This paper discusses the formulation and estimation of life-cycle models of family labour supply. The focus of this research is on the development of economically rigorous econometrically tractable models that exploit the new wealth of longitudinal data that has become available in the United States.

Paper (@Springer)

in B. Weisbrod and H.Hughes (eds), Human Resource, Employment and Development, Proceedings of Sixth World Congress, (IEA, McMillan, 1983).

Labour Supply Wage Rate Wage Growth Reservation Wage Sample Selection Bias1980 Feb
A Life Cycle Model of Female Labour SupplyJames J. Heckman and T. MaCurdy

Paper (@JSTOR)

Review of Economic Studies, 1980, XLVII, 47-74.

1980 Jan
Does Unemployment Cause Future Unemployment? Definitions, Questions and Answers from a Continuous Time Model of Heterogeneity and State DependenceJames J. Heckman and G. Borjas

Paper (@JSTOR)

Special Symposium issue on Unemployment, Economica, (May 1980).

1980 May
Addendum To Sample Selection Bias As A Specification ErrorJames J. Heckman

in E. Stromsdorfer and G. Farkas, Evaluation Studies Review Annual, Vol. 5, (Sage Publications, 1980), 69-74.

1980 Jan
Sample Selection Bias as a Specification Error with an Application to the Estimation of Labor Supply FunctionsJames J. Heckman

In this paper, I present a simple characterization of the sample selection bias problem that is also applicable to the conceptually distinct econometric problems that arise from truncated samples and from models with limited dependent variables. The problem of sample selection bias is fit within the conventional specification error framework of Griliches and Theil. A simple estimator is discussed that enables analysts to utilize ordinary regression methods to estimate models free of selection bias. The techniques discussed here are applied to re-estimate and test a model of female labor supply developed by the author. (1974). This paper is in three parts. In the first section, selection bias is presented within the specification error framework. In this section, general distributional assumptions are maintained. In section two, specific results are presented for the case of normal regression disturbances. Simple estimators are proposed and discussed. In the third section, empirical results are presented.

Paper (@REPEC)

March, 1977 in J. Smith (ed.), Female Labor Supply: Theory and Estimation, (Princeton University Press, 1980).

1977 Mar
Reply to Mincer and OfekJames J. Heckman and R. Willis

Download (@JSTOR)

Journal of Political Economy, (February 1979)

Workforce, Women, Economic models, Empirical evidence, Population estimates, Unobservables, Permanent paper, Labor supply, Political economy, Spouses1979 Feb
Sample Selection Bias as a Specification ErrorJames J. Heckman

This paper discusses the bias that results from using nonrandomly selected samples to estimate behavioral relationships as an ordinary specification error or “omitted variables” bias. A simple consistent two stage estimator is considered that enables analysts to utilize simple regression methods to estimate behavioral functions by least squares methods. The asymptotic distribution of the estimator is derived.

Paper (@JSTOR)

Econometrica, (February 1979), 47(1), 153-161.

Selection bias, Analytical estimating, Estimation bias, Estimators, Sampling bias, Sampling methods, Error rates, Least squares, Population estimates1979 Feb
Simple Statistical Models for Discrete Panel Data Developed and Applied to Test the Hypothesis of True State Dependence Against The Hypothesis of Spurious State DependenceJames J. Heckman

This paper develops statistical models for the analysis of discrete longitudinal data. Many interesting stochastic processes are generated by a model in which discrete events arise from a dichotomization of latent continuous variables. The latent variables are given various dynamic specifications which give rise to alternative stochastic processes. Probabilities of runs patterns for the temporal sequences of discrete events generated by these models are investigated. The models are used to investigate whether conditional relationships between the probability of experiencing an event and previous experience of the event arise from spurious correlation or a real effect of previous experience. Simple runs tests and generalized linear probability estimators are developed and applied to test the hypothesis of no real effect.

Paper (@JSTOR)

Annals de INSEE, Paris, (1978), 227-269, (September, Special Issue)

Estimators, Random variables, Probabilities, Unemployment, Statistical variance, Workforce, Economic analysis, Maximum likelihood estimation, Markov models1978 Sep
Labor Supply Estimates for Public Policy EvaluationJames J. Heckman and G. Borjas

In recent years, the study of labor supply has occupied the attention of a large number of economists. With the growth in interest in the topic and with the inevitable diversity of economic models and statistical methods proposed by new entrants in the field, the literature has developed its own folklore. The principal legend is that the empirical estimates of the same parameters obtained from the set of available studies display such diversity that they are of little use to policymakers. This paper disputes the folklore. We claim that there is more agreement than disagreement once a few reasonable criteria based on recent theoretical work are used to eliminate certain studies from consideration, and once we are careful about posing the question we seek the estimates to address.

