On Inequalities in Well-Being and Human Capital Formation
This thesis provides new empirical insights into how social and economic inequalities shape modern society. First, it investigates inequalities in mental health and well-being between individuals with and without work. Second, the thesis studies how the timing of a parental death in childhood affects long-run educational outcomes. The starting point of Chapter 2 is the growing literature on a U-shape in mental well-being over the life-cycle, with mental health dipping during prime working ages (e.g., Blanchflower and Oswald, 2008; Blanchflower 2020a,c). Yet, what is behind the U-shape remains a mystery. However, the U-shape literature has, so far, only considered ceteris paribus population averages in mental health, which does not do justice to the strong socioeconomic gradients in mental health. I go beyond population averages and analyze heterogeneity in age patterns of well-being along socioeconomic dimensions that strongly correlate with mental health. Using Dutch survey data, I find that a cross-sectional U-shape is present for unemployed and disabled men and women, but not when stratifying by other socioeconomic dimensions, such as educational attainment, household income, or marital status. Exploiting the longitudinal dimension of the survey, I find that while the left-hand side of the U-shape for the unemployed and disabled can potentially be attributed to composition effects, unemployed and disabled men and women experience significantly larger mental-health improvements with age than do employed individuals in the second half of working life (the right-hand side of the U-shape). The findings from Chapter 2 beg the question what underlying mechanism drives mental health improvements for the unemployed and disabled in the second half of working life. Chapter 3 provides the answer to this question: the social expectation that an individual works, i.e. the social norm of work, weakens with age. I provide evidence that the social norm of work has a detrimental causal effect on the mental well-being of individuals not able to abide by it — such as the unemployed and disabled — and that this effect disappears gradually as it becomes more accepted for individuals not to work as they approach retirement ages. Using data from the Survey for Health, Aging and Retirement on individuals aged 50+ from 10 European countries, I identify the social norm of work effect in a differences-in-differences (DiD) model that compares mental well-being scores of unemployed / disabled individuals (the treatment group) with those of employed / retired individuals (the control group) at varying levels of the fraction of retirees of comparable age, my proxy for the social norm of work. Across countries, the initial mental well-being gaps are large at 50 years of age, and full convergence occurs generally at an age that is slightly above the normal retirement age (around age 68), when everyone has retired. Chapter 4 focuses on childhood to trace back where inequalities in human capital outcomes may originate. So far, there is scant empirical work on how the timing of adverse shocks in childhood affects human capital formation. Using administrative data from the Netherlands, I estimate the causal effects of parental deaths on educational attainment by age of the child at the time of the parental death (age effects). Exploiting variation in the age at which children experience a parental death, I find strong evidence for substantial effects of parental deaths on college enrollment in middle childhood. Especially at ages 10-12 parental deaths reduce the probability of ever enrolling in college by 3-4 percentage points, an almost 10% reduction in the chances that a child ever attends college. After age 12, the negative effects of parental deaths diminish rapidly with age, leaving no effects of parental deaths in early adulthood.
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