Discussion Paper No. 514
October 31, 2024
Skills and Earnings: A Multidimensional Perspective on Human Capital
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Abstract:
The multitude of tasks performed in the labor market requires skills in many dimensions. Traditionally, human capital has been proxied primarily by educational attainment. However, an expanding body of literature highlights the importance of various skill dimensions for success in the labor market. This paper examines the returns to cognitive, personality, and social skills as three important dimensions of basic skills. Recent advances in text analysis of online job postings and professional networking platforms offer novel methods for assessing a wider range of applied skill dimensions and their labor market relevance. A synthesis and integration of the evidence on the relationship between multidimensional skills and earnings, including the matching of skill supply and demand, will enhance our understanding of the role of human capital in the labor market.
Keywords:
skills; human capital; education; labor market; earnings; tasks; cognitive skills; personality; social skills; multidimensional skills;
JEL-Classification:
J24; I26;
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Discussion Paper No. 510
September 19, 2024
Motivated Political Reasoning: On the Emergence of Belief-Value Constellations
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We study the relationship between moral values (“ought” statements) and factual beliefs (“is” statements). We show that thinking about values affects the beliefs people hold. This effect is mediated by prior political leanings, thereby contributing to the polarization of factual beliefs. We document these findings in a pre-registered online experiment with a nationally representative sample of over 1,800 individuals in the US. We also show that participants do not distort their beliefs in response to financial incentives to do so, suggesting that deep values exert a stronger motivational force than financial incentives.
Keywords:
motivated beliefs; values; polarization; experiment; reasoning;
JEL-Classification:
C90; D72; D74; D83; P16;
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Discussion Paper No. 506
July 8, 2024
Fairness in a Society of Unequal Opportunities
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Abstract:
Modern societies are characterized by widespread disparities in opportunities, which play a crucial role in creating income inequality. This paper investigates how individuals handle income inequality arising from these unequal opportunities. We report from a large-scale experimental study involving general populations in the United States and Scandinavia, where participants make consequential redistributive decisions as third-party ‘spectators’ for workers who faced unequal opportunities. Our findings provide strong evidence that a significant majority of people are willing to accept inequality caused by unequal opportunities, a position that markedly contrasts with their responses to inequality caused by luck. Two distinct forces drive greater acceptance of inequality under unequal opportunities: the tendency to mistakenly attribute the impact of unequal opportunities to inherent productivity, and the moral relevance attributed to choice differences caused by unequal opportunities. We further demonstrate a clear societal and political divide in responses to unequal opportunities, with Americans and right-wing voters exhibiting a greater acceptance of the resulting inequality, reflecting both differences in fairness views and attribution biases in these populations.
Keywords:
unequal opportunities; inequality acceptance; attribution bias; fairness views;
JEL-Classification:
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Discussion Paper No. 505
May 23, 2024
Do Narratives about Psychological Mechanisms Affect Public Support for Behavioral Policies?
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Behavioral policy, such as leveraging defaults, is increasingly employed by governments worldwide, but has sometimes faced public backlash, which limits political feasibility. We conducted a survey experiment with a large, representative sample to explore how the narrative describing the psychological mechanism by which a default rule impacts a socially significant outcome affects public approval. Respondents are presented with a vignette in which an unemployed person follows a default to participate in further training. We experimentally vary the narrative about his reasons for doing so. Compared to the baseline condition in which no information on the psychological mechanism is provided, voluntary ignorance, involuntary ignorance, perceived social expectations and perceived social pressure each reduce policy approval. These factors also lead to more negative perceptions of the default rule's impact on the decision maker’s welfare and autonomy. The benign mechanism of deliberate endorsement, however, does not significantly raise approval or perceptions. We show that these findings hold irrespective of assumed preferences and discuss their practical implications.
Keywords:
behavioral policy; public support; psychological mechanisms; default rule;
JEL-Classification:
D91; D83; I31; J68;
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Discussion Paper No. 502
April 10, 2024
An Axiomatization of the Random Priority Rule
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We study the problem of assigning indivisible objects to agents where each is to receive one object. To ensure fairness in the absence of monetary compensation, we consider random assignments. Random Priority, also known as Random Serial Dictatorship, is characterized by symmetry, ex-post efficiency and probabilistic (Maskin) monotonicity -- whenever preferences change so that a given deterministic assignment is ranked weakly higher by all agents, the probability of that assignment being chosen should be weakly larger. Probabilistic monotonicity implies strategy-proofness for random assignment problems and is equivalent on a general social choice domain; for deterministic rules it coincides with Maskin monotonicity.
