rates of return to human capital a test using el salvador data most of the empirical work on human capital has been confined to conditions in developed countries this is probably due to difficulties in obtaining data for other countries it would be interesting to see how robust the theory and its associated models are in conditions regarded as typical for developing countries this will be considered here using a large data set describing the el salvador labor market two questions will be examined namely a how well does the earnings function of the human capital theory explain earnings distribution in el salvador and b does the return to training called experience here approximate the return to school as is often assumed in human capital research the latter issue is of course related to the notion of overtaking the point in the experience profile when the flat earnings stream is intersected from below by the earnings stream affected by postschool investments

entrepreneurial human capital and the long run survival of firms in india abstract this paper analyses the characteristics of entrepreneurs that contribute to firms survival in less developed countries ldcs the study which relies on data collected in a 1971 survey of entrepreneurs in south india and a follow up survey of surviving firms in 1993 finds that entrepreneurial human capital greatly influences firm survival the results indicate that firms founded by older entrepreneurs in higher castes are most likely to survive but that increased education of the founding entrepreneur reduces survival these results provide evidence that opportunities of entrepreneurs outside the firm ignored in most theories are important in firm survival

an experiment on time preference and misprediction in unpleasant tasks we experimentally investigate the time inconsistent taste for immediate gratification and future preference misprediction across 7 weeks 100 participants choose the number of unpleasant transcription tasks given various wages to complete immediately and at different future dates participants preferred 10 12 fewer tasks in the present compared to any future date leading to an estimated of 0 83 comparing predictions with actual immediate work choices provides evidence against substantial sophistication with estimates implying that participants understand no more than 24 of their present bias finally we find evidence of projection bias participants wished to complete 4 12 fewer tasks when decisions were elicited right after completing tasks rather than before

options for economic and political reform in sweden sweden assar lindbeck per molander torsten persson olof peterson agnar sandmo birgitta swedenborg and niels thygesen this paper summarizes an official report to the swedish government and general public the economic crisis in sweden is explained by both system failures and specific policy mistakes the system failures include distorted incentives and markets and inappropriate and outdated institutions the deep recession and extraordinary rise in unemployment started as a collision between inflationary wage development and attempts to pursue a hard currency policy the resulting loss of international competitiveness in the tradable sector was accompanied by increased real interest rates collapsing real estate prices and a related financial crisis following the floating of the swedish krona in november 1992 the main problem became a domestic demand collapse which has been accentuated by a spectacular rise in the household saving rate the report emphasizes that good policy advice is not enough it is also necessary to analyse and reform the institutions which continually produce undesired outcomes with respect not only to macroeconomic stability but also economic efficiency and growth the proposed institutional reforms are designed to restore a highly competitive market system and to facilitate a responsible fiscal stabilization programme this would also enhance the medium run credibility of government policies and provide scope for a more expansionary policy in the short run

semiparametric inference in dynamic binary choice models we introduce an approach for semiparametric inference in dynamic binary choice models that does not impose distributional assumptions on the state variables unobserved by the econometrician the proposed framework combines bayesian inference with partial identification results the method is applicable to models with finite space of observed states we demonstrate the method on rust s model of bus engine replacement the estimation experiments show that the parametric assumptions about the distribution of the unobserved states can have a considerable effect on the estimates of per period payoffs at the same time the effect of these assumptions on counterfactual conditional choice probabilities can be small for most of the observed states

job search and hyperbolic discounting structural estimation and policy evaluation this paper estimates the structural parameters of a job search model with hyperbolic discounting and endogenous search effort it estimates quantitatively the degree of hyperbolic discounting and assesses its implications for the impact of various policy interventions aimed at reducing unemployment the model is estimated using data on unemployment spells and accepted wages from the national longitudinal survey of youth nlsy the likelihood function explicitly incorporates all the restrictions implied by the optimal dynamic programming solution to the model both observed and unobserved heterogeneity are accounted for the results point to a substantial degree of hyperbolic discounting especially for low and medium wage workers the structural estimates are also used to evaluate alternative policy interventions for the unemployed estimates based on a model with exponential discounting may lead to biased inference on the economic impact of policies jel c6 c73 d90 j64 j68

