Human capital and economic growth: A macroeconomic model for Pakistan

The paper presents a small macro model for Pakistan economy focusing the impact of investment in human capital on the key macroeconomic variables. The demand side is modeled along the Keynesian lines while the supply side is modeled as per neoclassical theory of production. This framework allows analyzing the effects of investment in human capital on supply side variables (like labor, physical and human capital) and demand side variables (like consumption and investment) at the same time.The model has small forecasting horizon in which three alternative scenarios regarding government spending on education are evaluated from 2012 to 2016. The model shows that the link between human capital and labor market is weak however a change in education spending affects output through enhancing productivity and through multiplier-accelerator principle. Though the model is small in size and forecasting horizon, it can help in evaluating the future paths of key macroeconomic variables associated with education spending.     

Contingent Labor and Higher Education

Over the past 30 years, the profession of college professor in the US has been changing from a high-status occupation, where faculty have extensive control over their job responsibilities, to a low-status contingent job in the peripheral labor market. This change mirrors the drift toward nonstandard employment in other sectors of the economy. Contingent and part-time faculty have grown at 10 times the rate of growth for tenure-track faculty, leading to a fundamental transformation in the nature of the professoriate. We review data related to these changes as well as the conventional explanations for this transformation. We conclude that the current system of academic labor is best understood within the core–periphery model of nonstandard employment. We conclude with some brief prospects for the future of the academic labor market and higher education.     

Reducing Start‐up Costs for New Firms: The Double Dividend on the Labor Market*

Starting a firm with expansive potential is an option for educated and high‐skilled workers. If there are labor market frictions, this additional option can be seen as reducing the chances of ending up in a low‐wage job and hence as increasing the incentives for education. In a matching model, we show that reducing the start‐up costs for new firms results in higher take‐up rates of education. It also gives rise—through a thick‐market externality—to higher rates of job creation for high‐skilled labor as well as average match productivity. We provide empirical evidence to support our argument.     

EVOLUTION OF GENDER DIFFERENCES IN POST‐SECONDARY HUMAN CAPITAL INVESTMENTS: COLLEGE MAJORS

Although women in the United States now complete more college degrees than men, the distribution of college majors among college graduates remains unequal, with women about two‐thirds as likely as men to major in business or science. We develop and estimate a dynamic, overlapping generations model of human capital investments and labor supply. We allow for specific college major choices, instead of aggregating these choices to the education level. Results show that changes in skill prices, higher schooling costs, and gender‐specific changes in home value were each important to the long‐term trends.     

EARNINGS INEQUALITY, LABOUR SUPPLY AND SCHOOLING IN HUSBAND–WIFE FAMILIES

This paper describes the association between market work and earnings inequality across families over the life cycle and over calendar time with special attention to the different experiences of college‐educated and high‐school‐educated people. A concise and effective accounting framework is developed that allows for an assessment of the effect of the growing market employment of married women on family earnings inequality. Applying this framework to pseudo‐panel data from successive Current Population Surveys indicates that the increase in wives' employment has diminished the growth in family earnings inequality especially for well‐educated couples. Inferences about the level and change in earnings inequality depend on the degree of labor market attachment of the people studied especially in the case of wives.     

What Can Students Gain from China's Higher Education?

China's higher education system has undergone a rapid expansion over the last two decades. By drawing on hand-collected data, we explore students' experiences in college and in the labor market post-graduation in the wake of this expansion. According to our data, the largest employer of college graduates in the labor market was the state sector, followed by the domestic private sector. To explain the returns to college education in China, we explore three mechanisms: human capital, social networks, and signaling. We find that human capital measures, apart from a student's college English test scores, cannot explain the college wage premium, whereas both social networks (for example, membership of the Communist Party) and signaling matter significantly. This seems to indicate that in China, connections are crucial for student success in the labor market, whereas the higher education system itself is more a system for selecting talented individuals than it is for educating them. Finally, students allocate their time accordingly, for example, by spending more time studying English in college than any other subject.     

Labor Market Dynamics and the Business Cycle: Structural Evidence for the United States*

We use a 12‐dimensional VAR to examine the aggregate effects of two structural technology shocks and two policy shocks. For each shock, we examine the dynamic effects on the labor market, the importance of the shock for labor market volatility, and the comovement between labor market variables and other key aggregate variables in response to the shock. We document that labor market indicators display “hump‐shaped” responses to the identified shocks. Technology shocks and monetary policy shocks are important for labor market volatility but the ranking of their importance is sensitive to the VAR specification. The conditional correlations at business cycle frequencies are similar in response to the four shocks, apart from the correlations between hours worked, labor productivity and real wages. To account for the unconditional correlations between these variables, a mixture of shocks is required.     

