Barriers to skill acquisition in Brazil: Public and private school students performance in a public university entrance exam

This paper uses a novel data set to quantify the difference in performance of public and private school students in an entrance test exam of the major public university in Brazilian Northeast (Universidade Federal de Pernambuco – UFPE). Although there are many public universities in Brazil, from our knowledge, there is no study that uses data on entrance test scores at such universities to evaluate the determinants of students’ performance and the barriers for public school students to get in the good universities. The data set has detailed information on individual and school characteristics, and family background. We found that test scores of public school students are on average about 4.2–17% lower than those taken by private school students, depending on the set of controls. This result is robust when we address problems related to attrition, omitted variables (e.g., cognitive ability), and unobservable selectivity. We also show that once students get into the university, those from public schools perform as well as those from private schools. In addition, the proportion of public school students that gets into the university is roughly the same as the proportion of students doing the entrance exam. However, there is a strong barrier for public school students to get into high competitive majors. The fraction of students from public schools that gets into high competitive majors such as law, medicine, and electronic engineering is almost null. Our findings provide quantitative evidence to the common view that the Brazilian elitist high education system is an important channel for inequality persistence.     

Facts and distortions in an endogenous growth model with physical capital, human capital and varieties

This article studies a model with physical and human capital accumulation and varieties. The model includes several distortions: duplication effects, spillovers, creative destruction, surplus appropriability, and an erosion effect. We show that the duplication effect in R&D is essential to make the model replicate several stylized facts linked with R&D. We evaluate the distance to the optimal solution, comparing the strength of each distortion.     

On the effect of R&D in returns to experience

Using a recent macroeconomic database, we empirically estimate an ‘erosion effect’: we show that Total Factor Productivity (TFP) growth decreases returns to experience. The ‘erosion effect’ is typically stronger within the rich and the most experienced countries in the world. This article complements the scarce microeconomic literature on the issue and the theoretical macroeconomic literature recently coming to the conclusion that this effect has important implications for the interaction between human capital accumulation and TFP.     

Growth, development and natural resources: New evidence using a heterogeneous panel analysis

This paper explores whether natural resource abundance is a curse or a blessing. To do so, we firstly develop a theory consistent econometric model, in which we show that there is a long run relationship between real income, the investment rate, and the real value of oil production. Secondly, we investigate the long-run (level) impacts of natural resource abundance on domestic output as well as the short-run (growth) effects. Thirdly, we explicitly recognize that there is a substantial cross-sectional dependence and cross-country heterogeneity in our sample, which covers 53 oil exporting and importing countries with very different historical and institutional backgrounds, and adopt the non-stationary panel methodologies developed by Pesaran (2006) and Pedroni (2000) for estimation. Our results, using the real value of oil production, rent or reserves as a proxy for resource endowment, reveal that oil abundance has a positive effect on both income levels and economic growth. While we accept that oil rich countries could benefit more from their natural wealth by adopting growth and welfare enhancing policies and institutions, we challenge the common view that oil abundance affects economic growth negatively.     

Disentangling the relation between wealth and contraceptive use in India: a multilevel probit regression approach

This paper discusses the poverty-wealth impact on contraceptive use both at individual and community levels. A multilevel probit regression framework was set up to explain the use of contraceptive methods. We use data from the Indian 2005–06 National Family Health Survey (NFHS). It contains data on both the socio-demographic and health characteristics of Indian women, as well as an assembled measure of household wealth: the wealth index. The individual-level model confirms the association between contraceptive use and wealth. When controlling the community level, i.e. where the women live, the multilevel regression results show it has a significant effect on contraceptive use, explaining 19  % of the total variance. Finally, decomposing the wealth index at individual and community levels (average community wealth; individual centered wealth values), the effect of the community poverty-wealth level is significant and positive. To sum up, this framework of nested models reveals the significant effect of the community’s poverty-wealth dimension on each woman’s decision about contraception and suggests that the longstanding urban-rural differential in the contraceptive prevalence is mainly poverty-wealth driven.     

On the effects of human capital and R&D policies in an endogenous growth model

We introduce an external effect of existing technologies in human capital accumulation in an endogenous growth model and describe its steady-state and transition. We numerically solve the model to compare the quantitative effects of R&D policy with the quantitative effects of human capital policy in wealth and welfare. Although R&D subsidies have now an overall positive effect on growth, wealth and welfare, the calibration exercise shows that for plausible values for the parameters, human capital policy is simultaneously the most income and welfare-improving and the less expensive to the government.     

When sociable workers pay off: Can firms internalize social capital externalities?

We use an endogenous growth model to contrast the socially optimal allocation of human capital with the decentralized solution, in a context where workers make the choices that determine social capital accumulation. As social capital is expected to increase productivity but is not traded in markets, a positive social capital externality is identified. We discuss the possibility that, in response to this externality, firms subsidize social capital accumulation activities, incurring into additional costs that are recouped through productivity gains. This reaction by firms may be seen as a justification for some corporate social responsibility actions targeted at workers, although a full internalization of the externality does not look achievable in practice.     

Does tourism influence economic growth? A dynamic panel data approach

On average, tourism-specialized countries grow more than others. This is not consistent with the core of modern economic growth theory that suggests that economic growth is linked to sectors with high-tech intensity and large scale. In this article, we use appropriate panel data methods to study the relationship between tourism and economic growth. In general, we show that tourism is a positive determinant of economic growth both in a broad sample of countries and in a sample of poor countries. However, contrary to previous contributions, tourism is not more relevant in small countries than in a general sample.     

Profitability in Portuguese service industries: a panel data approach

Based on various panel models, we study the profitability determinants of Portuguese service industries. The results obtained show that profitability is persistent over time, and that for larger companies with greater growth, a lower level of debt and lower level of fixed assets are more profitable. Considering the results obtained, we can conclude that diversification of activities and motivation as well as the tendency to innovate contribute positively to increased profitability in Portuguese service industries, whereas the need to pay off debt charges periodically harms profitability. The government would be well advised to create special credit channels that would permit the greater growth of Portuguese service industries, especially those most inclined to innovate.     

Income Inequality and Technological Adoption

We relate technological adoption (of different technologies) with income inequality. In the process, we discover that some technologies, such as aviation, cell phones, electric production, internet, telephone, and TV, are skill-complementary in raising inequality. We construct standardized indexes of skill-complementary technological adoption for modern information and communication technologies (ICT), older ICT, production and transport technologies. We find strong evidence that older ICT and transport technologies (and less frequently modern ICT) tend to increase inequality. Additionally, we discover that results are much stronger in rich countries than in poor ones. Our results are quite robust to a series of changes in specifications, estimators, samples, and measurement of technology adoption. These results may bring insights into the design of incentive schemes for technology adoption.