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Infant Mortality, Post-College Jobs And Chapter 13 Bankruptcy

inthepapers

Every Monday, the National Bureau of Economic Research, a nonprofit organization made up of some of North America’s most respected economists, releases its latest batch of working papers. The papers aren’t peer-reviewed, so their conclusions are preliminary (and occasionally flat-out wrong). But they offer an early peek into some of the research that will shape economic thinking in the years ahead. Here are a few of this week’s most interesting papers:


Title: “Why is Infant Mortality Higher in the U.S. than in Europe?”

Authors: Alice Chen, Emily Oster, Heidi Williams

What they found: The high U.S. mortality rate for infants between 1 month and 12 months old is driven mostly by socioeconomic inequality.

Why it matters: The U.S. has for decades had a higher infant mortality rate (IMR) than other wealthy countries. As of 2013, the U.S. ranked 51st worldwide in IMR, on par with Croatia. This IMR disadvantage can be due to several reasons: inconsistent reporting, condition at birth, neonatal mortality (deaths in first month) and post-neonatal mortality (deaths in months one through 12). The different reporting rates narrow the gap some — perhaps up to 40 percent — between the U.S. and the two other countries studied, Austria and Finland. Birth-weight differences can explain the gap a bit further, but even normal birth-weight infants have a higher IMR in the U.S. The authors conclude the U.S. has an advantage in neonatal mortality but a substantial disadvantage in post-neonatal mortality. The bulk of this difference is explained by wider socioeconomic inequality in America.

Key quote: “We show that infants born to white, college-educated, married women in the U.S. have mortality rates that are essentially indistinguishable from a similar advantaged demographic in Austria and Finland.”

Data they used: Micro data sets for the U.S., Austria and Finland.

(Disclaimer: Emily Oster is a contributor to FiveThirtyEight.)


Title: “Cashier or Consultant? Entry Labor Market Conditions, Field of Study, and Career Success”

Authors: Joseph G. Altonji, Lisa B. Kahn, Jamin D. Speer

What they found: College graduates in the U.S. earn less if they graduate during a severe recession. They earn about 10 percent less, on average, in the first year, but this fades out over the first seven years post-college. How much graduates’ earnings drop varies widely by their field of study; higher-earning majors see their wage advantage widen during a recession.

Why it matters: The authors of this paper quantify the earnings drop for college graduates looking for work during a severe recession. The economists find that graduates entering a labor force in a severe recession (with an unemployment rate inflated by 4 percentage points) earn about 10 percent less in their first year of out of school than they would in normal economic times. That’s because it’s harder to find a job during a recession, but also because the jobs available often pay less. These effects persist but taper over the next six years, resulting in a 1.8 percent earning loss per year over their first decade out of college. The gap between higher-earning majors and everyone else widens by about 15 percent during recessions, and it lasts for several years.

Key quote: “We also find that the early careers of higher-skilled majors (as measured by the earnings premium) are less sensitive to aggregate conditions at graduation. In other words, the earnings gap across college majors widens in recessions. A person in a typically high-earning major increases his or her earnings advantage by almost a third when graduating into a severe recession, relative to an average major, and this effect remains large for the first seven years after college graduation.”

Data they used: Current Population Survey data and pooled data from several longitudinal surveys such as: the National Longitudinal Surveys of Youth, 1979 and 1997; the National Survey of College Graduates, 1993 and 2003; the Baccalaureate and Beyond, 1993 and 2008; the National Longitudinal Study, 1972; the Survey of Income and Program Participation, 1984-2008 panels; and the American Community Survey, 2009-2012.


Title: “Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection”

Authors: Will Dobbie, Jae Song

What they found: Consumer bankruptcy protection (specifically, Chapter 13) increases yearly earnings by more than $5,500, decreases foreclosures rates by nearly 20 percent and leads to a more than 1 percentage-point decline in the five-year mortality rate.

Why it matters: In 2010, about 1.5 million people filed for consumer bankruptcy protection in the U.S. The total debt relief, about $450 billion, is greater than all state unemployment insurance benefits combined. But little is known about the outcomes of debtors. The authors study Chapter 13 bankruptcy protection — where most assets are kept in exchange for a partial debt repayment. There are tricky selection effects when studying the outcome of bankruptcy filers — it’s hard to disentangle the factors that lead to worse outcomes for people, even before they file for bankruptcy. To get around this problem, the researchers utilize how bankruptcy judges are chosen using a blind rotation. Because some judges interpret the criteria for granting bankruptcy protection in widely different ways, similar filers get bankruptcy protection while others don’t, depending on which judge was assigned to their case. Comparing similar people who do and do not get bankruptcy protection, the authors find significant positive effects on earnings and employment, while foreclosure and mortality rates decline.

Key quote: “In our empirical analysis, we find compelling evidence that Chapter 13 bankruptcy protection benefits debtors. Over the first five post-filing years, Chapter 13 protection increases the marginal recipient’s annual earnings by $5,562, a 25.1 percent increase from the pre-filing mean. Employment increases by 6.8 percentage points over the same time period, an 8.3 percent increase. Five-year mortality decreases by 1.2 percentage points, a 30.0 percent decrease from the dismissed filer mortality rate, and five-year home foreclosure rates decrease by 19.1 percentage points, a more than 100 percent decrease from the dismissed filer foreclosure rate.”

Data they used: A data set of 500,000 bankruptcy filings; administrative tax records from the Social Security Administration; and administrative foreclosure records.

Andrew Flowers writes about economics and sports for FiveThirtyEight.

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