Working Paper: NBER ID: w25167
Authors: Mohit Agrawal; Joseph G. Altonji; Richard K. Mansfield
Abstract: We extend the control function approach of Altonji and Mansfield (2018) to allow for multiple group levels and complementarities. Our analysis provides a foundation for causal interpretation of multilevel mixed effects models in the presence of sorting. In our empirical application, we obtain lower bound estimates of the importance of school and commuting zone inputs for education and wages. A school/location combination at the 90th versus 10th percentile of the school/location quality distribution increases the high school graduation probability and college enrollment probability by at least .06 and .17, respectively. Treatment effects are heterogeneous across subgroups, primarily due to nonlinearity in the educational attainment model.
Keywords: education; wages; sorting; multilevel models; neighborhood effects
JEL Codes: C1; C31; I20; I24; I26; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| quality of school and commuting zone inputs (I21) | educational outcomes (I26) |
| quality of school and commuting zone inputs (I21) | wages (J31) |
| quality of school and commuting zone inputs (I21) | probability of high school graduation (I21) |
| quality of school and commuting zone inputs (I21) | college enrollment probabilities (I23) |
| quality of school and commuting zone inputs (I21) | heterogeneous treatment effects across subgroups (C21) |
| unobserved characteristics (D80) | educational outcomes (I26) |
| unobserved characteristics (D80) | wages (J31) |