Kenneth Y. Chay

The Costs of Low Birth Weight

Low birth weight (LBW) infants experience severe health and developmental difficulties that can impose large costs on society. However, estimates of the return to LBW-prevention from cross-sectional associations may be biased by omitted variables, such as genetic factors. To address this, we compare the hospital costs, health at birth, and infant mortality rates between heavier and lighter infants from all twin pairs born in the United States. We also examine the effect of maternal smoking during pregnancy—the leading risk factor for LBW in the United States—on health among singleton births after controlling for detailed background characteristics. Both analyses imply substantially smaller effects of LBW per se than previously thought, suggesting two possibilities: 1) existing estimates overstate the true costs and consequences of LBW by at least a factor of four and by as much as a factor of twenty; or 2) different LBW-preventing interventions have different health and cost consequences, implying that policy efforts that presume a single return to reducing LBW will be suboptimal.

Identification and Estimation of Dynamic Binary Response Panel Data Models: Empirical Evidence Using Alternative Approaches

We examine the roles of sample initial conditions and unobserved individual effects in consistent estimation of the dynamic binary response panel data model. Different specifications of the model are estimated using female welfare and labor force participation data from the Survey of Income and Program Participation (SIPP). These include alternative random effects models, in which the conditional distributions of both the unobserved heterogeneity and the initial conditions are specified, and fixed effects conditional logit models that make no assumptions on either distribution. There are several findings. First, the hypotheses that the sample initial conditions are either exogenous or in equilibrium are rejected by the data. Misspecification of the initial conditions results in drastically overstated estimates of the state dependence and understated estimates of the short- and long-run effects of children on labor force participation. The fixed effects conditional legit estimates are similar to the estimates from the random effects model that is flexible with respect to both the initial conditions and the correlation between the unobserved heterogeneity and the covariates. Heterogeneity appears to explain about 50% and 70% of the overall persistence in welfare and labor force participation, respectively. In addition, for female labor force participation, there is evidence that fertility choices are correlated with both unobserved heterogeneity and pre-sample participation histories.

The Clean Air Act of 1970 and Adult Mortality

Previous research has established an association between air pollution and adult mortality. However, studies utilizing short-term fluctuations in pollution may detect mortality changes among the already ill or dying, while prospective cohort studies, which utilize geographic differences in long-run pollution levels, may suffer from severe omitted variables bias. This study utilizes the long-run reduction in total suspended particulates (TSPs) pollution induced by the Clean Air Act of 1970, which mandated aggressive regulation of local polluters in heavily polluted counties. We find that regulatory status is associated with large reductions in TSPs pollution but has little association with reductions in either adult or elderly mortality. These findings are interpreted with caution due to several caveats.

Civil Rights, the War on Poverty, and Black-White Convergence in Infant Mortality in the Rural South and Mississippi

For the last sixty years, African-Americans have been 75% more likely to die during infancy as whites. From the mid-1960s to the early 1970s, however, this racial gap narrowed substantially. We argue that the elimination of widespread racial segregation in Southern hospitals during this period played a causal role in this improvement. Our analysis indicates that Title VI of the 1964 Civil Rights Act, which mandated desegregation in institutions receiving federal funds, enabled 5,000 to 7,000 additional black infants to survive infancy from 1965-1975 and at least 25,000 infants from 1965-2002. We estimate that by themselves these infant mortality benefits generated a welfare gain of more than

The Impact of Federal Civil Rights Policy on Black Economic Progress: Evidence From the Equal Employment Opportunity Act of 1972

7 billion (2005

Changes in relative wages in the 1980s Returns to observed and unobserved skills and black-white wage differentials

) for 1965-1975 and more than

Birth Cohort and the Black-White Achievement Gap: The Roles of Access and Health Soon After Birth

27 billion for 1965-2002. These findings indicate that the benefits of the 1960s Civil Rights legislation extended beyond the labor marker and were substantially larger than recognized previously.

Early Life Environment and Racial Inequality in Education and Earnings in the United States

The Equal Employment Opportunity Act (EEOA) of 1972 extended civil rights coverage to employers with 15–24 employees, while leaving unaffected the civil rights protection for employees of larger firms. In conjunction with pre-existing state fair employment practice (FEP) laws, the EEOA provides a “natural experiment” in which the treatment and control groups are defined by differences across industries in the fraction of workers employed in the newly covered establishments and across states in the scope of the FEP laws. Applying the treatment and control group methodology to Current Population Survey data, the author finds that there were large shifts in the employment and pay practices of the industries most affected by the amendment. The timing of the relative gains and their concentration by industry and region provide evidence that the EEOA had a positive impact on the labor market status of African-Americans.

Does Air Quality Matter? Evidence from the Housing Market

During the 1980s, did the sharp increase in the college-high school wage differential represent a rise in the college premium, or a growth in the payoff to unmeasured ability or skill? Can the slowdown in black-white wage convergence or the widening black-white gap among young workers witnessed during the 1980s be explained by a rise in the return to pre-labor market factors correlated with race? In this study, we show that it is possible to use across-group variation in within-group wage variances from multiple periods to identify the change in the return to unobservable skill, within a relatively unrestrictive error-components model of wages. The identification does not require full specification of the time-series properties or the functional form of the errors. Male earnings data from the CPS show that there is useful variation in within-group wage variances -- enough to estimate a growth in the return to unobservable skill of about 10 to 20 percent during the 1980s. In our analysis, these magnitudes imply that even alter controlling for the effects of an increase in the payoff to unobservable skill, college-educated workers still gain substantially relative to high school-educated workers, while young black men still experience a significant wage decline relative to white men during the l980s.

The Central Role of Noise in Evaluating Interventions that Use Test Scores to Rank Schools

One literature documents a significant, black-white gap in average test scores, while another finds a substantial narrowing of the gap during the 1980s, and stagnation in convergence after. We use two data sources – the Long Term Trends NAEP and AFQT scores for the universe of applicants to the U.S. military between 1976 and 1991 – to show: 1) the 1980s convergence is due to relative improvements across successive cohorts of blacks born between 1963 and the early 1970s and not a secular narrowing in the gap over time; and 2) the across-cohort gains were concentrated among blacks in the South. We then demonstrate that the timing and variation across states in the AFQT convergence closely tracks racial convergence in measures of health and hospital access in the years immediately following birth. We show that the AFQT convergence is highly correlated with post-neonatal mortality rates and not with neonatal mortality and low birth weight rates, and that this result cannot be explained by schooling desegregation and changes in family background. We conclude that investments in health through increased access at very early ages have large, long-term effects on achievement, and that the integration of hospitals during the 1960s affected the test performance of black teenagers in the 1980s.