counterfactual decomposition of changes in wage distributions using quantile regression we propose a method to decompose the changes in the wage distribution over a period of time in several factors contributing to those changes the method is based on the estimation of marginal wage distributions consistent with a conditional distribution estimated by quantile regression as well as with any hypothesized distribution for the covariates comparing the marginal distributions implied by different distributions for the covariates one is then able to perform counterfactual exercises the proposed methodology enables the identification of the sources of the increased wage inequality observed in most countries specifically it decomposes the changes in the wage distribution over a period of time into several factors contributing to those changes namely by discriminating between changes in the characteristics of the working population and changes in the returns to these characteristics we apply this methodology to portuguese data for the period 1986 1995 and find that the observed increase in educational levels contributed decisively towards greater wage inequality copyright 2005 john wiley sons ltd

job search and impatience workers who are more impatient search less intensively and set lower reservation wages the effect of impatience on exit rates from unemployment is therefore unclear if agents have exponential time preferences the reservation wage effect dominates for sufficiently patient individuals so increases in impatience lead to higher exit rates the opposite is true for agents with hyperbolic time preferences using two large longitudinal data sets we find that impatience measures are negatively correlated with search effort and the unemployment exit rate and are orthogonal to reservation wages impatience substantially affects outcomes in the direction predicted by the hyperbolic model

public private sector wage differentials in canada evidence from quantile regressions abstract quantile regressions are used to estimate the size of the public sector wage premium in canada we find that public sector rent payments tend to be highest for federal government employees females and individuals at the lower tail of the wage distribution

paying not to go to the gym how do consumers choose from a menu of contracts we analyze a novel dataset from three u s health clubs with information on both the contractual choice and the day to day attendance decisions of 7 752 members over three years the observed consumer behavior is difficult to reconcile with standard preferences and beliefs first members who choose a contract with a flat monthly fee of over 70 attend on average 4 3 times per month they pay a price per expected visit of more than 17 even though they could pay 10 per visit using a 10 visit pass on average these users forgo savings of 600 during their membership second consumers who choose a monthly contract are 17 percent more likely to stay enrolled beyond one year than users committing for a year this is surprising because monthly members pay higher fees for the option to cancel each month we also document cancellation delays and attendance expectations among other findings leading explanations for our findings are overconfidence about future self control or about future efficiency overconfident agents overestimate attendance as well as the cancellation probability of automatically renewed contracts our results suggest that making inferences from observed contract choice under the rational expectation hypothesis can lead to biases in the estimation of consumer preferences

changes in the u s wage structure 1963 1987 application of quantile regression the 1980 s witnessed rapid changes in the structure of wages in the united states in this study recently developed techniques for quantile regression are applied to every march current population survey since 1964 and changes in the return to schooling and experience at different points of the wage distribution are examined the quantile regression technique parsimoniously describes the entire conditional wage distribution this conditional distribution is used to examine changes in within group wage inequality as measured by the difference between conditional quantiles two linear models are considered a simple one group model and a 16 group model the results suggest that the returns to schooling and experience differ across quantiles of the wage distribution but their patterns of change are similar significant differences in wage inequality are also found across the various skill groups the paper also presents a new imputation method for cps data

is addiction rational theory and evidence this paper makes two contributions to the modeling of addiction first we provide new and convincing evidence that smokers are forward looking in their smoking decisions using state excise tax increases that have been legislatively enacted but are not yet effective and monthly data on consumption second we recognize the strong evidence that preferences with respect to smoking are time inconsistent with individuals both not recognizing the true dife culty of quitting and searching for self control devices to help them quit we develop a new model of addictive behavior that takes as its starting point the standard rational addiction model but incorporates time inconsistent preferences this model also exhibits forward looking behavior but it has strikingly different normative implications in this case optimal government policy should depend not only on the externalities that smokers impose on others but also on the internalities imposed by smokers on themselves we estimate that the optimal tax per pack of cigarettes should be at least one dollar higher under our formulation than in the rational addiction case

