a model of power biased technological change new technologies have allowed firms to monitor low skill workers more closely thus reducing the power of these workers we show that this power biased change may generate rising wage inequality and increases in the work intensity and unemployment of low skill workers

the role of application assistance and information in college decisions results from the h r block fafsa experiment growing concerns about low awareness and take up rates for government support programs like college financial aid have spurred calls to simplify the application process and enhance visibility we present results from a randomized field experiment in which low income individuals receiving tax preparation help were also offered immediate assistance and a streamlined process to complete the free application for federal student aid fafsa for themselves or their children treated participants were also provided with aid estimates that were compared against tuition cost amounts for nearby colleges the combined assistance and information treatment substantially increased fafsa submissions and ultimately the likelihood of college attendance persistence and aid receipt in particular high school seniors whose parents received the treatment were 8 percentage points more likely to have completed two years of college going from 28 to 36 during the first three years following the experiment families who received aid information but no assistance with the fafsa did not experience improved outcomes the findings suggest many other opportunities for using personal assistance to increase participation in programs that require filling out forms to become eligible jel codes i2 h4 j24 copyright 2012 oxford university press

a major in science initial beliefs and final outcomes for college major and dropout taking advantage of unique longitudinal data we provide the first characterization of what college students believe at the time of entrance about their final major relate these beliefs to actual major outcomes and provide an understanding of why students hold the initial beliefs about majors that they do the data collection and analysis are based directly on a conceptual model in which a student s final major is best viewed as the end result of a learning process we find that students enter school quite optimistic about obtaining a science degree but that relatively few students end up graduating with a science degree the substantial overoptimism about completing a degree in science can be attributed largely to students beginning school with misperceptions about their ability to perform well academically in science copyright 2014 oxford university press

the wage effects of high performance work organization in manufacturing an unresolved question about now widespread innovative work systems such as teams and quality programs is whether they influence wage determination this study examines that possible association in manufacturing the author uses data from the 1997 national establishment survey that allow examination of how new work systems affected not only employees who were directly involved in them but other workers as well the key finding is that for core blue collar manufacturing employees higher wages were associated with high performance work organization hpwo systems while higher skill levels and computer based technologies were associated with higher wages the key mechanism appears to have been productivity gains independent of skill and technology that were shared via various across the board wage payment systems hpwo systems appear to have increased managers wages as well although through different channels the author finds no evidence that hpwo related wage gains led to greater wage inequality amon

constrained after college student loans and early career occupational choices abstract in the early 2000s a highly selective university introduced a no loans policy under which the loan component of financial aid awards was replaced with grants we use this natural experiment to identify the causal effect of student debt on employment outcomes in the standard life cycle model young people make optimal educational investment decisions if they are able to finance these investments by borrowing against future earnings the presence of debt has only income effects on investment decisions we find that debt causes graduates to choose substantially higher salary jobs and reduces the probability that students choose low paid public interest jobs we also find some evidence that debt affects students academic decisions during college our estimates suggest that recent college graduates are not life cycle agents two potential explanations are that young workers are credit constrained or that they are averse to holding debt we find suggestive evidence that debt reduces students donations to the institution in the years after they graduate and increases the likelihood that a graduate will default on a pledge made during her senior year we argue this result is more likely consistent with credit constraints than with debt aversion

choosing the field of study in postsecondary education do expected earnings matter abstract this paper examines the determinants of the choice of the college major when the length of studies and future earnings are uncertain we estimate a three stage schooling decision model focusing on the effect of expected earnings on major choice we control for dynamic selection through the use of mixture distributions exploiting variations across the french business cycle in the relative returns to the majors our results yield a very low though significant elasticity of major choice to expected earnings this suggests that at least for the french university context nonpecuniary factors are a key determinant of schooling choices

building the stock of college educated labor half of college students drop out without completing a degree this paper establishes a causal link between college costs and degree completion i use quasi experimental methodology to analyze two state scholarship programs the programs increase the share of the exposed population with a college degree by three percentage points with stronger effects among women a cost benefit analysis indicates that the programs are socially efficient at rates of return to schooling as low as 5 percent even with the offer of free tuition many students continue to drop out suggesting tuition costs are not the only impediment to college completion

