Education policies and optimal taxation

This paper studies the design of education policies in a setting in which optimal redistributive labor taxation is available. It is usually argued that the crucial parameter to guide education policy is the complementarity of education and ability. This is true only when labor supply is fixed or when income taxes are not allowed. I show that, if labor supply is endogenous and if the government can tax income in a nonlinear way, the crucial parameter is how the education elasticity of wage changes with ability. Taking the elasticity criterion into account, education subsidies are optimal in cases in which, under the complementarity criterion, education taxes would be optimal. To do this, I use an asymmetric information setting that motivates nonlinear taxation of income and education. JEL Classification H21 · H23 · H52 · I28     

Electoral Experience,Institutional Quality and Economic Development in Latin America

In a panel of 18 Latin American countries from 1900 to 2007, we test the degree to which institutions and geography affect country income. Using a new instrument, we find strong evidence that both institutions and geography are important determinants of country income. However, the penalty for economically unfavourable geography is much smaller than the potential benefits from good institutions. The coefficient estimates do not vary significantly when there are changes in the number of countries included in the analysis; the results for institutions are robust to the inclusion of country-fixed effects.     

Book Reviews

Brun, Jacques and Catherine Rhein (eds.) La ségrégation dans la ville: concepts et mesures Smith, Michael Peter and Joe R. Feagin (eds.) The bubbling cauldron: race, ethnicity and the urban crisis MacShane, Clay (ed.) Down the asphalt path: the automobile and the American city McAndrew, John P. Urban usurpation — from friar estates to industrial estates in a Philippine hinterland     

Enhancing art gallery visitors’ learning experience using wearable augmented reality: generic learning outcomes perspective

The potential of Information and Communication Technology-enhanced visitor learning experience is increasing with the advancement of new and emerging technologies in art gallery settings. However, studies on the visitor learning experience using wearable devices, and in particular, those investigating the effects of wearable augmented reality on the learning experience within cultural heritage tourism attractions are limited. Using the generic learning outcomes framework, this study aims to assess how the wearable augmented reality application enhances visitor’s learning experiences. Forty-four volunteers who were visiting an art gallery were divided into two groups, an experimental group and a control group. Following their visit to the gallery, the volunteers, who had and had not used wearable computing equipment, were interviewed, and the data were analysed using thematic analysis. Findings revealed that the wearable augmented reality application helps visitors to see connections between paintings and personalize their learning experience. However, there are some drawbacks such as lack of visitor–visitor engagement and the social acceptability.     

Exchange rate bubbles: Fundamental value estimation and rational expectations test

We propose a model of periodically collapsing bubbles which extends the Van Norden (1996) model, and nests it, by considering a non-linear specification for the bubble size in the survival regime, and the endogenous determination of the level of the fundamental value of the stochastic process. They allow us to test for rationality in the formation of expectations, and remove the arbitrariness of exogenously setting the level of the fundamental value. This general model is applied to the exchange rate of the Brazilian real to the US dollar from March 1999 to February 2011. The futures market exchange rate is used as a proxy of its expected future value, and three different structural models are considered for the determination of the fundamental value. The first two imply that the exchange rate satisfies either purchasing power parity (PPP), or a modified version of it. The third structural model is a version of the monetary model of exchange rate determination, fitted to the period under consideration. We obtain the maximum likelihood estimate of the parameters of the models, explore the properties of the errors, test its restricted versions, and compare the three specifications for the fundamental. We find that the models we propose fit well the data, and are useful in the heuristic interpretation of the exchange rate movements of the period. Finally we select the structural models that display the best performance, according to several criteria.     

Childbirth and poverty in Europe: A dynamic bivariate approach

We use the 2015–2018 European Union Statistics on Income and Living Conditions panel data and a dynamic bivariate probit model to estimate the impact of childbirth on the risk of poverty in 25 European countries. We model both poverty and childbirth mechanisms, identifying genuine state dependence and accounting for feedback effects from past poverty to childbirth. We find that childbirth slightly increases the risk of poverty in Europe, but some heterogeneities emerge at the country level. When disentangling the effects of childbirth conditional on past poverty status, it appears that childbirth determines redistributive effects possibly induced by welfare systems. We find evidence of genuine state dependence and suggests that discouraging factors induced by the experience of poverty itself has increased over time. The risk of poverty is triggered by the presence of dependent members in the household, while education and employment stability are helpful to combat poverty.     

HUMAN CAPITAL AND URBAN GROWTH IN ITALY, 1981–2001

Over the last decades of the XX century, human capital has emerged as a critical source of agglomeration economies fueling urban growth in advanced economies. Focusing on the Italian case, this paper assesses the contribution of human capital to urban growth, the latter gauged by employment growth between 1981 and 2001. A 10% higher share of college‐educated residents prompted a higher growth in employment in the 0.5–2.2% range. These results hold controlling for a wide set of urban characteristics and using an instrumental variable approach. By exploiting a spatial localization model, we disentangle the estimated effect into two components related to higher productivity and to higher life quality, respectively. We found that the former contributed to more than 60% of the effect at municipal level, and to over 90% at the wider local labor market level.