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In this paper we propose a new variance estimator for OLS as well as for nonlinear estimators such as logit, probit and GMM. This variance estimator enables cluster-robust inference when there is two-way or multi-way clustering that is nonnested. The variance estimator extends the standard cluster-robust variance estimator or sandwich estimator for one-way clustering (e.g. Liang and Zeger (1986), Arellano (1987)) and relies on similar relatively weak distributional assumptions. Our method is easily implemented in statistical packages, such as Stata and SAS, that already offer cluster-robust standard errors when there is one-way clustering. The method is demonstrated by a Monte Carlo analysis for a two-way random effects model; a Monte Carlo analysis of a placebo law that extends the state-year effects example of Bertrand et al. (2004) to two dimensions; and by application to two studies in the empirical public/labor literature where two-way clustering is present.

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have had difficulty replicating the UK results using the code I provided in a data appendix. 1 Through these discussions I learned that a few sampling restrictions that were mentioned in the paper were not in the code, and that some datasets were not merged correctly (for example, individuals were matched based on person and household identifiers, but not family identifiers). The British earnings measure for 1994 was also accidentally dropped. This corrigendum therefore updates the code for producing a revised set of UK results which are qualitatively similar to the original results. The revised output does not affect the discussion or conclusions of the original article. One of the primary ideas behind the original article is that the remarkably large response from changes to compulsory schooling laws in the UK provides a rare 1 I thank Paul Devereux, Heather Royer, Joseph Shapiro, and Raymond Guiteras for pointing me to these mistakes. I am a strong supporter of making available code for replication purposes, and I am grateful that these errors were identified using the paper’s data appendix. Part of the difficulty reconciling the results

This paper presents new tests of the permanent income hypothesis and other widely used models of household behavior using data from the labor market. We estimate the “excess sensitivity” of job search behavior to cash-on-hand using sharp discontinuities in eligibility for severance pay and extended unemployment insurance (UI) benefits in Austria. Analyzing data for over one-half million job losers, we obtain three empirical results: (1) a lump-sum severance payment equal to two months of earnings reduces the job-finding rate by 8-12 % on average; (2) an extension of the potential duration of UI benefits from 20 weeks to 30 weeks similarly lowers job-finding rates in the first 20 weeks of search by 5-9%; and (3) increases in the duration of search induced by the two programs have little or no effect on subsequent job match quality. Using a search theoretic model, we show that estimates of the relative effect of severance pay and extended benefits can be used to calibrate and test a wide set of intertemporal models. Our estimates of this ratio are inconsistent with the predictions of a standard permanent income model, as well as naive “rule of thumb” behavior. The representative job searcher in our data is 70 % of the way between the permanent income benchmark and credit-constrained behavior in terms of sensitivity to cash-on-hand. We are extremely grateful to Rudolph Winter-Ebmer and Jospeh Zweimüller for assistance in obtaining the data

have improved the paper as well as participants at the Teachers College Society of Economics and

This paper uses age-at-school-entry policies to identify the effect of female education on fertility and infant health. We focus on sharp contrasts in schooling, fertility, and infant health between women born just before and after the school entry date. School entry policies affect female education and the quality of a woman’s mate and have generally small, but possibly heterogeneous, effects on fertility and infant health. We argue that school entry policies manipulate primarily the education of young women at risk of dropping out of school. (JEL I12, I21, J13, J16) Education is widely held to be a key determinant of fertility and infant health. From a theoretical perspective, several causal channels have been emphasized. First, education raises a woman’s permanent income through earnings, tilting her optimal fertility choices toward fewer offspring of higher quality (Gary S. Becker 1960; Jacob Mincer 1963; Becker and H. Gregg Lewis 1973; Robert J. Willis 1973). Second, under positive assortative mating, a woman’s education is causally connected to her mate’s education

Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. IZA Discussion Paper No. 2200

Abstract—This paper examines the effect of attending the flagship state university on the earnings of 28 to 33 year olds by combining confidential admissions records from a large state university with earnings data collected through the state’s unemployment insurance program. To distinguish the effect of attending the flagship state university from the effects of confounding factors correlated with the university’s admission decision or the applicant’s enrollment decision, I exploit a large discontinuity in the probability of enrollment at the admission cutoff. The results indicate that attending the most selective state university causes earnings to be approximately 20 % higher for white men. Received for publication August 15, 2007. Revision accepted for publication