Good students tend to pick good schools. This selection mechanism makes it incredibly hard to estimate what effect education actually has. That graduates from some programs earn more could be because their skills improved more in school (a causal effect of education), but it could also be because they were more talented to start with (selection). In this research program I use statistical techniques to properly estimate the component that is causal.
To do so, I make use of archived applications to Swedish universities going back all the way to 1977. When there are more applicants than available spots, the system admits those with the highest scores. This creates natural experiments that I can exploit. For each program, some students end up above the cutoff and others end up below. Since the exact cutoffs changes from year to year, it is impossible to know beforehand if one will be admitted, and admission among those close to the cutoff can be considered random. Using data around the cutoff like an experiment is called a regression discontinuity design and is a powerful tool for causal identification. It is the backbone of all studies in this research program.
My work on this topic is supported by IFAU (152/2020), The Jan Wallander and Tom Hedelius Foundation (W18-0005) and Forte (2016-07099).
The first publication using this data is the paper “O Brother, Where Start Thou? Sibling Spillovers on College and Major Choice in Four Countries”, published in the Quarterly Journal of Economics. It is an international collaboration where we study the causal effect of older sibling educational trajectories on younger sibling choices.
We study Chile, Croatia, Sweden, and the United States, and find individuals are more likely to apply to both the same college and the same college-major combination as their older siblings. The effect is similar in size across all four countries, despite the vast differences in education policy and institutions. In fact, Sweden and Chile are on opposite extremes of all OECD countries when it comes to average college earnings premia.
Interestingly we see younger siblings follow their older even when the alternative where they would go is seemingly worse than the counterfactual. However, we see no effect to alternatives from which the older sibling drops out.
Our findings underscore the importance of influence from close peers in life-changing decisions such as university education choice and could partly explain why inequalities in educational attainment between social groups persist.
O Brother, Where Start Thou? Sibling Spillovers on College and Major Choice in Four Countries
Quarterly Journal of Economics, 2021
Family and social networks are widely believed to influence important life decisions, but causal identification of those effects is notoriously challenging. Using data from Chile, Croatia, Sweden, and the United States, we study within-family spillovers in college and major choice across a variety of national contexts. Exploiting college-specific admissions thresholds that directly affect older but not younger siblings’ college options, we show that in all four countries a meaningful portion of younger siblings follow their older sibling to the same college or college-major combination. Older siblings are followed regardless of whether their target and counterfactual options have large, small, or even negative differences in quality. Spillover effects disappear, however, if the older sibling drops out of college, suggesting that older siblings’ college experiences matter. That siblings influence important human capital investment decisions across such varied contexts suggests that our findings are not an artifact of particular institutional detail but a more generalizable description of human behavior. Causal links between the postsecondary paths of close peers may partly explain persistent college enrollment inequalities between social groups, and this suggests that interventions to improve college access may have multiplier effects.
Work in Progress
Inheritance of fields of study
Winner of the Distinguished CESifo Affiliate Award 2023.
University graduates are more than three times as likely to hold a degree in the field their parent graduated from. To estimate how much of this association is caused by the educational choices of parents, I exploit admission thresholds to university programs in a regression discontinuity design. I study individuals who applied to Swedish universities between 1977 and 1992 and evaluate how their enrollment in different fields of study increases the probability that their children later study the same topic. I find strong causal influence. At the aggregate level, children become 50% more likely to graduate from a field if their parent has previously enrolled in it. The effect is positive for most fields, but varies substantially in size. Technology, engineering, medicine, business exhibit the largest, significant, effects. For these fields, parental enrollment increases child graduation probability with between 2.0 and 12.8 percentage points. I show that the parent's labor market experience plays an important role in explaining the results, but parental field enrollment does not increase subject-specific skills, nor is it associated with higher returns to earnings. I find little evidence for comparative advantage being the key driver of field inheritance. Rather, parents seem to function as role models, making their own field choice salient. This is indicated by the fact that children become less likely to follow parents with weak labor market prospects, and that children are more likely to follow the parent with the same gender.
Business Education and Portfolio Returns
Draft available to download. Comments appreciated.
We provide evidence of a positive causal link between financial knowledge acquired through business education and returns on stock investments. Using exogenous variation generated by admission thresholds to university business programs in Sweden, we document that early investments in financial sophistication causes individuals to invest significantly more in the stock market, to earn higher portfolio returns, and to end up accumulating higher levels of wealth. Investments in financial sophistication at the launch of economic life thus significantly alters the life cycle wealth profiles of individuals.
Relative Returns to Swedish College Fields
Being reworked with new, long-run, earnings data.