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Instruction time varies among schools, subjects, pupils and grades. This variation is positively associated with test scores and has been used to identify modest positive causal effects for instruction hours in certain grades. We exploit administrative data on delivered and timetabled instruction time in each grade throughout compulsory school for three full cohorts of Danish children, and find positive marginal hours effects on 9th grade test scores using accumulated time which are twice as large as when using 9th grade time only. Effects are largest for low SES households and for boys with non-western immigrant background, especially in the early grades.

Studies of individual wage dynamics typically ignore firm heterogeneity, whereas decompositions of earnings into worker and firm effects abstract from life-cycle considerations. We study firm effects in individual wage dynamics using administrative data on the population of Italian employers and employees. We propose a novel identification strategy for firm-related wage components exploiting the informative content of the wage covariance structure of coworkers. Wage inequality increases three-fold over the working life; firm effects are predominant while young, but sorting of workers into firms becomes increasingly important, explaining the largest share of lifetime inequality. Static models that do not allow for life-cycle dynamics underestimate the importance of sorting and overstate match and firm effects.

Education and wealth are positively correlated for individuals approaching retirement, but the direction of the causal relationship is ambiguous in theory and has not been identified in practice. We combine administrative data on individual total wealth with a reform expanding access to lower secondary school in Denmark in the 1950s, finding that schooling increases pension annuity claims but reduces the non-pension wealth of men in their 50's. These effects grow stronger as normal retirement age approaches. Labour market mechanisms are key, with schooling increasing job mobility, reducing housing equity, increasing leverage, and improving occupational pension benefits.

Family members tend to have similar labor market outcomes, but measuring the contribution of behavioral spillovers is difficult. To identify spillovers between brothers, we exploit Denmark's largest random assignment of young men to 8 months of military service where service status of brothers is correlated but draft lottery numbers are not. We find average spillovers of elder brother service on younger brother service of 7 percent, and as high as 55 percent for closely spaced brothers without sisters. Elder brother military service affects his own occupational choice and his younger brother's service through private information, thereby encouraging volunteering.

Correlations between parent and child earnings reflect intergenerational mobility and, more broadly, correlations between siblings’ earnings reflect shared community and family background. These earnings relationships capture important aspects of relations in socio-economic status more generally. We estimate intergenerational transmission and sibling correlations of life-cycle earnings jointly within a unified framework that nests previous models. Using data on the Danish population of father/first-son/second-son triads we find that intergenerational effects account for on average 72 percent of sibling correlations. This share is higher than all previous studies because we allow for heterogeneous intergenerational transmission between families. Sibling correlations exhibit a U-shape over the working life, consistent with differences in human capital investments between families.

Military conscription implicitly taxes draftees. Those who would have volunteered at the market wage may be forced to serve for lower wages, and those with higher opportunity costs may be forced to serve regardless, yet little is known about the distribution of this burden. We exploit the Danish draft lottery to estimate the causal effect of military service on labor earnings of young men across the cognitive ability distribution. We find that high ability men who are induced to serve face a 7 percent earnings penalty, whereas low ability men face none. Educational career disruption is an important channel.

The characteristics of measurement error determine the bias of linear estimators. We propose a method for validating economic survey data allowing for measurement error in the validation source, and we apply this method by validating Survey of Health, Ageing and Retirement in Europe (SHARE) data with Danish administrative registers. We find that measurement error in surveys is classical for annual gross income but non-classical for years of schooling, causing a 21% amplification bias in IV estimators of returns to schooling. Using a 1958 Danish schooling reform, we contextualize our result with an estimate of the income returns to schooling.

Correlations between the earnings of siblings reflect shared family and community background, but evidence is mixed on the relative magnitudes of these influences. We estimate long run earnings correlations between brothers, school mates and teenage neighbors jointly in a unified framework. Using administrative data on the Danish population we find that (1) family is by far the most relevant factor that shapes long-term earnings; (2) the contribution of neighborhood and school quality on long-term earnings is overestimated if the family component is ignored, and becomes negligible and not significantly different from zero by age 30; and (3) the importance of family declines over the life-cycle.

There are large differences in labor force participation rates by health status. We examine to what extent these differences are determined by the provisions of Disability Insurance and other pension programs. Using administrative data for Denmark we find that those in worse health and with less schooling are more likely to receive DI. The gradient of DI participation across health quintiles is almost twice as steep as for schooling - moving from having no high school diploma to college completion. Using an option value model that accounts for different pathways to retirement, applied to a period spanning a major pension reform, we find that pension program incentives in general are important determinants of retirement age. Individuals in poor health and with low schooling are significantly more responsive to economic incentives than those who are in better health and with more schooling. Similar gradients in outcomes and behavior by health and schooling partially reflects the less educated having poorer health on average, but also that the less educated have worse job prospects and higher replacement rates due to a progressive formula for DI and other pension benefits.