do consumers correctly expect price reductions testing dynamic behavior the assumption that consumers are fully rational and hold correct price expectations is demanding in dynamic settings we claim that it is testable provided that market level data on prices and purchases are available we find that consumers hold simple expectations regarding the timing of promotions for music albums consumers act as if they were aware of reductions but did not revise their beliefs over time the anticipation effect due to strategically delaying purchase amounts to 1 5 of the decision to purchase during regular periods these results have implications in terms of demand estimation optimal pricing and welfare computations

earnings functions for the self employed comment abstract the standard human capital earnings model is applied to data from a 1975 socioeconomic survey conducted in tehran iran results show that the returns to schooling for the self employed not including street vendors canvassers and newsvendors are statistically equivalent to those of wage and salary workers thus in contradiction to conclusions drawn from a study by chiswick 1976 the high rates of return to schooling found in many studies of less developed countries do not appear to be the result of the systematic exclusion of the self employed from the estimating samples in other words when wage and salary workers are compared with the self employed in similar occupations their earnings profiles are similar

time inconsistency and welfare program participation evidence from the nlsy we empirically implement a dynamic structural model of labor supply and welfare program participation for agents with potentially time inconsistent preferences using panel data on the choices of single women with children from the nlsy 1979 we provide estimates of the degree of time inconsistency and of its influence on the welfare take up decision with these estimates we conduct counterfactual experiments to quantify the utility loss stemming from the inability to commit to future decisions and the potential utility gains from commitment mechanisms such as welfare time limits and work requirements

time inconsistency and alcohol sales restrictions restrictions on alcohol sales hours or days are commonly used tools in order to reduce alcohol consumption however a forward looking consumer can buy in advance thereby mostly undo the impact of the restriction i study whether time inconsistent consumer preferences can provide a justification for restrictions on alcohol sales time i estimate a demand model which allows a fraction of consumers to be time inconsistent using scanner data of beer purchases and other shopping behavior according to the estimation results 20 of consumers are time inconsistent and they account for 64 of beer consumption i find that sunday sales restriction decreases weekend consumption by the same amount as a sales tax increase by 21 percentage points in terms of consumer welfare the sales restriction is preferable to the tax increase

returns to education and wage equations the paper shows why considering a number of education dependent covariates in a wage equation decreases the coefficient of education in that equation this result is illustrated empirically with a meta analysis for portugal the education coefficient decreases when covariates are used that can be considered post education decisions on the other hand it is independent of sample size tenure and whether hourly or monthly wages are used these results support the use of a simple specification of the mincer equation for the study of the total returns to education

returns to education a further international update and implications this paper updates evidence on the returns to investment in education by adding estimates for new countries and refining existing estimates to bring the total number of country cases to over 60 the new cross country evidence confirms and reinforces earlier patterns namely that returns are highest for primary education the general curricula the education of women and countries with the lowest per capita income the findings have important implications for directing future investment in education which for efficiency and equity purposes should concentrate on these priority areas

job matching and occupational choice this paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types or occupations such differences affect the value of job specific experience inducing a career profile where certain types are sampled before others more specifically the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk then after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations panel data are used to estimate its underlying parameters the hypothesis that people do not switch occupations is rejected against the alternative that they do thus providing empirical support for the theoretical extension undertaken here

conditional choice probability estimation of dynamic discrete choice models with unobserved heterogeneity we adapt the expectation maximization algorithm to incorporate unobserved heterogeneity into conditional choice probability ccp estimators of dynamic discrete choice problems the unobserved heterogeneity can be time invariant or follow a markov chain by developing a class of problems where the difference in future value terms depends on a few conditional choice probabilities we extend the class of dynamic optimization problems where ccp estimators provide a computationally cheap alternative to full solution methods monte carlo results confirm that our algorithms perform quite well both in terms of computational time and in the precision of the parameter estimates

