Strategic dropouts

Following Spence, this note provides an education signaling model to explain the phenomenon of gifted entrepreneurs who acquire less education than ordinary individuals. Two types of individuals, ordinary and gifted, are considered. Each one of them can either convince an investor to fund his enterprise or approach a competitive job market. The probability that an ordinary individual succeeds to establish a successful enterprise is smaller than that of a gifted individual irrespective of his education level. The probability of an ordinary individual succeeding increases with the level of education. In a separating equilibrium gifted individuals curtail their eduction to a level below that of the ordinary ones. This happens if the value of a successful enterprise per dollar investment is sufficiently large, on the one hand, but not too large to guarantee that the expected value of an enterprise run by an educated ordinary entrepreneur falls below the investment cost, on the other.     

Pension design when fertility fluctuates: The role of education and capital mobility

This study compares alternative designs of an unfunded pension system. Convex combinations between a fixed contribution rate and a fixed benefit rate are considered. The objective is to maximize the expected ex ante welfare under stochastic fertility. The model is a three-period CGE framework where the financing of education and effects on factor prices are accounted for. Factor prices depend on the degree of capital mobility. For low degrees of capital mobility, it is optimal to have a fixed benefit rate in the pension system. But for the small open economy, a fixed contribution rate is optimal if the education system has a fixed benefit rate. In this case individuals in the small open economy are unaffected by fertility fluctuations.     

CRIME AND EDUCATION IN A MODEL OF INFORMATION TRANSMISSION

We model the decisions of young individuals to stay in school or drop out and engage in criminal activities. We build on the literature on human capital and crime engagement and use the framework of Banerjee (1993) that assumes that the information needed to engage in crime arrives in the form of a rumour and that individuals update their beliefs about the profitability of crime relative to education. These assumptions allow us to study the effect of social interactions on crime. In our model, we investigate informational spillovers from the actions of talented students to less talented students. We show that policies that decrease the cost of education for talented students may increase the vulnerability of less talented students to crime. The effect is exacerbated when students do not fully understand the underlying learning dynamics.     

Hurdle and Latent Class Approaches to Serial Non-Participation in Choice Models

In repeated choice modelling studies, it is often the case that individuals always select the status quo option. Although this pattern may reflect considered choices, they may also be the result of alternative decisions about whether to participate in the choice process at all. Alternative methods of dealing with this behaviour, each with associated implications for estimates of economic values, are presented. In particular we consider the alternative strategies of excluding such individuals from the data, using hurdle models to explicitly model this group, and propose the use of latent class models to endogenously allow for different preference structures. An advantage of the latent class approach is that the form of the non-participation need not be defined in advance. These approaches are considered using UK choice experiment data on food choices where the attributes include genetic modification of food. The latent class approach reveals the presence of two forms of non-participation in the data. This paper draws work commissioned by UK Department of Environment Food and Rural Affairs (DEFRA). The views presented in this paper are those of the authors alone and should not be regarded as those of DEFRA or of individuals within DEFRA.     

Earnings distribution of Cuban immigrants in the USA: evidence from quantile regression with sample selection

This article analyses the conditional earnings distribution for Cuban immigrants in the USA considering Buchinsky sample selection in a quantile regression model. The test proposed by Huber and Melly to test the independence between error terms and regressors (conditional on the selection probability) is also considered. This is the first attempt in the migration literature to use quantile regression with sample selection. The data used come from the US American Community Survey. The results show that the hypothesis of conditional independence is not rejected, and increments in earnings associated with the usual socioeconomic characteristics in labour studies vary between the cohorts considered. The main conclusions are that a decline in returns from education may be a sign that a high level of education no longer provides a competitive advantage and that being a black person is associated with substantially lower earnings regardless of the individuals’ position in the earnings distribution. This may explain why, historically, comparatively fewer black Cubans have made the decision to emigrate to the USA because of a lack of economic incentives.     

An evolutionary approach to the examination of capital market efficiency

The paper investigates capital market efficiency on basis of an evolutionary model of asset pricing. Participants of capital markets are considered as organizations in the sense of Nelson and Winter (1982). Behavior of these organizations is described by routines. Routines are regular and predictable behavioral patterns, which determine how individuals gather information, form expectations, and order assets. The participants change their behavior by innovating new routines or by imitating routines of other participants.     

REVERSE DISCRIMINATION AND EFFICIENCY IN EDUCATION*

This article shows that reverse discrimination policies can find a justification purely on efficiency grounds. We study the optimal provision of education when households belong to different groups, differing in the distribution of the potential to benefit from education among individuals, which is private information. The main result is that high‐potential individuals from groups with relatively few high‐potential individuals should receive more education than otherwise identical individuals from groups with a more favorable distribution of these benefits.     

