The objective of this paper is primarily methodological. Using a new specification, we reanalyze the data on worldwide environmental quality investigated by Gene Grossman and Alan Krueger in their well-known paper on the environmental Kuznets curve (which postulates an inverse U-shaped relationship between income level and pollution). This new specification avoids using nonlinear transformations of potentially nonstationary regressors in panel estimation, which is a major unresolved econometric problem plaguing much of the existing literature. We furthermore draw conclusions from fixed effects estimation, which had eluded Grossman and Krueger. Our estimation results indicate the presence of an EKC for only six of the fourteen pollutants, whereas Grossman and Krueger find support for all but one pollutant.

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Choosing a type of education is one of the largest financial decisions we make. Educational investment differs from other types of investment in that it is indivisible and non-tradable. These differences lead agents to demand a premium to enter careers with more idiosyncratic risk. Since the required premium will be smaller for wealthier agents, they will tend to enter careers with more idiosyncratic risk. After developing a model of career choice, we use data from the Panel Study of Income Dynamics (PSID) to estimate the risk associated with different careers. We find education, health care, and engineering careers to have relatively safe streams of labor income; business, sales, and entertainment careers are more risky. By choosing a college major, many students make a costly human capital investment that allows them to enter a specific career. To examine the link between wealth and college major choice implied by the model, we use data on choice of college major from the National Postsecondary Student Aid Survey (NPSAS). Controlling for observable measures of ability and background, we find evidence that wealthier students tend to choose riskier careers, particularly business.

Recent research has documented a rise in the volatility o f individual labor earnings in the United States since 1970. Existing measures o f this trend abstract from within-group latent heterogeneity, effectively estimating an increase in average volatility for observable groups. We decompose this average and find no systematic rise in volatility fo r the vast majority o f individuals. Increasing average volatility has been driven almost entirely by rising earnings volatility o f those with the most volatile earnings, identified ex ante by large past earnings changes. We characterize dynamics o f the volatility distribution with a nonparametric Bayesian stochastic volatility model from Jensen and Shore (2011).

The objective of this paper is primarily methodological. Using a new specification, we reanalyze the data on worldwide environmental quality investigated by Gene Grossman and Alan Krueger in their well-known paper on the environmental Kuznets curve (which postulates an inverse U-shaped relationship between income level and pollution). This new specification avoids using nonlinear transformations of potentially nonstationary regressors in panel estimation, which is a major unresolved econometric problem plaguing much of the existing literature. We furthermore draw conclusions from fixed effects estimation, which had eluded Grossman and Krueger. Our estimation results indicate the presence of an EKC for only six of the fourteen pollutants, whereas Grossman and Krueger find support for all but one pollutant.