determinants of college major choice identification using an information experiment this article studies the determinants of college major choice using an experimentally generated panel of beliefs obtained by providing students with information on the true population distribution of various major specific characteristics students logically revise their beliefs in response to the information and their subjective beliefs about future major choice are associated with beliefs about their own earnings and ability we estimate a rich model of college major choice using the panel of beliefs data while expected earnings and perceived ability are a significant determinant of major choice heterogeneous tastes are the dominant factor in the choice of major analyses that ignore the correlation in tastes with earnings expectations inflate the role of earnings in college major choices we conclude by computing the welfare gains from the information experiment and find positive average welfare gains

upper secondary school completion and the business cycle previous evidence suggests that enrollment in post compulsory education increases decreases in cyclical downturns upturns however little evidence exists on whether enrollment is successfully transformed into completed education this paper adds to the literature by analyzing the relationship between completion of upper secondary education and regional unemployment using norwegian regional panel data on students graduating from compulsory school between 1981 and 2004 we find robust evidence that completion rates are countercyclical our results suggest that poor labor market conditions when starting upper secondary education have a lasting effect and motivate students to stay in school and graduate

technology skill and the wage structure insights from the past recent technological advances and a widening of the wage structure have led many to conclude that technology and human capital are relative complements the possibility that such a relationship exists today has prompted a widely held conjecture that technology and skill have always been relative complements according to this view technological advance always serves to widen the wage structure and only large injections of education slow its relentless course a related literature demonstrates that capital and skill are relative complements today and in the recent past zvi griliches 1969 thus capital deepening appears also to have increased the relative demand for the educated serving further to stretch the wage structure physical capital and technology are now regarded as the relative complements of human capital but have they been so for the past two centuries some answers have already been provided a literature has emerged on the bias to technological change across history that challenges the view that physical capital and human capital have always been relative complements many of the major technological advances of the 19th century substituted physical capital raw materials and unskilled labor for highly skilled artisans john a james and jonathan s skinner 1985 but if physical capital and human skill were not always relative complements when did they become so and when did new technology become skilled labor s complement we argue that capital skill complementarity was manifested in the aggregate economy as particular technologies spread specifically batch and continuous process methods of production across the past two centuries manufacturing shifted first from artisanal to mechanized and nonmechanized factory production then from simple factories to assembly lines and finally from assembly lines to continuous and batch processes although few products were manufactured by more than two of the technologies mentioned manufacturing as a whole progressed in the fashion described in considering our argument it is useful to envision manufacturing as having two distinct stages i a machine installation and machine maintenance segment and ii a production or assembly portion capital and educated skilled labor we will argue are always complements in the machine maintenance segment of manufacturing regardless of the technology machinists for example are needed to install machinery and make it run the workable capital created by skilled labor plus raw capital is then used by unskilled labor to create the final product in the production or assembly segment of manufacturing how the adoption of a technology alters the relative demand for skilled workers will depend on whether the machinemaintenance demand for skilled labor is offset by the production process demand for unskilled labor

quality over quantity reexamining the link between entrepreneurship and job creation although much has been written about the quantity of jobs created by entrepreneurs scholars have yet to examine the quality of these jobs in this article the authors begin to address this important issue by examining nearly 5 000 businesses that began operations in 2004 they investigate the extent to which nascent employers provide what many think of as quality jobs those offering health care coverage and a retirement plan the authors find that because of small scale constrained resources and protection from institutional pressures start up companies do not provide their employees with either of these proxies for job quality and their likelihood of offering health or retirement benefits increases only marginally over their first six years of operation the finding that entrepreneurs impressive record of job creation is not matched by a similarly impressive outcome with respect to job quality challenges policymakers to ensure that entrepreneurs are encouraged to create quality employment opportunities in the course of creating new businesses abstract from author

