Franchising the american elementary and secondary educational system

To solve the education “woes” of the U.S., many experts have looked to both command economies (standardized curriculum), and competitive markets (e.g. school choice and school vouchers), for answers. This normative research explores an optimal mix between market economies and command economies in education through the use of the business-format franchising structure. Franchising, an organizational form lying between the extremes of markets and hierarchies, would establish a standardized curriculum composed of those components of education that are deemed essential to the educational growth of our students. At the same time, franchising allows for levels of autonomy for educational institutions that would enable them to effectively target the additional needs and preferences of their local area, which in turn develops competitive markets in which schools compete for student enrollment thereby remedying the moral hazard problem. Finally, two additional characteristics that make this format attractive in tackling the problems in education are its continuous transfer of “know how” and its regular technical assistance. In the context of education, these characteristics translate into necessary links between educational theory and practice as well as national research and training grounds for teachers and administrators.     

Sorting and inequality in Canadian schools

A student's peers are often thought to influence his or her educational outcomes. If so, an unequal distribution of advantaged and disadvantaged students across schools (“sorting”) in a community will amplify existing inequalities. This paper explores the relationship between the degree of sorting across schools within a community and educational inequality as measured by the variance of standardized high school exam scores within the community. Cross-sectional OLS estimates suggest that the variance of test scores is related to sorting by ethnicity, but not to sorting by income or parental education. We then implement two strategies for addressing endogeneity in the degree of sorting: a standard unobserved effects (first-difference) approach, and a first-difference/instrumental variables approach in which the structure of school choice (number and relative size of schools) is used to construct instruments for the degree of sorting. The results from both approaches indicate that the variance of test scores is related to sorting by home language and parental education, but not to sorting by income. Our results also suggest that reducing sorting would have little effect on inequality of outcomes in the typical Alberta community, but would have substantial effects in the larger cities.     

On the impact of public policies and wage formation on business investment in research and development

Against the backdrop of mediocre growth prospects in many countries, governments should do more to promote private investment in research and development (R&D). Public fiscal policies and the characteristics of wage formation are key as they affect both the incentives that firms face and their resources. This paper studies their impact at the macro level in a panel of 14 OECD countries since 1981, while we also account for the impact of unobserved common factors like the world level of knowledge. Tax incentives, government intramural expenditures on R&D, public R&D subsidies (if they are not too low nor too high) and especially investment in tertiary education, encourage business R&D investment. Wage moderation may also contribute to innovation, but only in fairly closed economies and in economies with flexible labour markets. In highly open economies with rigid labour markets, high wage pressure promotes investment in R&D. Innovation may then be the only competitive strategy for firms.     

On the stability of the cooperative type of organization

The stability of producer cooperatives in market economies is analyzed in a dynamic context. It is shown that, when permitted to hire wage laborers, a producer cooperative, even if its labor productivity is higher than in an otherwise equivalent capitalist firm, is likely to lose its cooperative character because members' personal income will be maximized when “expensive” members are replaced by “inexpensive” wage-laborers. Producer cooperatives will maintain their organizational character best when they operate in a marginal industry where cooperation enhances members' productivity so that their earnings exceed their opportunity wages. In general, competitive markets for membership are not a sufficient condition to prevent the transformation of cooperatives into capitalist firms.     

Economies of scale in public education: an econometric analysis

This article investigates the sources of scale economies in the production of public education. The relationship between the average cost of producing educational output and school characteristics including school and district size is estimated using a neoclassical cost function. The empirical analysis used panel data from Utah school districts and estimates the function using the covariance and error component models after making necessary corrections for heteroskedasticity and autocorrelation. The uncorrected fixed effects model generates a significant negative coefficient on district size in both the cost and expenditure functions; the coefficient on number of students has the hypothesized sign but is not significant in either equation. After making various corrections for autocorrelation and heteroskedasticity, the coefficients have the correct signs and are significant in all equations. Thus, it is concluded that scale economies arise from both sources but that the evidence is stronger for district size.     

End-of-Course Evaluations as Indicators of Student Learning and Instructor Effectiveness

There are two aspects of this article that readers should find particularly interesting. First, Marlin and Niss provide additional data on the question of student evaluations of professors and courses. Second, they suggest the use of canonical correlation as an ideal way of facing the problems confronted in analyzing the educational production function. The authors assert that “canonical correlation would seem to answer many of the problems encountered in previous single-equation models….” Their research suggests that student evaluations can be used as surrogates for direct evaluations and that the former “do indeed measure the level of teacher input.”     

