CEPEO Seminar: Prof Dennis Petrie - Inequality impacts of an education reform in Sweden

In this paper, we present a new, flexible method for estimating the impact of a social policy on parameters of the outcome distribution that can be expressed as raw moments, such as the variance (E[Y^2] − E[Y]^2]) of outcome Y. Our approach involves predicting the observed and counterfactual values for each raw moment (E(Y^2), E(Y)) using standard causal methods. We then combine these predictions to estimate a policy’s impact on the parameters of interest. Our new approach is as good as existing approaches under selection on observables but also extends to any method that can credibly identify the counterfactual raw moments. In a difference-in-differences set-up, assuming parallel trends in the first four raw moments, we estimate the impact of a major Swedish comprehensive school reform on the mean, variance, skewness and kurtosis of years of schooling and log income, as well as their covariance.