1. Duflo (2001): School Construction and Educational Attainment in Indonesia
Citation: Duflo, E. (2001). Schooling and labor market consequences of school construction in Indonesia: Evidence from an unusual policy experiment. American Economic Review, 91(4):795-813.
Research question: Does primary school construction increase educational attainment and wages?
Identification strategy: Indonesia's INPRES programme built over 61,000 primary schools between 1973 and 1979, with intensity varying systematically across districts. Duflo [2001] uses a DiD-IV strategy: the interaction of the number of INPRES schools built per child in a district with cohort age at the time of construction serves as an instrument for years of schooling. Older cohorts (who had already completed primary school when construction occurred) serve as the control; younger cohorts (who were of school-going age) form the treatment group.
Key results: Each primary school built per 1,000 children increased educational attainment by 0.12-0.19 years and wages by 1.5-2.7%. The first stage is strong, and the IV estimates are somewhat larger than OLS, consistent with positive selection bias in schooling.
Takeaway: Physical school infrastructure causally increases both schooling and earnings one of the cleanest IV estimates of the returns to education from a large-scale natural experiment in a developing country.
2. Chetty et al. (2014): Where Is the Land of Opportunity? Intergenerational Mobility and Geography
Citation: Chetty, R., Hendren, N., Kline, P., and Saez, E. (2014). Where is the land of opportunity? The geography of intergenerational mobility in the United States. Quarterly Journal of Economics, 129(4):1553-1623.
Research question: How much does geography affect intergenerational income mobility in the United States?
Identification strategy: Using administrative tax records linked across generations, the authors compute rank-rank correlations between parent and child income for each commuting zone in the US. While primarily descriptive, the causal interpretation is supported by a movers analysis: children who move to higher-mobility areas at younger ages have better outcomes, with each additional year in a better area producing larger gains consistent with a causal effect of place.
Key results: Intergenerational mobility varies enormously across commuting zones, from Salt Lake City (top) to Atlanta (bottom). The Great Gatsby Curve holds within the US: areas with higher income inequality also have lower mobility. Commuting zone characteristics school quality, family structure, social capital, and residential segregation- are the strongest predictors of mobility.
Takeaway: Place of childhood matters enormously for long-run outcomes, independent of family income. This paper catalysed a large literature on neighbourhood effects and the causal impacts of place.
3. Bleakley (2007): Disease and Development: Hookworm Eradication and Human Capital in the American South
Citation: Bleakley, H. (2007). Disease and development: Evidence from hookworm eradication in the American South. Quarterly Journal of Economics, 122(1):73-117.
Research question: Did the Rockefeller Sanitary Commission's 1910-1920 hookworm eradication campaign improve human capital outcomes in the American South?
Identification strategy: Hookworm infection rates varied across counties in the pre-campaign period due to soil and climate conditions. Bleakley [2007] exploits this variation in a DiD design: counties with higher pre-campaign infection rates (treated more intensely by eradication) should show larger post-campaign improvements in school enrolment, attendance, and later earnings.
Key results: Children in high-infection areas who were exposed to the eradication campaign (the "young" cohort) showed substantially larger increases in school enrolment and literacy than older cohorts or children in low-infection areas. Long-run follow-up shows higher income and occupational attainment for the exposed cohort returns of approximately 40% increase in income.
Takeaway: Child health directly affects human capital accumulation. Treating a curable disease with modest cost (hookworm) produced dramatic educational and economic returns, with implications for health interventions in developing countries today.
4. Chetty, Hendren, and Katz (2016): Effects of Exposure to Better Neighbourhoods on Children: Moving to Opportunity Revisited
Citation: Chetty, R., Hendren, N., and Katz, L.F. (2016). The effects of exposure to better neighborhoods on children: New evidence from the Moving to Opportunity experiment. American Economic Review, 106(4):855-902.
Research question: Does moving to a lower-poverty neighbourhood as a child improve long-run economic outcomes?
Identification strategy: The Moving to Opportunity (MTO) experiment (1994-1998) randomly assigned families in high-poverty public housing to receive (1) a voucher to move to a low-poverty area, (2) a standard housing voucher, or (3) no voucher. Prior analyses of MTO found null effects on adult earnings. Chetty et al. [2016] link MTO participants to tax records 20 years later and distinguish by age at random assignment.
Key results: Children who moved to low-poverty areas before age 13 show large improvements in earnings (31% higher), college attendance (16 percentage points), and lower poverty rates as adults. Children who moved after age 13 show no gains, and in some cases negative effects (disruption). The programme had a positive return even accounting for housing costs.
Takeaway: Age at exposure is decisive early childhood neighbourhood effects are large and causal, while adolescent moves may be disruptive. This fundamentally changed how researchers and policymakers think about place-based interventions.
References
- Duflo, E. (2001). Schooling and labor market consequences of school construction in Indonesia: Evidence from an unusual policy experiment. American Economic Review, 91(4):795-813.
- Chetty, R., Hendren, N., Kline, P., and Saez, E. (2014). Where is the land of opportunity? The geography of intergenerational mobility in the United States. Quarterly Journal of Economics, 129(4):1553-1623.
- Bleakley, H. (2007). Disease and development: Evidence from hookworm eradication in the American South. Quarterly Journal of Economics, 122(1):73-117.
- Chetty, R., Hendren, N., and Katz, L.F. (2016). The effects of exposure to better neighborhoods on children: New evidence from the Moving to Opportunity experiment. American Economic Review, 106(4):855-902.