do recessions keep students in school the impact of youth unemployment on enrolment in post compulsory education in england in this paper i assess the impact of the youth labour market on enrolment in post compulsory education to that end i construct data for a panel of english regions and identify youth labour market effects using variation in youth unemployment rates across regions and over time my estimates suggest that the youth labour market has large enrolment impacts at least twice as large as suggested by uk estimates based on time series data this helps to explain why enrolment growth slowed down from the mid 1990s and suggests that a weakening youth labour market could cause enrolment to increase again

what has been learned about labor supply in the past twenty years the main advance in the study of labor supply in the past 20 years has come in recognizing and interpreting the variety of different labor supply functions that coexist in the empirical literature a crucial theoretical distinction with important empirical payoff is that between labor supply choices at the extensive margin i e labor force participation and employment choices and choices at the intensive margin i e choices about hours of work or weeks of work for workers another important distinction is the one between a descriptive labor supply function and a structural supply function that can be the basis for out of sample policy investigations concerning responses to tax and welfare programs and evaluations of welfare losses a full understanding of the participation hours dichotomy leads to an appreciation of the importance of the problem of selection bias what is the wage to impute to a nonworking person these distinctions are a legacy of the research conducted on labor supply over the past 20 years many important empirical questions have been addressed i how strong are the effects of taxes welfare and transfer programs on labor supply ii how important is intertemporal substitution can life cycle labor supply models explain business cycle labor supply behavior iii has the consensus view of the 1960 s of high labor supply elasticities for married women and low labor supply elasticities for married men held up all of the empirical evidence assembled on labor supply must be called into question in the light of important research on the basic quality of the data conducted by analysts at the university of michigan i discuss this evidence in a concluding section except for my discussion of measurement issues i focus only on the major discoveries about which a general consensus has emerged

changes in the labor supply behavior of married women 1980 2000 using march current population survey data we investigate married women s labor supply from 1980 to 2000 we find a large rightward shift in their labor supply function for annual hours in the 1980s with little shift in the 1990s these shifts account for most of the slowdown in the growth of labor supply during this period a major development was the dramatic decrease in the responsiveness of married women s labor supply to their own and husbands wages their own wage elasticity fell by 50 56 while their cross wage elasticity fell by 38 47 in absolute value

wages employment structure and employer size wage premia their relationship to advanced technology usage at us manufacturing establishments a common theme in the labour econiomics literature is that use of advanced technology in production requires a skilled and educated workforce using a new survey of production processes at us manufacturing plants we ask whether plants that employ advanced technology require a skilled workforce we find that plants that use the most advanced technology pay the highest wages and employ the greatest fraction of non production workers who are generally regarded as more skilled than production workers the inclusion in standard wage regressions of variables that indicate the use of advanced technology reduces the size wage premia by as much as 60 for some size categories

investment over the business cycle insights from college major choice this paper examines the relationship between individuals personal exposure to economic conditions and their investment choices in the context of human capital focusing on bachelor s degree recipients we find that birth cohorts exposed to higher unemployment rates during typical schooling years select majors that earn higher wages that have better employment prospects and that more often lead to work in a related field much of this switching behavior can be considered a rational response to di erences in particular majors labor market prospects during a recession however higher unemployment leads to other meaningful changes in the distribution of majors conditional on changes in lifetime expected earnings recessions encourage women to enter male dominated fields and students of both genders pursue more dicult majors such as stem fields these findings imply that the economic environment changes how students select majors possibly by encouraging them to consider a broader range of possible degree fields finally in the absence of this compensating behavior we estimate that the average estimated costs of graduating in a recession would be roughly ten percent larger jel e32 i23 j22 j24

