Heckman's Work with The American Bar Foundation

synopsis by Thomas Lyons

• Heckman, James, Anne Layne-Farrar, and Petra Todd, 1997, "Human Capital Pricing Equations with an Application to Estimating the Effect of Schooling Quality on Earnings," Review of Economics and Statistics , pp. 562-609.
  
  Abstract : 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 educationa 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.

• Heckman, James, Anne Layne-Farrar, and Petra Todd, 1996, "Does Measured School Quality Really Matter? An Examination of the Earnings-Quality Relationship", in G. Burtless, ed. Does Money Matter? The Link between Schools, Student Achievement and Adult Success. , Washington, DC: Brookings Institution.

• Heckman, James, Thomas Lyons, and Petra Todd, "Understanding Black-white Wage Differentials Over the Last Fifty Years", Working paper, Department of Economics, University of Chicago.
  
  Abstract : Improvements in education are universally acknowledged to be important contributors to black economic progress. Rising returns to education are said to arise partly from improvements in the quality of southern black schools over the first half of the twentieth century. This paper reexamines the empirical support for these findings with special consideration given to the role of functional form assumptions and sample inclusion criteria in generating them. It shows that estimates obtained by standard wage decomposition methods can be highly sensitive to restrictions on functional form. Estimates from a more flexible earnings specification put less emphasis on human capital supply-side factors in explaining changes in the black-white wage gap over time. Seemingly innocuous sample inclusion restrictions, such as a lower income bound restriction imposed to guard against outliers, are shown to be an important source of discrepancies across empirical studies.

• Donohue, John, James Heckman, and Petra Todd, "Social Action, Private Choice and Philanthropy: Understanding the Sources of Improvement in Schooling Quality in Georgia, 1910-1960," Working paper, Department of Economics, University of Chicago.
  
  Abstract : Improvements in educational attainment and in educational quality are universally acknowledged to be major contributors to Black economic progress in the twentieth century. The sources of these improvements are less well understood. Many scholars implicitly assume improvements in schooling reflect private choices. In fact, schooling is publicly provided, and increases in the quality and availability of Black schools in the South occurred at a time when Blacks were excluded from the political process. This paper demonstrates the important roles of social action, especially NAACP litigation, and private philanthropy, in improving access and quality of public schooling in Georgia and in the rest of the South in the first half of the century. Analyses that pit rising school quality as an alternative to social action in explaining Black progress miss the important role of social activism in promoting schooling quality and hence in elevating the economic status of African Americans.

• Heckman, James, and Brook Payner, 1989, "Determining the Impact of Federal Antidiscrimination Policy on the Economic Status of Blacks: a Study of South Carolina," American Economic Review , 79 (1), 138-177.
  
  Abstract : 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-1960's. 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.
  
  
• Donohue, John and James Heckman, 1991, "Continuous Versus Episodic Change: the Impact of Civil Rights Policy on the Economic Status of Blacks," Journal of Economic Literature , 29 , 1603-1643.
  
  Abstract : This essay critically examines the available evidence on the causes of black economic advance in order to assess the contribution of Title VII of the 1964 Civil Rights Act, which forbids discrimination in employment. Professional economists are currently divided in their assessment of the contribution of federal civil rights policy to the elevation of black economic status. One group of scholars contend that long-term secular trends in migration and educational attainment explain black economic progress. Another group focusses on the improvements in relative earnings, wages, and occupational status that occured in the 1960's, coinciding with the passage of the Civil Rights Act and the establishment of the Office of Federal Contract Compliance, the passage of the Voting Rights Act, and other Federal initiatives design to eliminate discrimination against blacks. The sources of black improvement since 1940 differ among decades; the changes are episodic rather than continuous. The Northern migration of blacks played a major role until the mid-1960s, but not after 1964. There is a consensus in sociology and economics that the lack of growth in economic progress among blacks, relative to whites, since 1975 is due to a decline in the relative wages paid to unskilled versus skilled workers. However, no consensus has emerged regarding black economic progress between 1960 and 1975. We conclude that a variety of policies and factors may be responsible for black economic progress in this period. 10 - 20% of the gains were generate by selective attrition of blacks from the labor force. Another 15 - 20% of the improvement, according to Card and Krueger (1990,1991), can be attributed to improvements in schooling quality for blacks. However, a considerable portion of black economic gains cannot be explained using traditional supply-side arguments, which suggests a large role for government intervention. As important as these interventions may have been, they are difficult to verify using standard econometric tests because the pressure applied by the Federal government is not easily measured. This paper will present a new analysis of the effect of federal civil rights legislation and describe how much of the economic progress of blacks can be attributed directly to this legislation, and how much must be attributed to general social change.