Human capital and economic growth in an overlapping generations model

The paper describes an aggregative optimal growth model, the essential features of which are that individuals are mortal and obtain their labor skill through educational training. The process of human capital formation is described by an education function which relates the pass rate to the educational expenditure per student. Two alternative scenarios, private and public education regimes, are separately investigated. Under the decentralized education regime, risk-neutral individuals borrow to finance their education when young. Under the centralized education regime, the cost of education is financed by taxes imposed on the workers in the economy, and the central government maximizes a long-term social target function. The equilibria of both regimes are analyzed and various comparative static results derived. It is shown that educational investment in a decentralized equilibrium is higher than that in the centralized steady state. We also establish that there exists a time discount rate at which or above which the decentralized per capita consumption exceeds that of the centralized steady state whereas for time rates of discount sufficiently near the population growth rate, the above result will be reversed.     

Lifetime Earnings, Discount Rate, Ability and the Demand for Post–compulsory Education in Men in England and Wales

Human capital theory suggests educational investments are made based on expected returns over the lifetime. Most other work in this field, particularly using British data, is based on demand models estimated in reduced form, with no earnings measures, or crudely constructed earnings measures, based on one or two earnings observations per individual.
We present a structural model of demand for educational investment which includes estimates of earnings paths for educational options as determinants of educational choice. This provides us with directly interpretable parameter estimates. The discount rate is also determined within our demand model.
Ability controlled earnings profiles are estimated by matching individuals from the General Household Survey to individuals in similar occupations from the National Child Development Survey (NCDS).
Our results show that expected earnings profiles vary according to observed ability and educational choice. Results from the demand model show that expected lifetime earnings have a significant impact on educational choice.
Other socio–demographic factors, particularly social class, also exhibit significant influences on the education decision. We estimate the discount rate to be lower than reported in other studies.     

Unexpected windfalls,education, and mental health: evidence from lottery winners in Germany

This paper investigates the causal impact of large unexpected windfalls on individual mental health, physical health, as well as health behaviors. I use a large individual-level panel data set of lottery winners from Germany between the years 2000 and 2011 and observe lottery winners before and after winning a large lottery prize. Mental health declines immediately after winning a large lottery prize for individuals with low education and low levels of financial literacy. While these individuals report being happier after winning the lottery, evidence from commonly used SF-12 measures of mental health indicates that winners with low education experience increased role limitations due to emotional problems, are more anxious, and have less energy after their win. The impact on various measures of mental health is highly robust, statistically significant, economically significant, and persists for up to two years after the win. Unexpected windfalls have no impact on the mental health of individuals with high education or high financial literacy. Winning the lottery has no impact on individuals’ health behaviors such as smoking or alcohol consumption, and it has no impact on doctor visits, hospital stays, or illness-related work absences regardless of education level.     

College education and wages in the U.K.: estimating conditional average structural functions in nonadditive models with binary endogenous variables

Recent studies debate how the unobserved dependence between the monetary return to college education and selection into college can be characterised. This paper examines this question using British data. We develop a semiparametric local instrumental variables estimator for identified features of a flexible correlated random coefficient model. These identified features are directly related to the marginal and average treatment effect in policy evaluation. Our results indicate that returns to college systematically differ between actual college graduates and actual college non-graduates. They are on average higher for college graduates and positively related to selection into college for 96% of the individuals. The dependence between selection into college and returns to college education is strongest for individuals with low math test scores at the age of 7, individuals with less educated mothers, and for working-class individuals.     

Government spending and economic growth: the G-7 experience

Using ordered probit estimation technique this paper examines the job satisfaction of recent UK graduates. Focussing primarily on explaining job satisfaction in terms of individuals matching to jobs, with the match depending on reservation returns, information sets and job offer rates. Only limited support can be found for the argument that job matching explains higher job satisfaction. In addition, stylizing graduates as a peer group, who form satisfaction levels based on their rankings relative to each other we examine whether or not education quality, which raises peer group status and increases the job offer rate, is systematically related to job satisfaction. The results broadly support the hypothesis that job satisfaction is neutral across graduates of different education qualities. However, our specification tests indicate that ordered probit estimation may not be fully appropriate for identifying the characteristics of those with high job satisfaction.     

Public Expenditures,Growth, and Distribution in a Mixed Regime of Education with a Status Motive

This paper tackles the issue of growth, distribution, and the provision of public services in a growth model with human capital accumulation where heterogeneous individuals decide whether to attend a publicly funded education regime or a privately funded one. Heterogeneity of individuals is introduced via their status‐motivation which is shown to affect their choice of education. In such a framework, we obtain an inverted‐U shaped relationship between growth and the size of the public education sector. In contrast with the general wisdom, we show that a larger public education sector is compatible with both a reduction of inequalities and an increase of long‐term growth. Although we demonstrate that in a majoritarian system all individuals agree on a lower size of the public education regime than that which maximizes growth, our analysis also highlights the tension between the direct beneficiaries and nonbeneficiaries from the public regime.     