Working Paper (@NBER)

Proceedings of The Industrial and Labor Relations Research Association, Chicago meetings, 1978.

1978 Jul
Dummy Endogenous Variables in a Simultaneous Equation SystemJames J. Heckman

This paper considers a class of simultaneous equation models with both discrete and continuous random variables based on normally distributed latent random variables. The model set forth here contains the classical simultaneous equation model for continuous endogenous variables and more recent models for discrete endogenous variables as special cases of a more general model. Conditions for the existence of the model are developed. Identification criteria are provided and consistent estimators are proposed. The model set forth here is contrasted with the models of Goodman and Nerlove and Press.

Paper (@JSTOR)

Econometrica, (July 1978). Original draft, April 1973. Final draft, April 1977, 46(4), 931-959.

Consistent estimators, Maximum likelihood estimators, Instrumental variables estimation, Simultaneous equations, Economic models, Random variables, Linear models, Analytical estimating, Estimation theory1978 Jul
Comments on ’The Labor Supply Responses of Wage Earnings in the Rural Negative Income Experiment'James J. Heckman

in J. Palmer and J. Pechman (eds), The Labor Supply Responses of Wage Earners in Welfare in Rural Areas: The North Carolina-Iowa Maintenance Experiment, Brookings, 1977, Presented at the Brookings Conference on Evaluating the Results of the Rural Negative Income Tax Experiment, Washington, D.C., (January, 1977).

1977 Feb
Life-cycle Benefits of Early Childhood Programs: Evidence from an Influential Early Childhood ProgramJorge Luis García, James J. Heckman

There is a substantial body of evidence showing that early childhood programs can boost the skills of disadvantaged children. Most of this research has evaluated the short-run ‘treatment effects’ of these programs, focusing on outcomes such as cognitive test scores, school readiness, and measures of social behavior. So far, few studies have analyzed longer-term effects such as completed education, adult health, crime, and labor income. New research aims to bridge this gap, focusing on influential early childhood programs for disadvantaged children in North Carolina. Guided by economic theory, the study shows that it is possible to supplement experimental data with non-experimental data to ‘forecast’ the life-cycle benefits and costs of the programs.

Online (@Microeconomic Insights)

Microeconomic Insights

ABC, Abecedarian, life-cycle gains, social experiments2020 Jul
Gender Differences in the Benefits of an Influential Early Childhood ProgramJorge Luis García, James J. Heckman, Anna L. Ziff

This paper studies the life-cycle impacts of a widely emulated high-quality, intensive early childhood program with long-term follow up. The program starts early in life (at 8 weeks of age) and is evaluated by an RCT. There are multiple treatment effects which we summarize through interpretable aggregates. Girls have a greater number of statistically significant treatment effects than boys and effect sizes for them are generally bigger. The source of this difference is worse home environments for girls with greater scope for improvement by the program. Fathers of sons support their families more than fathers of daughters.

Paper (@ ScienceDirect)

European Economic Review, 109(October): 9–22. (2018).

Gender differences, Childcare, Early childhood education, Randomized trials, Substitution bias, ABC, Abecedarian2018 Oct
Early Childhood EducationElango, Sneha, Jorge Luis García, James J. Heckman, Andrés Hojman

This paper organizes and synthesizes the literature on early childhood education and childcare. In it, we go beyond meta-analysis and reanalyze primary data sources in a common framework. We consider the evidence from means-tested demonstration programs, large-scale means-tested programs and universal programs without means testing. We discuss which programs are beneficial and whether they are cost-effective for certain populations. The evidence from high-quality demonstration programs targeted toward disadvantaged children shows beneficial effects. Returns exceed costs, even accounting for the deadweight loss of collecting taxes. When proper policy counterfactuals are constructed, Head Start has beneficial effects on disadvantaged children compared to home alternatives. Universal programs benefit disadvantaged children.

Paper (@ NBER)

Economics of Means-Tested Transfer Programs in the United States, Volume 2, edited by Robert A. Moffitt. Chicago, IL: University of Chicago Press for NBER

early childhood interventions, social mobility, inequality, child poverty, ABC, Abecedarian, PPP, Perry Preschool Program2016 Nov
A Beta-Logistic Model For the Analysis of Sequential Labor Force Participation by Married WomenJames J. Heckman and R. Willis

In this paper, we discuss statistical problems that arise in studying sequences of quantal responses (e.g., labor force participation) in panel data on heterogeneous populations (i.e., populations in which there is unobserved variation in response probabilities). Assuming that response probabilities are governed by a beta distribution, we derive a generalization on of the cross-section logit model to enable it to deal with sequences of discrete events in panel data. This model is applied to panel data on labor force participation of married women. One of our findings is that the distribution of participation probabilities is U shaped, indicating that most women have participation probabilities near zero or near one.

