Using the U.S. Test of Financial Literacy in Germany—Adaptation and validation

In this article, the authors present the adaptation and validation processes conducted to render the American Test of Financial Literacy (TFL) suitable for use in Germany (TFL-G). First, they outline the translation procedure followed and the various cultural adjustments made in line with international standards. Next, they present results from the validation of the TFL-G's content and relations between test scores and external variables, including test takers' prior economic education and interest in economic topics. Preliminary analyses of data gathered from expert interviews and cognitive labs, and the results of the first administration to first-year higher education students (N = 1,108) indicate that the TFL-G is a valid instrument to assess young adults' understanding of personal finance in Germany. Perspectives for future research are discussed.     

Leaving Home: What Economics Has to Say about the Living Arrangements of Young Australians

Like their counterparts elsewhere, more young Australians than ever are delaying the move to establish residential independence from their parents. This paper reviews the developing economics literature surrounding young people's decisions to continue living in their parents' homes in order to begin to assess the causes and consequences of this decision. In particular, co‐residence with parents appears to be an important form of intergenerational support for young adults. It is important to understand the extent to which young people rely on this form of support as they complete their education, enter the labour market and establish themselves as independent adults. Specific attention is paid to the ways in which Australian income support, education and housing policies may influence these patterns.     

CROSSING THE BORDER AND MIGRATION DURATION

Policies to deter illegal entry and reduce the number of undocumented immigrants have a complex impact on migration patterns, border crossings, and duration. However, studies generally assume the method of crossing into the United States is exogenous with respect to migration duration. Using data from the Mexican Migration Project, this paper finds that the migrant's decision to hire a coyote (smuggler) to cross the border is endogenous with respect to duration. Instrumental variable estimates provide evidence that migrants who incur the cost of hiring a coyote have longer migration durations as they need to work longer in the United States. The migrants most likely to hire coyotes have less education, little migration experience, and/or come from rural communities. Results suggest that continuing to increase guest worker programs could actually decrease the number of Mexican immigrants in the United States by eliminating the need for coyotes which would reduce migration durations. This would better utilize the immigrant population in the United States by encouraging immigrants to stay while employed and to migrate home when unemployed, with the knowledge they can later return. Reducing coyote use would also reduce income flowing to Mexican cartels which have profited from human smuggling. (JEL O15, J61, J64)     

Optimal Taxation of Risky Human Capital*

In a two‐period life‐cycle model with ex ante homogeneous households, earnings risk, and a general earnings function, we derive the optimal linear labor tax rate and optimal linear education subsidies. The optimal income tax trades off social insurance against incentives to work. Education subsidies are not used for social insurance, but they are only targeted at offsetting the distortions of the labor tax and internalizing a fiscal externality. Both optimal education subsidies and tax rates increase if labor and education are more complementary, because education subsidies indirectly lower labor tax distortions by stimulating labor supply. Optimal education subsidies (taxes) also correct non‐tax distortions arising from missing insurance markets. Education subsidies internalize a positive (negative) fiscal externality if there is underinvestment (overinvestment) in education because of risk. Education policy unambiguously allows for more social insurance if education is a risky activity. However, if education hedges against labor‐market risk, optimal tax rates could be lower than in the case without education subsidies.     

ASSESSING THE RELATIVE IMPACTS OF ECONOMIC EDUCATION SCHOLARSHIP: AN APPLICATION OF THE HARZING DATABASE

Despite the rising prominence of economic education scholarship, little work has been done to document how economic education scholarship is faring in the academic world. Unlike prior research in this genre, this study assesses the relative impacts of economic education scholarship by examining published research in (strictly) economic education journals. In order to do so, we use the Harzing database of citations to articles published in (strictly) economic education journals from 1990 to the present. Supporting some of the measures found in prior research, we find that the Journal of Economic Education (JEE) is unambiguously the dominant source of influential scholarship in the field of economic education. Interestingly, the JEE's closest competitors among active economic education journals are the International Review of Economics Education and Computers in Higher Education Economics Research, both of which are published under the auspices of the Economics Network, which is located in the UK. Following these two journals in our ranking is the Journal of Economics and Finance Education, a relatively new journal launch.     