do business cycles affect state appropriations to higher education 1 introduction and motivation business cycles affect higher education in a number of important ways anecdotal evidence from college admissions officers and administrators as well as empirical evidence on the behavior of students and institutions of higher education suggest that enrollment in higher education is countercyclical for example betts and mcfarland 1995 recently showed that enrollments in community colleges are highly responsive to changes in local labor market conditions these authors found a 1 increase in the unemployment rate among all adults associated with a 4 increase in enrollment at community colleges in a large panel of community colleges across the united states leslie and ramey 1986 found a similar relationship between economic conditions and enrollment using data aggregated to the regional level this paper examines the relationship between state appropriations to higher education and state specific measures of business cycle conditions in order to better understand the effects of the business cycle on government funding of higher education 1 i further investigate the relationship between the business cycle and state government appropriations to higher education reported by betts and mcfarland 1995 and leslie and ramey 1986 both of these studies aggregated state and local government appropriations to higher education to the regional and national level while data aggregated to the regional and national levels are readily available decisions about government funding to higher education are made at the state and local levels and these decisions may be affected more by local economic conditions than by aggregate economic conditions if the timing of turning points in the business cycle varies across states then aggregating government appropriations data across states may obscure important statespecific phenomena most research has focused on the effects of economic conditions on demand for higher education one notable exception is leslie and ramey 1986 who examined the relationship between enrollment business cycles and state appropriations to higher education using regional appropriations and enrollment data and a national measure of business cycle conditions that study found a procyclical relationship between the nber coincident index and regional level government appropriations to higher education for one region the estimated elasticity of appropriations with respect to changes in the coincident index was three suggesting that a 1 change in the nber coincident index was associated with a 3 change in appropriations to higher education in that region this study also highlighted the complex relationship between state funding for higher education enrollment and business cycle conditions by documenting a statistically significant relationship between enrollment and state appropriations at the regional level although they found that the appropriations enrollment relationship weakened after 1977 betts and mcfarland 1995 also describe in an informal way using aggregate data a procyclical relationship between the business cycle and funding for higher education these authors report that aggregate state and local government appropriations to higher education fell in the years 1971 1975 1980 1982 as well as in several years in the early 1990s all of these years are either coincident with or immediately following years when the nber dating committee has identified a cyclical downturn in the economy the transmission mechanism linking business cycles and government appropriations to higher education during recessionary periods seems clear recessions reduce tax revenues state and local governments most of which operate under legally required balanced budget restrictions reduce appropriations to institutions of higher education as well as other types of expenditures in order to balance their budgets betts and mcfarland point out that these cyclical patterns of government support for higher education may place tremendous financial pressure on institutions of higher education during economic downturns because the cuts in government funding happen at the same time enrollments are increasing

initial labor market conditions and long term outcomes for economists each year graduate students entering the academic job market worry that they will suffer due to uncontrollable macroeconomic risk given the importance of general human capital and the relative ease of publicly observing productivity in academia one might expect that long term labor market outcomes for students graduating in unfavorable climates will resemble long term outcomes for those graduating in favorable climates in this paper i analyze the relationship between macroeconomic conditions at graduation initial job placement and long term outcomes for ph d economists from seven programs using macroeconomic conditions as an instrument for initial placement i show that a quality and type of initial job have a causal effect on long term job characteristics i also show that better initial placement increases research productivity which helps to limit the set of economic models that can explain the effect of initial placement on long term jobs

who suffers during recessions in this paper we examine how business cycles affect labor market outcomes in the united states we conduct a detailed analysis of how cycles affect outcomes differentially across persons of differing age education race and gender and we compare the cyclical sensitivity during the great recession to that in the early 1980s recession we present raw tabulations and estimate a state panel data model that leverages variation across u s states in the timing and severity of business cycles we find that the impacts of the great recession are not uniform across demographic groups and have been felt most strongly for men black and hispanic workers youth and low education workers these dramatic differences in the cyclicality across demographic groups are remarkably stable across three decades of time and throughout recessionary periods and expansionary periods for the 2007 recession these differences are largely explained by differences in exposure to cycles across industry occupation employment

estimating marginal returns to education this paper estimates marginal returns to college for individuals induced to enroll in college by different marginal policy changes the recent instrumental variables literature seeks to estimate this parameter but in general it does so only under strong assumptions that are tested and found wanting we show how to utilize economic theory and local instrumental variables estimators to estimate the effect of marginal policy changes our empirical analysis shows that returns are higher for individuals with values of unobservables that make them more likely to attend college we contrast our estimates with iv estimates of the return to schooling