an estimable dynamic stochastic model of fertility and child mortality this paper develops a finite horizon dynamic stochastic model of discrete choice with respect to life cycle fertility within an environment where infant survival is uncertain the model yields implications for the number timing and spacing of children a tractable estimation method is developed for the linear constraint quadratic utility case that is intimately tied to the dynamic optimization problem and the method is applied to malaysian household data estimation is based on integrating the numerical solution of the dynamic programming model of behavior with a maximum likelihood procedure

wage functions and occupational selection in a rural less developed country setting economists are just beginning to develop empirical knowledge about the basic relationships that determine the distribution of incomes and allocation of resources in the poor rural regions of the world understanding interactions between agriculture and the rest of the economy is particularly important in this context this paper empirically investigates the allocation of human resources between farm work and other jobs and the compensation received by individuals for their work in agriculture and elsewhere specifically two related tasks are undertaken in this paper 1 the estimation of wage functions and 2 the estimation of functions determining the allocation of time among occupations there have been a series of papers which estimate the earnings function using data from poor countries for examples see blaug 1974 chiswick 1977 and valdes 1971 however this study focuses not on total earnings but on the wage rates a person may earn in labor market work because the wage rate is the relevant price of time for many allocative decisions for example in dividing the work year between self employed farming and work as an employee off the farm a key price is the potential wage rate the person can earn in the labor market for discussion and evidence on this issue see sumner 1978 recently a few studies have appeared which illustrate the importance of understanding potential wage variations across individuals in less developed countries rosenzweig 1978 uses wage estimates from aggregate indian data in a model determining the impact of land reform bardhan 1979 develops wage functions from a sample survey in rural india as a step in estimating labor supply for rural households kusnic and davanzo 1980 use wage functions to impute potential incomes and to measure the full income distribution these previous studies illustrate the importance of understanding the determinants of market wages the present paper develops wage functions in more detail focusing especially on industrial differentials in many rural areas employment opportunities may be usefully categorized into 1 self employment mainly on small farms 2 work for wages on large farms and 3 work for wages in non farm industries the combination of selfemployment and work as an employee is also important in many rural areas in both rich and poor countries this paper examines the impact of personal characteristics on the choice to participate in work for wages and on the choice of industry these estimates also form a basis for studying industrial wage differentials tentative estimates of the dependence of participation on expected wages are also presented below the empirical analysis in this paper is based on a 1974 sample of five villages in central guatemala see corona 1978 and stein 1978 one village petapa is larger richer and more urban than the others it lies south of guatemala city within commuting distance of the capital the other villages are outside the capital city region the population sampled is almost exclusively ladino spanish culture as opposed to indian data are available on the earnings hours of work industry age schooling literacy and village of 1 005 male heads of households approximately one third of the sample work as both self employed farmers and hired workers and most of these men work on fincas large plantations another quarter of the sample work as self employed farmers and do no work for wages the suburban village has mostly nonagricultural workers whereas the four other villages have predominantly farmers and farm employees in received for publication june 21 1979 revision accepted for publication december 31 1980 north carolina state university research on this paper began while i was a rockefeller foundation supported post doctoral fellow in the labor and population group of the economics department of the rand corporation and continued at north carolina state university supported by the agricultural research service at rand robert newman served as my research assistant and at n c state james cochell provided able assistance i have benefited from the comments of colleagues at both institutions and from members of the labor economics workshop at the university of north carolina at chapel hill i also thank two anonymous referees for useful suggestions this is paper number 6558 of the journal series of the north carolina agricultural research service raleigh n c

schooling and the distribution of wages in the european private and public sectors international research has shown that schooling enhances within groups wage dispersion this assessment is typically based on private sector data and up to date the inequality implications of schooling have not been documented for the public sector this article uses recent data from eight european countries to explicitly take into account differences between the private and public sectors using quantile regression the article describes the effects of schooling on the location and shape of the conditional wage distribution in each sector while the average impact of schooling on wages is similar across sectors the impact of schooling on within groups dispersion is found to be substantially larger in the private sector than in the public sector this finding warns that the effects of the european educational expansion on overall within groups dispersion may be lower than previously thought