We model the correlations of brothers' earnings isolating the effect of fathers' earnings from additional residual influences shared between brothers. We separate the two effects by analysing sibling correlations and intergenerational correlations jointly within a unified framework. Our multi-person model of earnings dynamics distinguishes permanent from transitory shocks, allows for heterogeneous life cycle effects and nests previous models. Using data on the Danish population of father/first-son/second-son triplets, we corroborate the findings of studies that do not account for life cycle effects for those aged in their 30's, but find correlations twice as large at 25. The impact of intergenerational effects also varies over age, but is everywhere higher than found in previous studies ?by on average a factor of thirteen? and accounts for most of the sibling correlation. We provide evidence that lack of both life cycle effects and heterogeneous intergenerational transmission across families in previous studies explain the difference. When allowing for differential intergenerational transmission within families, we find mild evidence of stronger transmission to second sons.

We model the correlations of brothers' life-cycle earnings separating for the first time the effect of paternal earnings from additional residual sibling effects. We identify the two effects by analysing sibling correlations and intergenerational correlations jointly within a unified framework. Our multi-person model of earnings dynamics distinguishes permanent earnings from transitory - serially correlated - shocks, allows for life-cycle effects and nests the models of previous research that have focussed either on intergenerational or sibling correlations. Using data on the Danish population of father/first-son/second-son triplets we find that sibling effects explain between one fourth and one half of inequality in life-cycle earnings, and largely account for individual differences in earnings growth. Intergenerational associations account for a considerable share of overall sibling correlations, between 30 and 60 per cent from youth to maturity. We also find that transitory shocks are correlated across family members, in particular between brothers. Extensions of the model show a distinctive effect of mothers' human capital on top of fathers' earnings and no evidence of differential intergenerational transmission between brothers.

The intergenerational transmission of employers between fathers and sons is a common feature of labour markets in Canada and Denmark, with 30 to 40% of young adults having at some point been employed with a firm that also employed their fathers. This is strongly associated with the first jobs obtained during the teen years, but for four to about six percent it also refers to the main job in adulthood. In both countries the transmission of employers is positively associated with paternal earnings, rising distinctly and sharply at the very top of the father's earnings distribution, and has implications for the intergenerational transmission of earnings. Mobility out of the bottom has little to do with inheriting an employer from the father, while the preservation of high income status is distinctly related to this tendency. These findings stress that child adult outcomes are related to the structure of labour markets, and underscore the role of resources parents have - though information, networks, or direct control of the hiring process - in facilitating the job search of their children.

We investigate the relationship between life-cycle wages and flexicurity in Denmark. We separate permanent from transitory wages and characterise flexicurity using membership of unemployment insurance funds. We find that flexicurity is associated with lower wage growth heterogeneity over the life-cycle and greater wage instability, changing the nature of wage inequality from permanent to transitory. While we are in general unable to formally test for moral hazard against adverse selection into unemployment insurance membership, robustness checks suggest that moral hazard is the relevant interpretation.

Why is it that parents with more schooling tend to have children with better outcomes? We use unique Danish administrative data for identical and fraternal twin parents and their children to estimate the effect of parental schooling on short-run and long-run outcomes for their children. By differencing within identical twin pair we are able to take heritable endowments transmitted from parent to child into account. For all outcomes OLS is found to be upward biased. Father schooling is found to have no causal effect on infant and early childhood health. Mother schooling increases birth weight and the probability of high school completion. For older cohorts, we are able to replicate the findings of Behrman & Rosenzweig (2002) that fathers' schooling has a positive causal effect on child schooling but mothers' does not. However, this is reversed for parents born after 1945, when mothers' schooling has a positive causal schooling effect but fathers' no longer does.

Understanding the causal relation between mothers and fathers schooling and child development is important to create polices raising schooling level. We use unique Danish administrative data with information on identical twins and their children to estimate the causal effect of parental schooling on both short-run and long-run outcomes. By applying within twin fixed effect techniques we are able to take heritable endowments transmitted from parent to child into account and as an important reference point to the general population we do a parallel study on a sample of same sex DZ twins. We find that endowments counts for a substantial part of the correlation between parents' schooling on the devel-opment of the child. Father's schooling increases children's length of schooling, but decreases 9th grade academic achievement. Mother's schooling increases short run outcomes and the probability of high school completion. We find substantial gender differences, but no stronger link between parents and children of same gender. Understanding the causal relation between mothers and fathers schooling and child development is important to create polices raising schooling level. We use unique Danish administrative data with information on identical twins and their children to estimate the causal effect of parental schooling on both short-run and long-run outcomes. By applying within twin fixed effect techniques we are able to take heritable endowments transmitted from parent to child into account and as an important reference point to the general population we do a parallel study on a sample of same sex DZ twins. We find that endowments counts for a substantial part of the correlation between parents' schooling on the devel-opment of the child. Father's schooling increases children's length of schooling, but decreases 9th grade academic achievement. Mother's schooling increases short run outcomes and the probability of high school completion. We find substantial gender differences, but no stronger link between parents and children of same gender.