career technical education and labor market outcomes evidence from california community colleges career technical education cte programs at community colleges are increasingly seen as an attractive alternative to four year colleges yet little systematic evidence exists on the returns to specific certificates and degrees we estimate returns to cte programs using administrative data from the california community college system linked to earnings records we employ estimation approaches including individual fixed effects and individual specific trends and find average returns to cte certificate and degrees that range from 14 to 45 percent the largest returns are for programs in the healthcare sector estimated returns in non health related programs range from 15 to 23 percent end page 986 abstract from author

high performance work practices and core employee wages evidence from italian manufacturing plants past research has provided mixed evidence on the relationship between high performance work practices hpwps and wages drawing from more than 1 800 interviews with the hr managers in a stratified

the effects of macroeconomic conditions at graduation on overeducation this article shows that unfavorable economic conditions at graduation decrease the likelihood of a good job worker match over a worker s subsequent career mismatch is quantified in terms of overeducation by both industry and occupation the german socio economic panel and region level unemployment rates from 1994 to 2012 are used instrumental variables estimates account for endogenous graduation timing a single percentage point increase in regional unemployment causes an increase in the probability of overeducation of 1 6 1 7 percentage points for university graduates effects for technical tertiary education and apprenticeship graduates are smaller labor market entry conditions affect workers for up to 9 years after graduation jel j23 j22 e32 i23

empirical age earnings profiles the human capital earnings function in which earnings are expressed as a quadratic in potential experience is probably the most widely accepted empirical specification in economics in spite of its widespread acceptance the human capital earnings function provides a very poor approximation of the true empirical relationship between earnings and experience the standard formulation understates early career earnings growth by about 30 50 and overstates midcareer growth by 20 50 however simple alternative specifications that fit the data are available

using unemployment rates as instruments to estimate returns to schooling i use state unemployment rates during a person s teenage years to estimate the returns to schooling a higher unemployment rate reduces the opportunity costs of attending school using the same 1980 census data set that angrist and krueger 1991 use i also estimate returns to schooling with a modified version of their quarter of birth instrument the estimates from the two stage least squares 2sls model using the unemployment rate and the model using the quarter of birth instruments are almost identical in addition these 2sls estimates are larger than the ordinary least squares ols estimates supporting this counterintuitive yet prevalent result in the literature

the impact of covid 19 on student experiences and expectations evidence from a survey abstract in order to understand the impact of the covid 19 pandemic on higher education we surveyed approximately 1500 students at one of the largest public institutions in the united states using an instrument designed to recover the causal impact of the pandemic on students current and expected outcomes results show large negative effects across many dimensions due to covid 19 13 of students have delayed graduation 40 have lost a job internship or job offer and 29 expect to earn less at age 35 moreover these effects have been highly heterogeneous one quarter of students increased their study time by more than 4 hours per week due to covid 19 while another quarter decreased their study time by more than 5 hours per week this heterogeneity often followed existing socioeconomic divides lower income students are 55 more likely than their higher income peers to have delayed graduation due to covid 19 finally we show that the economic and health related shocks induced by covid 19 vary systematically by socioeconomic factors and constitute key mediators in explaining the large and heterogeneous effects of the pandemic

earnings inequality and the business cycle abstract economists have long viewed recessions as contributing to increasing inequality however this conclusion is largely based on data from a period in which inequality was increasing over time this paper examines the connection between long run trends and cyclical variation in earnings inequality we develop a model in which cyclical and trend inequality are related and find that in our model recessions tend to amplify long run trends i e they involve more rapidly increasing inequality when long run inequality is increasing and more rapidly decreasing inequality when long run inequality is decreasing in support of this prediction we present evidence that during the first half of the 20th century when earnings inequality was generally declining earnings disparities indeed appeared to fall more rapidly in downturns at least among workers at the top of the earnings distribution

cobweb versus rational expectations models abstract a cobweb model of occupational choice is found to fit the data almost as well as a rational expectations model even though there are large forecastable changes in demand striking differences however are revealed when we simulate the two models