Paper (@JSTOR)

Journal of Political Economy, (February 1977), 85(1), 27-58, read at the Third World Econometric Society Meetings, Toronto, 1975.

Workforce, Conditional probabilities, Economic models, Political economy, Shadow prices, Women, Transition probabilities, Labor supply, Economic analysis1977 Feb
The Impact of the Government on the Labor Market Status of Black Americans: A Critical ReviewJames J. Heckman and R. Butler

in L. Hausman, (ed), Equal Rights and Industrial Relations, Madison, Wisconsin: Industrial Relations Research Association, Ch. 9.

1977 Jan
An Economic Analysis of the Contract Compliance ProgramJames J. Heckman

Essay in Labor Market Analysis and Economic Demography in Memory of Peter Comay, (Halstead, 1977).

1977 Jan
A Partial Survey of Recent Research on the Labor Supply of WomenJames J. Heckman

Paper (@JSTOR)

AEA Papers and Proceedings, (May 1978). Invited paper, presented to the American Economic Association, New York, 1977.

Labor supply, Workforce, Wage rate, Economic models, Recreation, Income estimates, Population estimates, Substitution effect, Income inequality, Labor force surveys1978 May
New Evidence on the Dynamics of Female Labor SupplyJames J. Heckman

in E. Andrews and C. Lloyd (eds.), Women in the Labor Market. Columbia University Press, 1978. Presented at a Labor Department Conference, “Women in the Labor Market,” Columbia University, September 1977.

1978 Jan
IntroductionJames J. Heckman

Chapter (@NBER)

Annals of Economic and Social Measurement, Special issue on Discrete, Qualitative and Limited Dependent Variables, (December, 1976)

1976 Dec
The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent VariablesJames J. Heckman

This paper presents a unified treatment of statistical models for truncation, sample selection and limited dependent variables. A simple estimator is proposed that permits estimation of those models by least squares and probit analysis. In an empirical example, it is shown that the estimator yields estimates close to the maximum likelihood estimates.

Paper (@REPEC)

Annals of Economic and Social Measurement, (December 1976)

1976 Dec
Does The Contract Compliance Program Work?: An Analysis of Chicago DataJames J. Heckman and K. Wolpin

Paper (@SAGE)

Industrial and Labor Relations Review, (Summer 1976). Presented at a Symposium on the Effect of the Office of Federal Contract Compliance on Minority Status, Cornell University, May 1975.

1976 Jul
A Life Cycle Model of Earnings, Learning and ConsumptionJames J. Heckman

Paper (@JSTOR)

Journal of Political Economy, (August 1976), 84(2), pt. 2, S11-S44.

Human capital, Recreation, Interest rates, Utility functions, Present value, Depreciation, Concavity, Bequests, Political economy, Income taxes1976 Aug
Simultaneous Equation Models with both Continuous and Discrete Endogenous Variables With and Without Structural Shift in the EquationsJames J. Heckman

in Goldfeld and Quandt (eds.), Studies in Nonlinear Estimation, Ballinger, (1976).

1976 Jul
Estimation of a Stochastic Model of Reproduction: An Econometric ApproachJames J. Heckman and R. Willis

In the past few years, there has been substantial progress in the application of the economic theory of household decision making to human fertility behavior. Theoretical emphasis has been given to the effects of the costs of parental tine and money resources devoted to rearing children on the demand for the total number of children in a static framework under conditions of certainty. Empirical work has focused on explaining variation in the number of children ever born to women, who have completed their childbearing, as a function of measures of the household’s total resources and the opportunity cost of time, especially the value of the wife’s time. One important objection to static theories of fertility is their failure to deal with the implications of the simple fact that reproduction is a stochastic biological process in which the number and timing of births and the traits of children (e.g. sex, intelligence, health, etc.) are uncertain and not subject to direct control. In this paper, we report some initial results of a study in progress whose goal is to develop an integrated theoretical and econometric model of fertility behavior within a sequential stochastic framework. The principal contribution of the paper is to the development of an appropriate econometric methodology for dealing with some new econometric problems that arise in such models.

