## Job-Market Paper

Class Rank and Sibling Spillover Effects

Abstract:

Household responses to changes in school inputs can change drastically the returns to public investment. I study an important and understudied aspect of family decision-making: how parents and younger siblings adjust their behaviors in response to the relative academic achievement of an older sibling within her cohort. I propose a novel identification strategy for sibling spillover effects in school achievement which exploits variation in child rank in school. I use administrative records from the Netherlands, where pupils leave primary school with a national standardized test score and a tracking recommendation. Variation in class rank conditional on ability and cohort-by-school fixed effects is credibly exogenous in this setting, and isolates sibling spillovers driven by behavioral and psychological mechanisms, net of direct transmission of human capital. A 1 standard deviation (SD) increase in child rank decreases their younger sibling’s test scores by around 2%SD. Higher-ranked older sibling experience faster own human capital accumulation, and same-sex older siblings have a stronger influence on younger siblings. I further show that migrant parents increase investments in school quality and speaking Dutch at home. Older sibling ranks also depress teachers’ tracking advice particularly for migrant children, suggesting that teachers’ form harsher expectations about younger siblings. My findings indicate that behavioral and psychological mechanisms contribute to sibling spillover effects, and school inputs are important drivers of within- family human capital spillovers.

## Submitted and Under Review

Abstract

Studying with higher ability peers increases student performance, yet we have little idea why. We exploit mandated random assignment of students to classrooms and find positive peer effects on test scores. With rich data on nineteen potential mechanisms, we then estimate how effects on attitudes, parents, and teachers could drive these results. Higher-achieving peers reduce student effort, increase student university aspirations, increase parental time investments and parental strictness, and have precise null effects elsewhere. None of these mechanisms, however, explain our peer effect on test scores. Our novel method to detect cluster violations of random assignment is of independent interest.

Abstract:

Studying with higher ability peers increases student performance, yet we have little idea why. We exploit mandated random assignment of students to classrooms and find positive peer effects on test scores. With rich data on nineteen potential mechanisms, we then estimate how effects on attitudes, parents, and teachers could drive these results. Higher-achieving peers reduce student effort, increase student university aspirations, increase parental time investments and parental strictness, and have precise null effects elsewhere. None of these mechanisms, however, explain our peer effect on test scores. Our novel method to detect cluster violations of random assignment is of independent interest.

• [2] Child Health and Parental Responses to an Unconditional Cash Transfer at Birth, with John Lynch, Aurélie Meunier, Rhiannon Pilkington, and Stefanie Schurer.
Abstract

We estimate the impact on child health of the unanticipated introduction of the Australian Baby Bonus, a $3,000 one-off unconditional cash transfer at birth. Using regression discontinuity methods and linked administrative data from South Australia, we find that treated babies had fewer preventable, acute, and urgent hospital presentations—medical care available without co-payments—in the first two years of life. The payment later increased demand for elective care, which requires planning, medical referrals, and often co-payments. Our effects are strongest for disadvantaged families. Our findings suggest that up to 34% of the payout were recouped within the first year. Abstract: We estimate the impact on child health of the unanticipated introduction of the Australian Baby Bonus, a$3,000 one-off unconditional cash transfer at birth. Using regression discontinuity methods and linked administrative data from South Australia, we find that treated babies had fewer preventable, acute, and urgent hospital presentations—medical care available without co-payments—in the first two years of life. The payment later increased demand for elective care, which requires planning, medical referrals, and often co-payments. Our effects are strongest for disadvantaged families. Our findings suggest that up to 34% of the payout were recouped within the first year.

• [3] From Subsidies to Loans: The Effects of a National Student Finance Reform on the Choices of Secondary School Students, with Jan Kabátek.
Abstract

We analyse the effects of a national student finance reform in the Netherlands, which replaced universal subsidies for higher education students by low-interest loans. We show that this reform had a large impact on education choices of secondary school students, lowering their enrolments in college-preparing tracks and increasing the share of students specializing in STEM subjects. The reform also affected the living arrangements of new college entrants. Our findings highlight that secondary school students respond to the modes of higher education financing well ahead of their graduation, and that financial aid uncertainty alone can deter many from pursuing higher education.

Abstract:

We analyse the effects of a national student finance reform in the Netherlands, which replaced universal subsidies for higher education students by low-interest loans. We show that this reform had a large impact on education choices of secondary school students, lowering their enrolments in college-preparing tracks and increasing the share of students specializing in STEM subjects. The reform also affected the living arrangements of new college entrants. Our findings highlight that secondary school students respond to the modes of higher education financing well ahead of their graduation, and that financial aid uncertainty alone can deter many from pursuing higher education.

• [4] Two Decades of Welfare Reforms in Australia: How Did They Affect Single Mothers and Their Children?, with Stefanie Schurer and Angela Zhang.
Abstract

Worldwide, single mothers are profoundly time and income constrained, making them heavily reliant on government transfers. We examine how welfare reforms that introduced mutual obligations affected the economic position of single mothers and the development of their children over the past two decades in Australia. Using nationally representative longitudinal data, we show that disposable incomes of single-mother households were significantly reduced relative to partnered mothers since the 2005 Welfare-to-Work Act came into effect in July 2006, a downward trend that was aggravated by the Global Financial Crisis and the 2013 suspension of grandfathered single parenting payment rules. The reform diminished parenting and family payments for single mothers, who compensated income loss by increasing reliance on disability pension payments, work hours, and child-care expenditures. We then use nationally representative cohort data to estimate the impact of single motherhood on child skill development, following children who entered primary school when their mothers were affected by the Welfare-to-Work reform. We find unadjusted single-motherhood gaps of 0.2 SD in cognitive and 0.3 SD in non-cognitive skills. Non-cognitive skill gaps are only partially explained by differences in observable characteristics, while cognitive skill gaps are fully explained by observable characteristics. Differences in disposable household income between single and partnered mother households explain over 50% of the observed cognitive ability gaps in childhood and 25% in late adolescence. In the presence of positive spillover effects, we propose that welfare payments to vulnerable families may function as a social investment rather than a sunk cost.

Abstract:

Worldwide, single mothers are profoundly time and income constrained, making them heavily reliant on government transfers. We examine how welfare reforms that introduced mutual obligations affected the economic position of single mothers and the development of their children over the past two decades in Australia. Using nationally representative longitudinal data, we show that disposable incomes of single-mother households were significantly reduced relative to partnered mothers since the 2005 Welfare-to-Work Act came into effect in July 2006, a downward trend that was aggravated by the Global Financial Crisis and the 2013 suspension of grandfathered single parenting payment rules. The reform diminished parenting and family payments for single mothers, who compensated income loss by increasing reliance on disability pension payments, work hours, and child-care expenditures. We then use nationally representative cohort data to estimate the impact of single motherhood on child skill development, following children who entered primary school when their mothers were affected by the Welfare-to-Work reform. We find unadjusted single-motherhood gaps of 0.2 SD in cognitive and 0.3 SD in non-cognitive skills. Non-cognitive skill gaps are only partially explained by differences in observable characteristics, while cognitive skill gaps are fully explained by observable characteristics. Differences in disposable household income between single and partnered mother households explain over 50% of the observed cognitive ability gaps in childhood and 25% in late adolescence. In the presence of positive spillover effects, we propose that welfare payments to vulnerable families may function as a social investment rather than a sunk cost.

## Ongoing Projects

• [2] The Impact of Low-Income Priorities Points on School Choice and Student Outcomes, with Shushanik Margaryan and José Montalban Castilla.
• Status: Preliminary Results. Presented by José at the IZA 2021 Junior/Senior Symposium.