on the regional labour market determinants of female university enrolment in europe casarico a profeta p and pronzato c d on the regional labour market determinants of female university enrolment in europe regional studies this paper empirically investigates how young women s decisions of investing in post secondary education are affected by labour market outcomes of older women living in the same region eu silc data on educational decisions of women who completed secondary schooling are used and indicators of the regional labour market are constructed exploiting regional and time variability it is found that the share of working women with young children of women with managerial positions and the self employed positively affect the probability to enrol significant effects of these variables for men are not found

opening the box information technology work practices and wages using 1994 95 survey data on customer service representatives in 303 u s bank branches the authors investigate the effects on wages of information technology it of work practices and of those two factors in combination offline high involvement practices measured by the presence of quality circles were related positively to wages as was more extensive use of it that supports sales efforts where it was used more extensively to automate routine processes wages were lower in branches that did not have high involvement work practices the effects are partially explained by higher education requirements and more extensive introductory training in higher wage jobs

safe port in a storm the impact of labor market conditions on community college enrollments the paper examines the impact of the business cycle on enrollments and finances at individual community colleges between the late 1960s and the mid 1980s we find that 1 percent increases in the unemployment rates of recent high school graduates and of all adults are associated with rises in full time attendance of about 0 5 percent and 4 percent respectively part time enrollment exhibits similar anticyclical patterns this link carries over in large part to degrees obtained in contrast state and local appropriations per student are procyclical we interpret this funding pattern as a failure to integrate education policy sufficiently closely with labor market policy

changes in college skills and the rise in the college wage premium the college wage premium for new labor market entrants rose sharply during the 1980s we ask how much of this change arose from changes in the skill level of the typical college graduate we find that skills attained prior to college as measured by standardized test scores and high school grades had no effect on the change in the college wage premium for men in contrast the returns to math ability rose considerably for women failing to account for math skills thus substantially overstates the growth in the female college wage premium skills acquired in college as reflected in the distribution of students across majors had important effects on the relative wages of men the trend away from low skill subjects such as education and toward high skill subjects such as engineering accounts for one fourth of the rise in the male college wage premium

deadline effects and inefficient delay in bargaining with endogenous commitment abstract bilateral sequential negotiators delay agreements until a deadline if a player that rejects an offer is subsequently committed not to accept any poorer proposal and if the common discount factor is close enough to one journal of economic literature classification numbers c7 c78 j52

bargaining with history dependent preferences abstract two impatient players bargain over a pie of size one according to the infinite alternating offers procedure players payoffs depend not only on the outcome but also on the process of the bargaining specifically they prefer impasse to any agreement that gives them lower discounted utility than would have been derived from accepting earlier offers we characterize the essentially unique subgame perfect equilibrium path which consists of gradual concessions the more patient players are the longer it takes them to reach an agreement when players become infinitely patient the efficiency loss is substantial yet the equilibrium division converges to the nash solution

the returns to computer use revisited have pencils changed the wage structure too are the large measured wage differentials for on the job computer use a true return to computer skills or do they just reflect that higher wage workers use computers on their jobs we examine this issue with three large cross sectional surveys from germany first we confirm that the estimated wage differential associated with computer use in germany is very similar to the u s differential second we also measure large differentials for on the job use of calculators telephones pens or pencils or for those who work while sitting down we argue that these findings cast some doubt on the literal interpretation of the computer use wage differential as reflecting true returns to computer use or skill

predicted future earnings and choice of college major using data from the national longitudinal survey of young men the author of this paper examines the relationship between predicted future earnings for five broad fields of study and college students choice of major conditional logit models of major choice that incorporate alternative predicted earnings variables are specified and estimated the results indicate that holding family background characteristics constant individuals are likely to choose majors offering greater streams of future earnings rather than as some have argued majors with higher beginning earnings at the time of the choice it is also found that earnings profiles corrected for self selection bias have flattened for more recent graduates in business liberal arts and education the life cycle earnings in these disciplines appear to be more severely depressed than those in science and engineering

alternating offer bargaining with endogenous commitment abstract we revisit the classical alternating offer bargaining model further assuming that players cannot reduce their proposals during the game in equilibrium players have history dependent strategies and do not necessarily reach an agreement immediately in the first stage