Working Paper(@NBER)

in N. Terleckyj (ed.), Household Production and Consumption, 40, 99-145, (New 25 August 12, 2020 York: Columbia University Press, 1976). Presented at the Conference on Research in Income and Wealth, Washington, D.C., November 1973.

1976 Jan
Measuring the Effect of an Antidiscrimination ProgramJames J. Heckman and O. Ashenfelter

Since 1941, six Executive Orders have been issued forbidding Federal government contractors from discriminating against minority workers. In principle, all prospective contractors are required to demonstrate compliance with the law before a contract is let. The potential penalties are severe: failure to comply with the law may result in revocation of current contracts and suspension of the right to bid on future contracts. Despite these provisions, doubts have been raised about the effectiveness of the Orders. Defenders of the Orders cite cases in which contract award dates have been postponed until firms have taken steps toward compliance with the law. In this paper, we investigate these competing claims using data from 40,445 establishments sampled in 1966 and 1970. In the first section of this paper, we distinguish what can be measured from what cannot. We develop a framework to measure and interpret program effects. In the second section we discuss the design of our sample and present results of an analysis of the randomness of this sample. In the third and concluding section, we present the estimates and discuss their plausibility.

Paper (@REPEC)

July 1974 mimeo, in Evaluating The Labor Market Effects of Social Programs, (Princeton, N.J.: Princeton University Press, 1975). Presented at the American Economic Association Winter Meetings, 1972.

1974 Jul
Estimating Labor Supply FunctionsJames J. Heckman and O. Ashenfelter

in G. Cain and H. Watts (eds.), Labor Supply and Income Maintenance, (Chicago: Markham Publishing Company, 1974).

1974 Jun
A Stochastic Model of Reproduction: An Econometric ApproachJames J. Heckman and R. Willis

Papers and Proceedings of the American Statistical Association, Social Statistics Section, 1974.

1974 Apr
Life Cycle Consumption and Labor Supply: An Explanation of the Relationship Between Income and Consumption over the Life CycleJames J. Heckman

Paper (@JSTOR)

American Economic Review, (March 1974)

Wage rate, Recreation, Consumer goods, Consumer preferences, Interest rates, Consumer economics, Consumer prices, Labor supply, Economic uncertainty1974 Mar
The Effect of Day Care Programs on Women’s Work EffortJames J. Heckman

Paper (@JSTOR)

Journal of Political Economy, (March/April 1974). Reprinted in T.W. Schultz (ed.), Economics of the Family: Marriage, Children, and Human Capital, (University of Chicago Press, 1974), 491-518.

Child care, Indifference curves, Wage rate, Marginal rate of substitution, Women, Recreation, Estimation methods, Budget constraints, Market prices1974 Mar
Shadow Prices, Market Wages and Labor SupplyJames J. Heckman

Paper (@JSTOR)

Econometrica, (July 1974) 42(4): 679– 94.

Labor supply, Wage rate, Shadow prices, Recreation, Labor markets, Estimation methods, Mathematical functions, Women, Maximum likelihood estimation, Net assets1974 Jul
The Estimation of Income and Substitution Effects in a Model of Family Labor SupplyJames J. Heckman and S. Polachek

This paper contains the formulation of the theoretical restrictions on the labor supply functions of the husband and wife in a model of family labor supply in a manner that makes them readily amenable to test and, if they are not rejected, to imposition onto the data. It also contains an application of the proposed empirical counterparts of the theoretical equations to cross-sectional data from the 1960 U.S. Census of Population.

Download (@JSTOR)

Econometrica, (January 1974), 42(1), 73-86. Presented at the Econo- metric Society Winter Meetings, (1971).

Labor supply, Workforce, Standard error, Labor demand, Income maintenance programs, Wage rate, Covariance matrices, Wives, Elasticity of demand1974 Jan
Empirical Evidence on the Functional Form of the Earnings-Schooling RelationshipJames J. Heckman and S. Polachek

This article presents empirical evidence on the correct functional form of the regression relationship between earnings as regress and schooling and experience as regressors. Evidence from several bodies of data suggests that among simple transformations the natural logarithm of earnings is the correct dependent variable while the best simple specification of the regressors is one advanced by Jacob Mincer on theoretical grounds.

Paper (@JSTOR)

Journal of the American Statistical Association, 69(346), 350- 354. Also, NBER, mimeo.

1972 Oct
A Note on Second Best Conditions for Public GoodsJames J. Heckman and R. Nelson

Public Finance, 27(1):73-74 (1972).

1972 Jan