School performance - no difference between twins and singletons: Ugeskr Læger 2007;169(38):3202-3205 Studies of twins born 50+ years ago indicate that twins had a lower IQ than singletons. We carried out a register based study of all twins (N=3411) and a 5% random sample of singletons (N=7796) born in Denmark 1986-1988. We found no difference in school performance in adolescence between twins and singletons, nor when controlling for birth weight, gestational weight, age of parents or parents' education. Progress within living conditions, obstetrics, and paediatrics may be the reason why twins now generally have school performances similarly to singletons. Studies of twins born 50+ years ago indicate that twins had a lower IQ than singletons. We carried out a register based study of all twins (N=3411) and a 5% random sample of singletons (N=7796) born in Denmark 1986-1988. We found no difference in school performance in adolescence between twins and singletons, nor when controlling for birth weight, gestational weight, age of parents or parents' education. Progress within living conditions, obstetrics, and paediatrics may be the reason why twins now generally have school performances similarly to singletons.

This paper provides estimates of the private financial return to education based on large samples of monozygotic (MZ) and dizygotic (DZ) twins which we obtain from Danish population registers. Our estimation exploits the fact that our data is a long panel. We show that the rising inequality, which we observe in the raw data, is due to rising returns to observable skills. Indeed, our results suggest that the inequality associated with unobservable skills appears to have fallen since the late 1980's. The fact that we have both MZs and DZs allows us to separate the rising residual variance into changes in returns to unobservables and changes in the variance in unobservables across successive cohorts. Measurement error has been a concern in the twins literature since the usual methodology is based on within-twin differences. We exploit two instruments that provide additional measures of the within twin schooling difference: differences in when the twins first join the labour force on a full-time basis, which comes from a register that is independent of the education registers; and the strong assortative mating in the data which allows us to use twins spouse's education as an instrument. We also address a further concern in the literature: that differencing between twins fails to remove individual fixed effects as opposed to family fixed effects resulting in schooling differences being correlated with the residual. This would induce the within twin schooling difference coefficient to be biased. Here we exploit the Danish equivalent of Maimonides' rule which generates potential variation in education within twin pairs associated with being placed in different classes if they attended a small school in a larger than average cohort. This different experience across twin pairs is shown to generate differences in within twin schooling. Our baseline estimates suggests that correcting for selfselection in schooling, and measurement error, gives returns that are about two fifths higher than OLS for men and about one fifth higher for women. Her Majesty's Treasury's Evidence Based Policy Fund Aarhus University Research Fund Danish Social Science Research Council Economic and Social Research Council

Many countries provide extensive in-kind public transfers for specific needs of particular client groups such as the elderly, the disabled, and children. However, this may crowd out private expenditures on the goods in question and, to some extent, undermine the case for not simply giving cash. If the target group belongs to a larger household the mechanism behind this crowding out could be either altruism or agency. This paper is concerned with three nutrition programmes for children in UK households: free lunch at school for children from poor households; free milk to poor households with pre-school children; and free milk at day-care for pre-school children in attendance regardless of parental income. We exploit a reform that removed eligibility to the first two programs from working poor households. We find significant crowding-out of private food expenditures – a free school lunch reduces food expenditure by around 15% of the purchase price of the lunch, and a free pint of milk reduces milk expenditure by about 80% of the market price. We conclude that this is due to altruism rather than agency problems because milk expenditure crowd-out is similar across milk programs that have different delivery mechanisms. Danish Social Science Research Council Education Research Section, Princeton University Economic and Social Research Council

This paper is concerned with the relationship between class size and the student outcome – length of time in post-compulsory schooling. Research on this topic has been problematic partly because omitted unobservables, like parents’ incomes and education levels, are likely to be correlated with class size. Two potential ways to resolve this problem are to exploit either experimental or instrumental variation. In both cases, the methods require that the variation in both class size and the outcome should not be contaminated by other unobservable factors that affect the outcome – like family background. An alternative approach, which we pursue here, is to take advantage of variation in class size between siblings which allows unobservable family effects to be differenced out. Our aim is to combine sibling differences with a fuzzy rule that determines class size to provide estimates of the effect of class size and use these to conduct an evaluation of the costs and benefits of a reduction in class sizes. Her Majesty’s Treasury Evidence Based Policy Fund Department for Education and Skills (Great Britain) Department of Work and Pensions (Great Britain) Department of Media, Culture and Sport (Great Britain) Aarhus University Research Fund Danish Social Science Research Council Economic and Social Research Council