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Friday, February 8, 2019 at 11:40am to 1:10pm
Ives Hall, 115
B07 Tower Rd, Ithaca, NY 14853, USA
Elira Kuka, Southern Methodist University, IZA & NBER
Do Human Capital Decisions Respond to the Returns to Education? Evidence from DACA
Absract: This paper studies the human capital responses to a large shock in the returns to education for undocumented youth. We obtain variation in the benefits of schooling from the enactment of the Deferred Action for Childhood Arrivals (DACA) policy in 2012, which provides work authorization and deferral from deportation for high school educated youth. We implement a difference-in-differences design by comparing DACA eligible to non-eligible individuals over time, and we find that DACA had a significant impact on the investment decisions of undocumented youth. High school graduation rates increased by between 4 and 11 percentage points (p.p.), while teenage births declined by 1.7 p.p. Further, we find that college attendance increased by nearly 10 p.p. among women, suggesting that DACA raised aspirations for education above and beyond qualifying for legal status. We also find that the same individuals who acquire more schooling also work more, counter to the typical intuition that these behaviors are substitutes.