equilibrium welfare and government policy with quasi geometric discounting abstract we consider a representative agent equilibrium model where the consumer has quasi geometric discounting and cannot commit to future actions we restrict attention to a parametric class for preferences and technology and solve for time consistent competitive equilibria globally and explicitly we then characterize the welfare properties of competitive equilibria and compare them to that of a planning problem the planner is a consumer representative who without commitment but in a time consistent way maximizes his or her present value utility subject to resource constraints the competitive equilibrium results in strictly higher welfare than the planning problem whenever the discounting is not geometric journal of economic literature classification numbers e21 e61 e91

insurance self control and contract flexibility we study a competitive insurance market in which some consumers have too optimistic expectations regarding their future use of preventive measures when contracts are long term and inflexible such naive consumers would increase the costs of insurance for low risk consumers the competitive insurance market therefore offers flexible contracts that allow for switching between different tariffs sophisticated consumers choose a partial insurance tariff and remain low risks naive consumers choose the same tariff but later switch to full insurance and become high risks if there are sufficiently many naive consumers they pay a transfer to sophisticated consumers so that high risks subsidize low risks in contrast there are no such transfers when contracts are short term the model generates novel implications for the time frame of insurance contracts and insurance requirements

welfare dependence and self control an empirical analysis this paper investigates the behavioral and policy mechanisms that generate dependence on welfare programs a dynamic model with labor supply disincentives and state dependence in preferences is expanded to incorporate time inconsistency which induces addictive behavior due to problems of self commitment estimation is based on data from a welfare reform experiment which contains a unique policy feature that helps identify the time preference parameters various results indicate that the commitment problem is an important consideration in the design of policy around one fourth of the individuals are time inconsistent and neglecting time inconsistency will cause state dependence in preferences to be overestimated these individuals are more responsive to policy changes due to the presence of commitment related incentives time inconsistency reduces income and net tax contribution by at least 15 and 50 percent respectively an increase in welfare benets aggravates the commitment problem and reduces utility from a time consistent perspective certain dynamic policy interventions are more eective than static interventions in alleviating the commitment problem for instance a dynamic nonwork tax generates strong commitmentrelated work incentives and over half of time inconsistent individuals will voluntarily adopt it as a commitment device the implications of time inconsistency for other policy interventions such as earned income tax credit eitc and a prowork time limit are examined

consumption savings decisions with quasi geometric discounting we study the consumption savings problem of an infinitely lived rational consumer who has time inconsistent preferences in the form of quasi geometric discounting the consumer operates a weakly concave production function and must simply divide current resources into current consumption and savings there is no uncertainty a solution to the consumer s problem is a subgame perfect equilibrium of a dynamic game between the consumer s successive selves we show that this game has a continuum of equilibria in stationary markov strategies not only is the stationary point of the consumer s asset holdings indeterminate but each stationary point has a continuum of dynamic paths converging to it the savings policy rules underlying these dynamic paths are step functions

capital formation and unemployment this paper criticizes the current enthusiasm for labour market policies as the main route to employment creation in oecd countries such policies are normally seen as a means of encouraging more employment on existing capital stock this approach is one sided and downplays the equally important task of increasing productive capacity with more investment in productive capacity conventional labour market policies for increasing employment would be more effective and some might be unnecessary the paper analyses the role of capital stock within the framework of a simple nairu model based on previous work by the author it also presents some empirical evidence copyright 1995 by oxford university press

the changing distribution of male wages in the uk this paper uses microeconomic data from the u k family expenditure surveys fes and the general household surveys ghs to describe and explain changes in the distribution of male wages since the late 1970s wage inequality has risen very fast in the u k and this rise is characterized both by increasing education and age differentials we show that a large part of the changes in the u k can be summarized quite simply as increases in eduction differentials and a decline of growth of entry level wages which persist subsequently this fact we interpret as cohort effects we also show that like in the u s an important aspect of rising wage inequality is increased within group wage dispersion finally we use the ghs to evaluate the role of alternative education measures

