Class Notes: The black-white wealth gap, togetherness in the household, and more – Brookings Institution

This week in Class Notes:

Couples like to do things together in the home, but togetherness may reinforce the gender pay gap

Couples often do things together within the household, but traditional economic models typically treat time inputs as individual ones and take no account of the value of joint activities. Sam Cosaert, Alexandros Theloudis, and Bertrand Verheyden develop a new theoretical framework to address this gap in the literature. Using Danish data from 2009 to 2012, they find that on average, households are willing to pay on average 17% of their hourly wage to convert an hour of separate, private child care into a joint activity. For joint leisure, they are willing to pay 10% of their wage. Joint child care is more expensive because it comes at the expense of both a loss of flexibility in the labor market and a loss of specialization in the household. Women are usually the ones who forgo work flexibility in order to increase household togetherness, however – and this can reinforce the gender pay gap.

Boosting cognitive endurance in school can build human capital

Good schooling increases knowledge and develops skills. But it can also improve cognitive endurance, which Christina L. Brown and her colleagues define as “the ability to sustain effortful mental activity over a continuous stretch of time.” This is useful not only in school, but also in the labor market. What can improve this ability? The research team studies two approaches with a randomized field experiment among low-income primary school students in India. The first sub-treatment group did more sustained work on math problems, while another sub-treatment group spent a similar amount of additional time on non-academic, but stimulating games. Over six months, both treatment groups improved their cognitive endurance by 22% relative to the control group. The gain remains 3-5 months after the intervention. In practice, this means that students were able to pay more attention in class and do better overall in terms of academic outcomes. The authors also show, drawing on separate data from Pakistan, that an extra year of schooling can improve cognitive endurance – but only in higher-quality schools. One way in which inequality of school quality impacts on long-term outcomes is through differences in the development of this “core mental skill.”

The Black-white wealth gap narrowed sharply after Emancipation, and steadily through the 20th century, but progress has stalled and is likely to reverse

There is an extensive literature on the current racial wealth gap. But Ellora Derenoncourt and her colleagues have constructed a continuous time series of white-to-Black per capita wealth ratios in the United States stretching back over the past 160 years. In 1860, the white-to-Black per capita wealth ratio was 56:1, but fell to 23:1 by 1870, …….

Source: https://www.brookings.edu/blog/up-front/2022/07/28/class-notes-the-black-white-wealth-gap-togetherness-in-the-household-and-more/