Cohort crowding: How resources affect collegiate attainment

Analyses of college attainment typically focus on factors affecting enrollment demand, including the financial attractiveness of a college education and the availability of financial aid, while implicitly assuming that resources available per student on the supply-side of the market are elastically supplied. The higher education market in the United States is dominated by public and non-profit production, and colleges and universities receive considerable subsidies from state, federal, and private sources. Because consumers pay only a fraction of the cost of production, changes in demand are unlikely to be accommodated fully by colleges and universities without commensurate increases in non-tuition revenue. For this reason, public investment in higher education plays a crucial role in determining the degrees produced and the supply of college-educated workers to the labor market. Using data covering the last half of the twentieth century, we find strong evidence that large cohorts within states have relatively low undergraduate degree attainment, reflecting less than perfect elasticity of supply in the higher education market. That large cohorts receive lower public subsidies per student in higher education explains this result, indicating that resources have large effects on degree production. Our results suggest that reduced resources per student following from rising cohort size and lower state expenditures are likely to have significant negative effects on the supply of college-educated workers entering the labor market.     

Wealth,Wages, and Wedlock: Explaining the College Gender Gap Reversal

In this paper, I study the role of changes in the wage structure and expectations about marriage in explaining the college gender gap reversal. With strongly diminishing marginal utility of wealth and in the presence of a gender wage gap, single women have a greater incentive than single men to invest in education. Marriage‐market distortions tend to depress the overall benefit of education for women relative to men. I develop a tractable two‐period model and parameterize it using US census data for the cohort born in 1950. I then show that it can generate a reversal and that the most important driving force for this is the decline in marriage rates.     

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.     

Termination of dynamic contracts in an equilibrium labor market model

In an equilibrium model of the labor market, workers and firms enter into dynamic contracts that can potentially last forever, but are subject to optimal terminations. Upon termination, the firm hires a new worker, and the worker who is terminated receives a termination contract from the firm and is then free to go back to the labor market to seek new employment opportunities and enter into new dynamic contracts. The model permits only two types of equilibrium terminations that resemble, respectively, the two kinds of labor market separations that are typically observed in practice: involuntary layoffs and voluntary retirements. The model allows for the simultaneous determination of a large set of important labor market variables including equilibrium unemployment and labor force participation. An algorithm is formulated for computing the model's equilibria. I then simulate the model to show quantitatively that the model is consistent with a set of important stylized facts of the labor market.     

全要素生产率与中国经济增长关系研究——基于VAR模型视角

运用TFP的变动来对经济增长潜力展开分析,是国内外经济学界的常见研究思路。从新古典模型出发,对改革开放以来的中国TFP进行估算分解,并构建TFP、GDP增长、资本增长和劳动力增长之间的VAR模型。实证研究认为,目前中国已进入跨越式发展时期,应大力发展资本市场,促进资本要素的有效流动,促进产业结构优化,将提高劳动力受教育水平作为重要发展战略,注重进行技术基础的革新,提高经济增长质量,促进经济发展方式向集约型发展方式转变。     

Reforms,Finance, and Current Accounts

We analyze the implications of labor market reforms for an open economy's human capital investment and future production. A stylized model shows that labor market deregulation can imply more positive current‐account balances if financial markets are imperfect and labor market institutions not only distort labor allocation, but also smooth income. Empirically, in Organisation for Economic Co‐operation and Development (OECD) country‐level panel data, we find that labor market deregulation has been positively related to current‐account surpluses on average and more strongly so when and where financial market access was more limited. These results are robust to inclusion of standard determinants of current‐account imbalances, and do not appear to be driven by cyclical phenomena.     

我国大学城向高等教育产业集群演变的机理

根据超边际分析方法,我国大学城与高新科技园存在四种交易结构,这四种结构是逐渐演进的。产品市场的交易效率与产品的消费弹性、劳动力的产出弹性、中间产品劳动市场的交易效率、最终产品劳动市场的交易效率正相关,当产品市场的交易效率达到一定的极限,我国大学城转化为高等教育产业集群。要使产品市场的交易效率达到一定的极限,需要一些对策。     

Recent trends in the registered nurse labor market in the U.S.: short-run swings on top of long-term trends

Drawing from labor economics, background information is provided for a deeper understanding of recent changes in the nurse labor market. The difference between the short and long-run supply of RNs are distinguished, and the economic forces that determine RNs' decision to be active in the labor market are explained. The ways the nurse labor market may change in the next few years are discussed.     