Keywords:
random assignment; random priority; random serial dictatorship; ex-post efficiency ; probabilistic monotonicity; maskin monotonity ;
JEL-Classification:
C70; C78; D63;
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Discussion Paper No. 488
December 20, 2023
Automatability of Occupations, Workers' Labor-market Expectations, and Willingness to Train
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We study how beliefs about the automatability of workers' occupation affect labor-market expectations and willingness to participate in further training. In our representative online survey, respondents on average underestimate the automation risk of their occupation, especially those in high-automatability occupations. Randomized information about their occupations’ automatability increases respondents’ concerns about their professional future, and expectations about future changes in their work environment. The information also increases willingness to participate in further training, especially among respondents in highly automatable occupation (+five percentage points). This uptick substantially narrows the gap in willingness to train between those in high- and low-automatability occupations.
Keywords:
automation; further training; labor-market expectations; survey experiment; information;
JEL-Classification:
J24; O33; I29; D83;
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Discussion Paper No. 442
November 5, 2023
Fairness in Matching Markets: Experimental Evidence
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We investigate fairness preferences in matching mechanisms using a spectator design. Participants choose between the Boston mechanism or the serial dictatorship mechanism (SD) played by others. In our setup, the Boston mechanism generates justified envy, while the strategy-proof SD ensures envy-freeness. When priorities are merit-based, many spectators prefer the Boston mechanism, and this preference increases when priorities are determined by luck. At the same time, there is support for SD, but mainly when priorities are merit-based. Stated voting motives indicate that choosing SD is driven by concerns for envy-freeness rather than strategy-proofness, while support for the Boston mechanism stems from the belief that strategic choices create entitlements.
Keywords:
matching markets; school choice; voting; Boston mechanism; sincere agents; justified envy;
JEL-Classification:
D47; C92; I24; D74;
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Discussion Paper No. 433
October 24, 2023
Religion and Growth
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We use the elements of a macroeconomic production function—physical capital, human capital, labor, and technology—together with standard growth models to frame the role of religion in economic growth. Unifying a growing literature, we argue that religion can enhance or impinge upon economic growth through all four elements because it shapes individual preferences, societal norms, and institutions. Religion affects physical capital accumulation by influencing thrift and financial development. It affects human capital through both religious and secular education. It affects population and labor by influencing work effort, fertility, and the demographic transition. And it affects total factor productivity by constraining or unleashing technological change and through rituals, legal institutions, political economy, and conflict. Synthesizing a disjoint literature in this way opens many interesting directions for future research.
Keywords:
religion; growth; Christianity; Judaism; Islam; preferences; norms; institutions; capital; saving; financial development; human capital; education; population; labor; demography; fertility; total factor productivity; technological change; rituals; political economy; conflict;
JEL-Classification:
Z12; O40; N30; I25; O15;
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Discussion Paper No. 429
September 19, 2023
Can Patience Account for Subnational Differences in Student Achievement? Regional Analysis with Facebook Interests
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Decisions to invest in human capital depend on people’s time preferences. We show that differences in patience are closely related to substantial subnational differences in educational achievement, leading to new perspectives on longstanding within-country disparities. We use social-media data – Facebook interests – to construct novel regional measures of patience within Italy and the United States. Patience is strongly positively associated with student achievement in both countries, accounting for two-thirds of the achievement variation across Italian regions and one-third across U.S. states. Results also hold for six other countries with more limited regional achievement data.
Keywords:
patience; student achievement; regions; social media;
JEL-Classification:
I21; Z10;
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Discussion Paper No. 387
February 27, 2023
Transparency and Policy Competition: Experimental Evidence from German Citizens and Politicians
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A lack of transparency about policy performance can pose a major obstacle to welfare-enhancing policy competition across jurisdictions. In parallel surveys with German citizens and state parliamentarians, we document that both groups misperceive the performance of their state’s education system. Experimentally providing performance information polarizes citizens’ political satisfaction between high- and low-performing states and increases their demand for greater transparency of states’ educational performance. Parliamentarians’ support for the transparency policy is opportunistic: Performance information increases (decreases) policy support in high-performing (low-performing) states. We conclude that increasing the public salience of educational performance information may incentivize politicians to implement welfare-enhancing reforms.
Keywords:
yardstick competition; beliefs; information; citizens; politicians; survey experiment;
JEL-Classification:
H11; I28; D83;