DISTANCE TO PROMOTION: EVIDENCE FROM MILITARY GRADUATE EDUCATION

Using a unique dataset of U.S. military officers enrolled in graduate programs at the Naval Postgraduate School, we find students enrolled in distance education programs are 19 percentage points less likely to graduate compared to students enrolled in comparable traditional resident programs. Interestingly, distance education students receive a larger proportion of As on their courses. But, they are also more likely to fail and withdraw from their courses compared to their resident counterparts. The negative effects of distance education are worse for students enrolled in more technical engineering programs compared to less technical business programs. Although distance students are more likely to separate from the military after completing their education compared to traditional students, there are no significant differences in job promotion within the military between the two groups. Our results highlight the challenges of designing effective distance education programs in technical fields. (JEL I20, I23)     

THE IMPACT OF HIV EDUCATION ON BEHAVIOR AMONG YOUTHS: A PROPENSITY SCORE MATCHING APPROACH

There has been a long‐standing debate as to whether sex or human immunodeficiency virus (HIV) education actually influences the way young people behave. To the extent these programs work, they represent a potential mechanism policy‐makers might use to reduce risky behavior among youths. This paper uses data from the 2009 Youth Risk Behavior Survey to examine if students who have received school‐based HIV instruction behave differently than those who have not. To address potentially endogenous exposure to HIV education, this paper considers a propensity score matching approach. Findings from the propensity score analysis suggest that standard ordinary least squares results are biased. Despite this, there remains some evidence that exposure to HIV education decreases risky sexual activity. Among male students, HIV education is also negatively related to the rate of using needles to inject illegal drugs into the body. The needle use results are robust to a sensitivity analysis, while the results for sexual behaviors are not. (JEL H75, I18, I28, K32)     

Economic returns to schooling in urban China, 1988 to 2001

This study provides estimates of the returns to schooling in urban China over an extended period of economic reforms. We find a dramatic increase in the returns to education, from only 4.0 percent per year of schooling in 1988 to 10.2 percent in 2001. Most of the rise in the returns to education occurred after 1992 and reflected an increase in the wage premium for higher education. The rise is observed within groups defined by sex, work experience, region, and ownership, and is robust to the inclusion of different control variables. The timing and pattern of changing schooling returns suggest that they were influenced strongly by institutional reforms in the labor market that increased the demand for skilled labor. Journal of Comparative Economics 33 (4) (2005) 730–752.     

GENDER INEQUALITY IN EDUCATION IN CHINA: A META‐REGRESSION ANALYSIS

Although there is evidence that there was gender inequality in China's education system in the 1980s, the literature in China has mixed evidence on improvements in gender inequality in educational attainment over the past three decades. Some suggest gender inequality is still severe; others report progress. We seek to understand the progress China has made (if any) in reducing gender inequality in education since the 1980s. To meet this goal, we use a meta‐analysis approach which provides a new quantitative review of a relatively large volume of empirical literature on gender educational differentials. This article analyzes differences across both time and space, and also across different grade levels and ethnicities. Our results indicate that gender inequality in educational attainment still exists, but it has been narrowing over time. Moreover, it varies by area (rural versus urban) and grade level. There is nearly no significant gender inequality in the case of girls in urban areas or in the case of the 9 years of compulsory education (primary school and junior high school). Girls, however, still face inequality in rural areas (although inequality is falling over time) and when they reach high school or beyond. (JEL I24)     

STRUCTURAL CHANGE THROUGH PUBLIC EDUCATION EXPENDITURE: EVIDENCE FROM CHINA

Under China's hukou system, I analyze the relationship between public education expenditure and structural change as measured by labor transfer from the agricultural to the industrial sector. I construct a two‐sector general equilibrium model, which shows that in the short term, public education expenditure crowds out industrial capital accumulation and temporarily hinders structural change, but in the long term, public education expenditure permanently reduces rural residents' education costs. An inverted U‐shape relationship implied by the empirical evidence indicates that China's current public education expenditure is far from optimal, suggesting that China should increase it, especially for rural residents. (JEL I28, O11, O15)