David S. Loughran

Endowments and Parental Investments in Infancy and Early Childhood

This article tests whether parents reinforce or compensate for child endowments. We estimate how the difference in birth weight across siblings impacts specific parental investments: breast-feeding, well-baby visits, immunizations, and preschool attendance. Our results indicate that normal-birth-weight children are 5%–11% more likely to receive early childhood parental investments than their low-birth-weight siblings. Moreover, the presence of additional low-birth-weight siblings in the household increases the likelihood of investments such as well-baby visits and immunizations for normal-birth-weight children. These results suggest that parental investments in early childhood tend to reinforce endowment differences.

Why Wait?: The Effect of Marriage and Childbearing on the Wages of Men and Women

The authors use data from the earlier and later cohorts of the National Longitudinal Survey of Youth to estimate the effect of marriage and childbearing on wages. Their estimates imply that marriage lowers female wages by between two and four percent in the year of marriage. Marriage also lowers the wage growth of men and women by about two and four percentage points, respectively. A first birth lowers female wages by between two and three percent, but has no effect on wage growth. Male wages are unaffected by childbearing. These findings suggest that early marriage and childbearing can lead to substantial decreases in lifetime earnings.

Elderly Labor Supply: Work or Play?

Approximately 15 percent of individuals over the age of 65 are employed. Due to the apparent reversal in the trend toward early retirement and the aging of the U.S. population, these individuals are becoming an increasingly important part of the labor force. However, very little research has examined labor market behavior in this population. In this paper, the authors examine a series of questions in an attempt to better understand why the elderly continue to work. The results indicate that labor supply is concentrated among the most educated, wealthiest, and healthiest elderly. Despite this, the authors find that the wages of the elderly are low both relative to younger populations and relative to the wages they earned when they themselves were young. Among individuals over the age of 70, the authors find that changes in health status dominate labor market transitions. Overall, the findings suggest that non-pecuniary considerations play an important role in determining elderly labor supply decisions.

The effect of the social security earnings test on male labor supply: New evidence from survey and administrative data

Despite numerous empirical studies, there is surprisingly little agreement about whether the Social Security earnings test affects male labor supply. In this paper, we provide a comprehensive analysis of the labor supply effects of the earnings test using longitudinal administrative earnings data and more commonly used survey data. We find that the response to the earnings test in survey data is obfuscated by measurement error and labor market rigidities. Accounting for these factors, our results suggest a consistent and substantial response to the earnings test, especially for younger men.

Deterring Fraud: The Role of General Damage Awards in Automobile Insurance Settlements

Awards for pain and suffering and other noneconomic losses account for over half of all damages awarded under third-party auto insurance bodily injury settlements. This article hypothesizes that third-party insurers use general damage awards to reduce the incentive to submit exaggerated claims for specific damages for injuries and lost wages. Consistent with this hypothesis, the article finds evidence using data on over 17,000 closed bodily injury claims that special damage claims that exceed their expected value receive proportionally lower general damage awards than claims that do not. Among the implications of this research is the possibility that insurers will be less zealous in challenging fraudulent special damage claims under a third-party insurance regime than they will be under a first-party insurance regime in which access to general damages is limited.

Do the Elderly Respond to Taxes on Earnings? Evidence from the Social Security Retirement Earnings Test

The effective tax on earnings embodied in the Social Security retirement earnings test has been as high as 50 percent. Despite numerous empirical studies, there is surprisingly little agreement about whether the earnings test affects male labor supply. In this paper, the authors provide a comprehensive analysis of the earnings test for men using longitudinal administrative earnings data and more commonly used survey data. They find that much of the response in survey data is obfuscated by measurement error and labor market rigidities. Their results suggest a consistent and substantial response to the earnings test, especially for younger men.

The response of household parental investment to child endowments

The theoretical and empirical literature on parental investment focuses on whether child-specific parental investments reinforce or compensate for a childs initial endowments. However, many parental investments, such as neighborhood quality and family size and structure, are shared wholly or in part among all children in a household. The empirical results of this paper imply that such household parental investments compensate for low endowments, as proxied by low birth weight.

WHAT HAPPENS TO THE EARNINGS OF MILITARY RESERVISTS WHEN THEY ARE ACTIVATED? EVIDENCE FROM ADMINISTRATIVE DATA

From 2001 through 2008, the US Department of Defense (DoD) has activated more than 700,000 military reservists. Activation imposes a variety of costs on reservists. Among those costs is potentially a decline in total earnings during the period of activation. In this paper, we use administrative data on military and civilian earnings to estimate how earnings change when reservists are activated and the causal effect of activation. Contrary to press accounts and DoD survey evidence, our estimates indicate that, on average, the earnings of activated reservists increase substantially when they are activated and that earnings losses are not common.

How Important are Wages to the Elderly? Evidence from the New Beneficiary Data System and the Social Security Earnings Test

More than 40 percent of Social Security beneficiaries continue to work after age 65. This research investigates the extent to which these individuals substitute labor across periods in response to anticipated wage changes induced by the Social Security earnings test. While we find that a disproportionate number of individuals choose earnings within a few percentage points of the earnings limit, we find no evidence that these individuals substitute labor supply between