on the compassion of time limited welfare programs supporters of recent welfare reforms argue that time limits and other eligibility restrictions serve recipients we present a simple model of agents with present biased preferences to investigate the theoretical validity of this claim we first identify four types of outcome that describe the behavior of a present biased agent in the absence of time limits we then show that the behavioral consequences of time limits are contingent on which outcome characterizes the agent s behavior in the absence of time limits we show that under some conditions the imposition of time limits may improve the wellbeing of welfare recipients evaluated both in terms of long run time consistent utility and the periodone self s utility this benefit of time limits may come either from allowing the welfare eligible to start working earlier than they otherwise would or contrary to the intent of the reforms from allowing them to postpone working d 2002 elsevier b v all rights reserved

post keynesianism socialisation of investment and swedish wage earner funds this paper analyses the performance of one of the most controversial of recent economic policy experiments namely swedish wage earner funds wefs it examines the ability of the wefs to meet macroeconomic financial and democratic objectives the analysis indicates a favourable financial performance but little significant democratisation macroeconomic influence was constrained by the limited size of the scheme and though associated with positive changes in economic variables the experiment was ultimately overwhelmed by the collapse of an asset price bubble nevertheless the performance of the wefs has legitimised the concept of collective investment funds as an economic policy instrument copyright 2006 oxford university press

public and private sector wages of male workers in germany we analyze several statistical assumptions used in empirical models on public private sector wage structures based on data for germany which contain a large range of background variables usually not available in other studies we investigate the sensitivity of results to various specification and identification assumptions the standard switching regression model is extended to allow for endogeneity of education level experience and hours worked these extensions lead to considerably different parameter estimates we compare conditional and unconditional wage differentials between the public and the private sector for the various specifications these differentials are sensitive to identification assumptions but robust across specifications which do and do not allow for endogeneity of education experience and hours worked

an empirical analysis of risk aversion and income growth risk aversion enters many theoretical models of human capital investment but attitudes toward risk have not been incorporated in empirical models of human capital investment this article develops a model of the joint investment in financial wealth and human wealth to show that human capital investment is an inverse function of the degree of relative risk aversion using data from the survey of consumer finances i find that wage growth is positively correlated with preferences for risk taking more educated individuals are also more likely to be risk takers thus risk taking explains a portion of the returns to education

government wage differentials a sample selection approach this paper uses the econometrics of sample selection to estimate the net wage differential between workers in the public and private sectors of the united states the results indicate workers self select by systematically locating in the sector which offers them the higher expected wage as a consequence previous research based on the assumption of random allocation between sectors is subject to serious specification bias the present estimation indicates government workers are slightly underpaid taking into account their observed characteristics and the selection process

public and private sector wages in the netherlands there is much debate in the netherlands about underpayment of public sector workers relative to private sector workers in this paper we analyze the wage structures in both sectors using an endogenous switching regression model unlike previous dutch studies we find that the earnings prospects of public sector workers are better in the public sector than in the private sector for private sector workers we find the exact opposite their earnings prospects are better in the private sector moreover the allocation over sectors points to comparative advantages

ramsey meets laibson in the neoclassical growth model the neoclassical growth model is modified to include a variable rate of time preference with no commitment ability and log utility the equilibrium features a constant effective rate of time preference and is observationally equivalent to the standard model the extended framework yields testable linkages between the extent of commitment ability and the rates of saving and growth the model also has welfare implications including the optimal design of institutions that facilitate household commitments steady state results are obtained for general concave utility functions and some properties of the transitional dynamics are characterized for isoelastic utility

poverty and the political economy of public education spending evidence from brazil a large body of literature has emphasized the elite capture of democratic institutions as the explanation for the low levels of spending on public education in many low income democracies this paper provides an alternative to that longstanding hypothesis motivated by new cross country facts and evidence from brazilian municipalities we hypothesize that many democratic developing countries might invest less in public education spending because poor decisive voters prefer the government to allocate resources elsewhere one possible explanation is that low income voters could instead favor redistributive programs that increase their incomes in the short run such as cash transfers to test for this possibility we design and implement an experimental survey and an incentivized choice experiment in brazil the findings from both interventions support our hypothesis