The economics of education and policy: Ideas for a principles course

There are many aspects of the “economics of education” that would make excellent examples for introductory economics students. The author presents two topics that are central to the economics of education and to human capital theory: the economic benefit (or “returns”) to schooling and educational attainment as an investment. There are two key concepts the author hopes students get from this discussion. The first is that there are both private and social benefits of schooling whence we derive the rationale for government intervention. The second is that educational attainment is an investment decision with both costs and benefits, and some risk.     

Stochastic equilibria with incomplete financial markets

We demonstrate the existence of equilibria with incomplete financial markets for stochastic economies whose information structure is given by an event tree, restricting attention to purely financial securities, those paying in units of account (e.g., “dollars”). Financial markets may be incomplete: some consumption streams may be impossible to obtain by any trading strategy. Securities may be individually precluded from trade at arbitrary states and dates. Sufficient conditions for the existence of stochastic equilibria are: continuous, convex, strictly monotonic preferences and strictly positive aggregate endowments. These conditions are weakened. A corollary states that any regime of security prices precluding arbitrage can be embedded in an equilibrium.     

The Relationship Between Economic Understanding and the Social Studies Curriculum

Much research is needed to determine the extent to which the high school social studies curriculum, and certain courses within that curriculum, contribute toward economic understanding. Boddy and Tocco report on their attempt to assess the social studies curriculum in Southwest Florida. They also single out one required course, Americanism vs. Communism, which was designed to “emphasize the free-enterprise-competitive economy of the United States,” and measure its impact on a sample of high school seniors. The findings are not encouraging. Although this study applies to one limited geographic area, others may find it interesting because it suggests the need for similar research in other parts of the nation.     

Strategic Privatization in Developing Countries

Privatization of state‐owned enterprises may have important welfare implications, in particular in less developed economies where markets are small and domestic firms are typically relatively weak, both technologically and financially. In these environments, a high‐tech foreign investor acquiring the state‐owned assets may end up dominating the local market, thereby harming local consumer and producer interests. A foreign investor, however, is likely to be both willing and able to offer a higher bid for the assets than local investors. This paper addresses the trade‐off for local governments between privatization revenues and foreign market power. The authors find that there may be an incentive to privatize “strategically” by selling the state‐owned firm to a local (less advanced) investor at a lower price in order to achieve a more competitive post‐privatization market structure.     

The influence of black markets on a queue-rationed centrally planned economy

In centrally planned economies in which prices are fixed, and the rationing mechanism is waiting line queues, we show that an equilibrium of waiting times exists. We then introduce a “black market” in which individuals can trade commodities that they have acquired through the official economy. An equilibrium of black market prices and waiting times is shown to exist; further, the economy with a black market is “queue-efficient.”. However, the introduction of black markets is not necessarily a Pareto improvement over an economy without black markets (even when we allow winners to compensate losers).     

Economic growth and poverty traps in sub-Saharan Africa: The role of education and TFP shocks

This paper investigates the “education-total factor productivity trade-off” in explaining income per worker differences between sub-Saharan (unlucky) and G7 (lucky) economies. First, we examine the dynamics of average years of schooling (i.e. education), capital per worker, income per worker, and total factor productivity (TFP) across sub-Saharan and G7 countries. We confirm that physical capital and education levels partially explain income per worker differences between lucky and unlucky economies. Second, we undertake a novel examination of the impact of technology shocks on income per worker, with the goal of understanding the role of technology variation in causing cross-country income per worker differences, and as a potential contributor to overall slow growth in the sub-Saharan region. In a vector autoregressive (VAR) framework, we show that the impact of “ad hoc” TFP shocks on income per worker is larger in unlucky economies than in lucky ones. We observe that average TFP volatility in the “unlucky world” is eight times higher than in the “G7 world”. We argue that the order of magnitude of the impact heavily depends on the level of the TFP volatility. Last, we suggest that the documented differences in the amount of physical capital and in the productivity of human capital between these two regions add conceptual support for the existence of poverty traps for sub-Saharan Africa.     