Financing Higher Education in a Mobile World

This paper analyzes how integrated labor markets affect the financing of higher education. For this, we employ a general‐equilibrium model with overlapping generations and individuals who differ in their abilities. At the first stage, governments can choose the quality of education and the financing system. At the second stage, individuals make their education and migration decisions given the governmental framework for higher education and the mobility assumptions. In a closed economy and in the presence of imperfect credit markets, a mix of tax‐ and fee‐financing is optimal. In integrated labor markets, countries have an incentive to attract skilled workers and to free‐ride on education provided by other countries. When only skilled workers are mobile, there is a suboptimal shift from taxes to fees and the number of students is too low. When also students can migrate, there is a countervailing force such that maintaining the optimal financial mix becomes possible.     

Horizontal mismatch and vocational education

ABSTRACT

Recent literature suggests that vocational education and training (VET) provides individuals with smoother transitions into the labour market but lower wages over the lifecycle, compared to general education. A possible mechanism explaining lower wages is horizontal mismatch, defined as a mismatch between the type of qualifications acquired by individuals and those required for their current job. Some studies have found higher mismatch wage penalties when individuals’ education is more specific, suggesting higher penalties for workers with VET. Therefore, we analyse horizontal mismatch in Switzerland, the country with the highest proportion of firm-based VET in the OECD. We use two measures from the Swiss Household Panel that cover different aspects of horizontal mismatch. While we find sizable mismatch wage penalties in OLS estimations, effects are small or insignificant in fixed-effects regressions. This holds for workers with vocational and general education background alike. We conclude that VET is more transferable than often assumed. We finish with recommendations on concept and methods for future analyses of horizontal mismatch.     

The growth–distribution nexus in a mixed regime of education with a status motive: On the macroeconomics of the welfare state

We develop a growth model with human capital accumulation to study the effects of status-driven motivation on individuals' choice between public or private education. This choice interacts with and exacerbates the effects of status, with implications for growth and distribution. More motivated individuals work harder and choose private education. In a majority voting/median voter setup, individuals choose a public education size for which there is no trade-off between long-term growth and inequality. We also highlight the conflict of interest between individuals with respect to the size of the public education sector and the tax rate that supports it. We thus highlight important interactions between the macroeconomy, social attitudes and educational institutions and derive results of interest in a variety contexts. We end by drawing policy conclusions among which, the idea that in democracies, higher growth and lower inequality are mutually compatible when the government promotes public education.     

中国古代官办高等教育——洛阳太学的教学内容和教学形式

培养高级人才是高等教育的重要职责,高等教育教学内容和教学形式是高等教育的重要内容,更与人才质量的高低息息相关,因此,探究高等教育教学内容与教学形式是研究高等教育发展状况及未来人才培养方向的必然选择。我国古代高等教育按性质分为官办高等教育和私立高等教育两种形式。古代官办高等教育是我国当代公立高等教育的雏形,而古代官办高等教育中的洛阳太学是我国古代官办高等教育的典型代表,因此,研究我国古代的洛阳太学及其概况,对我国当代的公立高等教育具有及其重要的作用。     

Introducing Time‐to‐Educate in a Job‐Search Model

Transition patterns from school to work differ considerably across OECD countries. Some countries exhibit high youth unemployment rates, which can be considered an indicator of the difficulty facing young people trying to integrate into the labour market. At the same time, education is a time‐consuming process, and enrolment and dropout decisions depend on expected duration of studies as well as on job prospects with and without completed degrees. One way to model entry into the labour market is by means of job‐search models, where the job arrival hazard is a key parameter in capturing the ease or difficulty in finding a job. Standard models of job search and education assume that skills can be upgraded instantaneously (and mostly in the form of on‐the‐job training) at a fixed cost. This paper models education as a time‐consuming process, a concept which we call time‐to‐educate, during which an individual faces the trade‐off between continuing education and taking up a job.     

The effect of education subsidies on regional economic growth and disparities in China

This paper examines the impact of education subsidies on regional economic growth and the disparities between two Chinese regions, Jiangsu and Liaoning, by simulating their economies in a six-period overlapping generations model in which individuals decide their length of education. This study estimates the long-run growth rates, that is, the steady growth paths of the regional economies based on current education subsidies, and explores their effect on human capital accumulation, namely in terms of economic growth while considering the increase in education subsidies. Because greater government subsidies in education induce individuals to invest in human capital, both regions achieve higher economic growth. Moreover, because of the large differences in productivity between the regions, the growth gap widens with evenly raised education subsidy rates.     

Lost in transition?

Using data for Germany and 23 other economies in Eastern and Western Europe, this paper estimates the monetary returns to education acquired under communism more than 10 years after the fall of the Berlin Wall. We show that, in the 2000s, Eastern European workers who completed their education under communism earned in the 2000s similar returns to their education as did workers belonging to the same age cohorts who studied in Western Europe. This might suggest that education under communism is still as valuable as education attained in Western Europe. However, individuals educated under communism are more likely than their Western counterparts to be unemployed, retired or disabled, and therefore to earn lower or zero returns to their education. Moreover, when we allow the returns to pre‐ and post‐secondary education to differ, we find that senior males who have attained only primary or secondary education under communism are penalized in the post‐transition Eastern European labour markets, and that those who have completed post‐secondary education under communism enjoy in these markets higher payoffs to their education than similarly educated Western European individuals who are employed in the West.