heterogeneity in returns to schooling econometric evidence from ethiopia this paper investigates whether returns to schooling in ethiopia vary across the wage distribution of individuals to do so it adopts an instrumental variables quantile regression framework that allows for both endogeneity of schooling resulting from unmeasured ability and possible heterogeneity in the impact of schooling the empirical estimates indicate that education contributes more to the earnings of individuals at a lower end of the income distribution

patents as options some estimates of the value of holding european patent stocks in many countries holders of patents must pay an annual renewal fee in order to keep their patents in force this paper uses data on the proportion of patents renewed and the renewal fees faced by post world war ii cohorts of patents in france the united kingdom and germany in conjunction with a model of patent holders renewal decisions to estimate the returns earned from holding patents in these countries since patents are often applied for at a nearly stage in the innovation process the model allows agents to be uncertain about the sequence of returns that will be earned if the patent is kept inforce formally then the paper presents and solves a discrete choice optimal stochastic control model derives the implications of the model on aggregate behaviour and then estimates the parameters of the model from aggregate data the estimates enable a detailed description of the evolution of the distribution of returns earned from holding patents over their life spans and calculations of both the annual returns earned from holding the patents still in force or the patent stocks in the alternative countries and the distribution of the discounted value of returns earned from holding the patents in a cohort this abstract was borrowed from another version of this item

is there a return risk link in education abstract using results for 16 countries the positive relationship between return to education and the risk involved in this investment is studied it seems that most of the countries fit the pattern well higher risk higher return and the tradeoff is rather large

strategic ignorance as a self disciplining device we analyse the decision of an agent with time inconsistent preferences to consume a good that exerts an externality on future welfare the extent of the externality is initially unknown but may be learned via a costless sampling procedure we show that when the agent cannot commit to future consumption and learning decisions incomplete learning may occur on a markov perfect equilibrium path of the resulting intra personal game in such a case each agent s incarnation stops learning for some values of the posterior distribution of beliefs and acts under self restricted information this conduct is interpreted as strategic ignorance all equilibria featuring this property strictly pareto dominate the complete learning equilibrium for any posterior distribution of beliefs

salience myopia and complex dynamic incentives evidence from medicare part d the standard medicare part d drug insurance contract is non linear with reduced subsidies in a coverage gap resulting in a dynamic purchase problem we consider enrolees who arrived near the gap early in the year and show that they should expect to enter the gap with high probability implying that under a benchmark model with neoclassical preferences the gap should impact them very little we find that these enrolees have flat spending in a period before the doughnut hole and a large spending drop in the gap providing evidence against the benchmark model we structurally estimate behavioural dynamic drug purchase models and find that a price salience model where enrolees do not incorporate future prices into their decision making at all fits the data best for a nationally representative sample full price salience would decrease enrolee spending by 31 entirely eliminating the gap would increase insurer spending 27 compared to 7 for generic drug only gap coverage

public private wage differentials in haiti do public servants earn a rent abstract this study uses a newly collected data set on haiti where data are very limited to assess how individuals are selected into the public vs private sectors and to estimate public private sector wage differentials the central question is whether or not public servants are earning a rent the estimation procedure is an extension of heckman s 1979 sample selection technique to the case where two selection rules generate the sample the procedure first estimates by bivariate probit analysis the probability of employment in the public or private sector and then for those in the public sector the probability of employment in the state owned enterprises soes vs public administration wage functions are then estimated for all three sectors using the inverse mills ratios from reduced form probits selectivity bias is found to exist in one sector soes correction for this bias in the wage equations lowers the wage differentials between the soe and the private sector and the soe and public administration as is clearly demonstrated by the oaxaca decomposition of these estimated mean differentials nevertheless the corrected findings still indicate that the public sector especially the soes earn a sizable rent