重庆市中学思想政治课教学现状与问题调查

随着中国素质教育和新一轮基础教育课程改革的深入,高中新课程改革必将对学生高考产生深远的影响。在结合2003年以来重庆初中思想政治课程改革实践基础上,对今年9月即将在高中新课程改革的可能出现的一些情况进行了分析,以期对新一轮中学思想政治课教学改革和发展提供一些有益的参考。     

Returns to skills,incentives to study and optimal educational standards

In imperfectly competitive labor markets returns to skills are lower than their productivity and educational standards may play an important role in stimulating students to provide efforts. We propose a principal-agent model to analyze the determinants of student effort and the setting of standards by a policy-maker maximizing alternative social welfare functions. We show that if the policy-maker takes into account individuals' future earnings, he finds it optimal to set lower standards in more distorted labor markets, whereas higher standards would be preferable for efficiency reasons. Moreover, we show that labor market distortions may also influence the amount of resources devoted to schools. Finally, it is shown that standard setting may be useful in preventing the opportunism of school principals in the use of resources.      

Credit Markets With Differences in Abilities: Education, Distribution, and Growth

This article presents an endogenous growth model in which credit markets affect time allocation of individuals with different educational abilities. Credit markets allow the more able to specialize in studying and the less able to specialize in working. This specialization can increase growth and welfare. This article also shows that in economies with high (low) levels of education abilities, the opening of credit markets induces a more disperse (equal) income distribution. The role of intergenerational transfers in overcoming the absence of credit markets is also discussed, as well as other forms of credit markets imperfections.     

What Makes Firms Competitive? States,Markets, and Organisational Embeddedness in Competitive Firm Restructuring in Postsocialist Economies

The prevailing transitions literature suggests that dynamic firms in postsocialist economies are the result of macroinstitutional reforms leading to the making of markets. This article builds on work in comparative political economy and economic sociology to show that the degree of competitive behaviour of postsocialist firms is determined not by the existence of general market institutions alone but by the kinds of organisational allies firms possess and the kinds of markets they compete in. Using firm survey data across 28 postsocialist economies, the article examines the determinants of competitive restructuring by firms, including product innovation, standards upgrade, financial transparency, and investments in research and development. The article confirms insights from comparative political economy which suggest that dynamic enterprise sectors emerge when governance is effective. However, at the firm level, the article finds that transnational ties and supportive policy environments are most significant in the making of dynamic postsocialist enterprises. The article also highlights important regional variation in firm behaviour and discusses the relationship between institutional frameworks, organisational embeddedness, and firm restructuring in postsocialist economies.     

Inverting the Classroom: A Gateway to Creating an Inclusive Learning Environment

Asserting that “elementary teachers are going to become increasingly involved with economic concepts, and that economic education at the elementary level is at an important developmental state,” Professor Ramsett explains how economics can be included in the elementary school curriculum without taking other subject matter out, and suggests approaches to the training of elementary teachers. He describes some innovative techniques being used at North Dakota's New School of Behavioral Studies, illustrates methods for motivating pupils, shows how economic concepts can be related to other subjects (such as arithmetic), and calls for cooperation between educators and liberal arts faculties in preparing the elementary teacher.     

Market structure and competitive equilibrium in dynamic economic models

Recently theorists have analyzed economies which potentially contain both finite and infinite horizon overlapping generations, using “Arrow-Debreu” (complete) markets. Typically, applied models assume recursive spot and contingent securities markets, implying a different equilibrium concept. Indeed, if infinite horizon agents are present recursive equilibria cannot exist without some side conditions on debt. With the right side conditions, we show that every recursive market equilibrium allocation is a complete market equilibrium allocation and vice versa. This bridges a gap between theory and applications, and extends existing equivalence results on market structure.     

Rio plus Ten: Politics,Poverty, and Environment

The purpose of this paper is to contrast the work of Douglass North and Karl Polanyi regarding financial institutions associated in market economies. Both implicitly acknowledge the synergy between public and private financial markets, which can serve to solidify an alliance between wealth holders and the state, potentially at the expense of “sociery” at large. This alliance may stimulate growth, according to North, as well as impose the strain of the market, according to Polanyi. Taken together, these insights undercut the classical story of the neutral role of money, as well as the notion of a clear distinction between public and private, politics and markets.     

Managing Financial Integration and Capital Mobility—Policy Lessons from the Past Two Decades

Emerging market experience over the past two decades has revealed the tenuous links between external financial integration and faster growth, and the proclivity of such integration to fuel costly crises. Emerging markets learned, converging to the middle ground of the macroeconomic trilemma. Following their crises of 1997–2001, emerging markets added financial stability as a goal, self‐insured by building up international reserves, and adopted a public finance approach to financial integration. The global crisis of 2008–09 illustrated that the advanced economies “overshot” the optimal degree of financial deregulation, while the resilience of the emerging markets validated their public finance approach to financial integration.