the demand for and return to education when education outcomes are uncertain this article treats education as a sequential choice that is made under uncertainty a simple model is used to explore the effects of ability high school preparation preferences for schooling the borrowing rate and ex post payoffs to college on the probability of various post secondary college outcomes and the ex ante return to starting college the model motivates an empirical method of accounting for uncertainty about educational outcomes and for nonlinearity in the relationship between years of education and earnings when estimating the expected return to the first year of college

do high performance work practices exacerbate or mitigate the gender pay gap the impact of performance oriented work practices on the gender pay gap has been the subject of considerable conjecture but little empirical investigation using the 2004 and 2011 british workplace employment relations surveys the analysis finds that whilst average earnings are significantly higher for men and women across private sector workplaces that have introduced so called high performance work practices the presence of such practices is not associated with a narrowing of the gender pay gap and if anything tends to exacerbate the differential in earnings between men and women data from the 2004 survey suggest that women are more likely to work in high performance workplaces but this is not the case for 2011 there is no evidence that gender segregation is significantly less in high performance workplaces than in workplaces taking a more traditional route policy makers and employing organisations therefore need to be careful in reconciling their performance and equality strategies in particular they need to examine whether the former are truly gender neutral this requires additional measures possibly the introduction of human resource audits in the public and private sectors

the business cycle human capital accumulation nexus and its effect on hours worked volatility abstract this paper studies hours worked volatility and the cyclicality of human capital investments by embedding a ben porath life cycle model of human capital accumulation into an rbc setting agents differ across two dimensions age and productivity in learning our results show that individuals invest more in human capital during economic downturns however human capital accumulation is more counter cyclical for young and low productivity individuals because they face a lower opportunity cost of education and a higher marginal product of human capital these results are confirmed empirically using us data from the current population survey and the american time use survey in addition the paper contributes to the rbc literature by showing that the model s business cycle properties in particular hours worked volatility are sensitive to assumptions of heterogeneity introducing heterogeneity in productivity increases the volatility of aggregate hours worked and changes the life cycle profile for hours volatility to better match the data

the varied economic returns to postsecondary education new evidence from the class of 1972 this paper estimates the returns to postsecondary education using the national longitudinal survey of the class of 1972 with earnings measured at about age 32 the results are based on transcripts rather than self reports about the amount of education allowing postsecondary education to be more precisely described than usual the results confirm the well known returns to b a degrees other credentials associate degrees and certificates for women also lead to higher earnings and wage rates though indirectly these credentials gain individuals access to jobs where they accumulate more experience and on the job training but provide no further advantage once experience and ojt are controlled most individuals who enroll in postsecondary education but fail to complete credentials have no higher earnings than high school graduates the effects of experience high school achievement and family background are familiar the results indicate a fundamental difference between labor markets for college graduates and the sub baccalaureate labor market

field of study earnings and self selection why do individuals choose different types of post secondary education and what are the labor market consequences of those choices we show that answering these questions is difficult because individuals choose between several unordered alternatives even with a valid instrument for every type of education instrumental variables estimation of the payoffs require information about individuals ranking of education types or strong additional assumptions like constant effects or restrictive preferences these identification results motivate and guide our empirical analysis of the choice of and payoff to field of study our context is norway s post secondary education system where a centralized admission process covers almost all universities and colleges this process creates credible instruments from discontinuities which effectively randomize applicants near unpredictable admission cutoffs into different fields of study at the same time it provides us with strategy proof measures of individuals ranking of fields taken together this allows us to estimate the payoffs to different fields while correcting for selection bias and keeping the next best alternatives as measured at the time of application fixed we find that different fields have widely different payoffs even after accounting for institutional differences and quality of peer groups for many fields the payoffs rival the college wage premiums suggesting the choice of field is potentially as important as the decision to enroll in college the estimated payoffs are consistent with individuals choosing fields in which they have comparative advantage we also test and reject assumptions of constant effects or restrictive preferences suggesting that information on next best alternatives is essential to identify payoffs to field of study