wage inequality and the distribution of education abstract this paper analyzes the relationship between education and wage inequality in metropolitan brazil the study is based on data from ten brazilian annual household surveys pnads which are available for the period 1976 1986 the universe of analysis is limited to occupied prime age males the inequality measure used was theil s second measure which is analytically convenient for a study of the determinants of inequality it is shown that there exist sharp differences in wage inequality across metropolitan areas to identify whether these large regional differences in inequality are directly associated with differences in educational levels or with differences in the steepness of the wage education profiles some simulations are conducted the results indicate that regional differences in the distribution of education are not able to explain much of the regional differences in wage inequality as a matter of fact the differences in wage inequality were shown to be intrinsically associated with differences in the steepness of the wage education profiles

schooling and earnings distributions with endogenous labour force participation marital status and family size this paper investigates the impact of various schooling investment strategies on family and per capita earnings within a framework that integrates effects on earnings family size marital status and labour force participation data are from a 1977 1978 survey of urban nicaraguan women aged 15 45 excerpt

public private employment choice wage differentials and gender in turkey abstract the main objective of this article is to examine the factors that explain the employment choice and the wage differentials in public administration state owned enterprises and the formal private wage sector in turkey selectivity corrected wage equations are estimated for each sector for men and women separately oaxaca blinder decomposition of the wage differentials between sectors by gender and between men and women by sector are carried out results indicate that when controlled for observed characteristics and sample selection for men public administration wages are higher than private sector wages except at the university level where the wages are at par state owned enterprise wages for men are higher than private sector wages similar results are obtained for women further while the wages of men and women are at parity in the public administration there is a large gender wage gap in the private sector in favor of men private returns to schooling are found to be lower in the noncompe

the personal discount rate evidence from military downsizing programs the military drawdown program of the early 1990s provides an opportunity to obtain estimates of personal discount rates based on large numbers of people making real choices involving large sums the program offered over 65 000 separatees the choice between an annuity and a lump sum payment despite break even discount rates exceeding 17 percent most of the separatees selected the lump sum saving taxpayers 1 7 billion in separation costs estimates of discount rates range from 0 to over 30 percent and vary with education age race sex number of dependents ability test score and the size of payment

education earnings and the canadian g i bill canadian second world war veterans benefited from an extensive educational pro gram similar to the u s g i bill because of differences in military enlistment rates how ever a much lower fraction of quebec men were eligible for these benefits than men from other provinces building on this fact we analyse inter cohort patterns of education and earnings for english speaking men from ontario using french speaking men from quebec as a control group we find that the instrumental variables estimates of the return to school ing are typically as big or bigger than the corresponding ols estimates jel classification j24 i21

returns to investment in education a global update the author updates compilations of rate of return estimates to investment in education published since 1985 and discusses methodological issues surrounding those estimates some key patterns among the three main levels of education primary education continues to exhibit the highest social profitability in all world regions private returns are considerably higher than social returns because of the public subsidization of education the degree of public subsidy increases with the level of education which is regressive social and private returns at all levels generally decline by the level of a country s per capita income overall the returns to female education are higher than those to male education but at individual levels of education the pattern is more mixed the returns to the academic secondary school track are higher than the vocational track since unit cost of vocational education is much higher and the returns for those who work in the private competitive sector of the economy are higher than in the public noncompetitive sector and the returns in the self employment unregulated sector of the economy are higher than in the dependent employment sector controversies in the literature are discussed in the light of the new evidence the undisputable and universal positive correlation between education and earnings can be interpreted in many ways the causation issue on whether education really affects earnings can be answered only with experimental data generated by randomly exposing different people to various amounts of education given the fact that moral and pragmatic considerations prevent the generation of such pure data researchers have to make do with indirect inferences or natural experiments some have been attempted the author looks at the research on overeducation or surplus schooling the conclusions reinforce earlier patterns they confirm that primary education continues to be the number one investment priority in developing countries they also show that educating females is marginally more profitable than educating males that the academic secondary school curriculum is a better investment than the technical vocational tract and that the returns to education obey the same rules as investment in conventional capital that is they decline as investment is expanded