The Increase in College Premium and the Decline in Low‐Skill Wages: A Signaling Story

The increase in the college premium over the last 30 years in the United States is to a large extent driven by a reduction in noncollege wages. We show that the signaling effects triggered by an improvement in the incentives to attend higher education can explain this fact, as well as the increase in the number of college graduates. Under imperfect credit markets and wealth heterogeneity, higher education is not only a signal of ability but also of individuals' (parents') wealth. General conditions on the distribution of wealth guarantee that after an increase in incentives to attend higher education, the absence of a college degree becomes a more evident signal of low ability. This results in a reduction in low‐skill wages but not necessarily in increased high skill wages. The increased incentives to enroll in college can either arise from a skill‐biased technology change or an improvement in access to higher education. An important difference is that while skill‐biased technology change always results in an increase in the college premium, that is not necessarily the case when the increased incentives to enroll arise from improved access to higher education.     

劳动力市场与大学毕业生人力资本投资决策

大学毕业生就业难问题已成为了社会关注的热点,文章从劳动力市场角度出发,通过运用人力资本投资决策模型对大学毕业生人力资本投资行为进行分析,得出工资水平、劳动力市场的流动性、信息渠道的畅通性和毕业生的保留价格对大学毕业生的决策行为有着重大的影响。文章还根据我国劳动力市场的实际情况,提出了一系列解决大学生就业难问题的意见和建议。     

Assessing policies to equalize opportunity using an equilibrium model of educational and occupational choices

The inter-generational correlation of education in the U.S. is tremendous. For instance, in PSID data from 1990, young males with college-educated parents had a 70% chance of attending college. But those with high school drop-out parents had only a 15% chance. In this paper, we analyze the impact of college attendance bonus schemes designed to increase college attendance rates (and PV of lifetime income) of youth from disadvantaged backgrounds. Of course, policies that increase the supply of skilled labor may reduce the college wage premium (see Heckman et al. [Heckman, James, Lochner, Lance and Taber, Christopher, Explaining rising wage inequality: explorations with a dynamic equilibrium model of labor earnings with heterogeneous agents, Review of Economic Dynamics, 1 (1998a), 1–58; Heckman, James, Lochner, Lance and Taber, Christopher, General-equilibrium treatment effects: a study of tuition policy, American Economic Review, 88:2 (1998b), 381–386]). This may have the unintended consequence of wiping out most of the gains to the targeted groups. The strength of such equilibrium effects on wages depends on the substitutability between different types of labor. Thus, it is important to evaluate education subsidies within an equilibrium framework that allows for flexible patterns of substitution across factor inputs. This is exactly what we do here, using an overlapping generations equilibrium model of the U.S. labor market fit to PSID data from 1968 to 1996. The model allows for imperfect substitution among types of labor differentiated by education, gender, age and ten (1-digit level) occupations — a much finer differentiation than has been considered in prior work.We find that very large college attendance bonuses are necessary to equate college attendance rates between youth whose parents had only high school degrees or were high school dropouts and youth whose parents attended at least some college. The size of these bonuses far exceeds any reasonable measure of college costs; suggesting the “costs” the bonuses overcome are primarily psychic or effort costs. For example, youth from disadvantaged backgrounds may be poorly prepared for college. This suggests that bonuses targeted at college age youth are probably a very inefficient way to reduce inequality. Earlier intervention is likely called for.     

TECHNOLOGICAL LEARNING AND LABOR MARKET DYNAMICS

The search‐and‐matching model of the labor market fails to match two important business cycle facts: (i) a high volatility of unemployment relative to labor productivity, and (ii) a mild correlation between these two variables. We address these shortcomings by focusing on technological learning‐by‐doing: the notion that it takes workers' time using a technology before reaching their full productive potential with it. We consider a novel source of business cycles, namely, fluctuations in the speed of technological learning, and show that a search‐and‐matching model featuring such shocks can account for both facts. Moreover, our model provides a new interpretation of recently discussed “news shocks.”     

A Fiscal Stimulus and Jobless Recovery

We analyze the effects of a government‐spending expansion in a dynamic stochastic general equilibrium model with Mortensen–Pissarides labor‐market frictions, deep habits in private and public consumption, investment adjustment costs, a constant elasticity of substitution (CES) production function, and adjustments in employment at both intensive and extensive margins. The combination of deep habits and CES technology is crucial. The presence of deep habits magnifies the responses of macroeconomic variables to a fiscal stimulus, while an elasticity of substitution between capital and labor in the range of available estimates allows the model to produce a scenario compatible with the observed jobless recovery.