on the political economy of educational vouchers abstract two significant challenges hamper the analyses of the collective choice of educational vouchers one is the multi dimensional choice set arising from the interdependence of the voucher public education spending and taxation second even absent a voucher preferences over public spending are not single peaked a middling level of public school spending may be less attractive to a household than either high public school spending or private education coupled with low public spending we show that besley and coate s 1997 representative democracy model provides a viable approach to overcome these hurdles we provide a complete characterization of equilibria with an endogenous voucher a voucher is adopted in political equilibrium provided the coefficient of variation of income is sufficiently small we undertake a parallel quantitative analysis and we find that no voucher arises in equilibrium for the u s income distribution which exhibits too much heterogeneity for a tighter income distribution including those in douglas county colorado where a voucher was recently adopted our model predicts a positive voucher public support for a not too large voucher arises because the cross subsidy to public school expenditure from those switching to private schools outweighs the subsidy to those who attend private school in the absence of a voucher

on the demographic composition of colleges and universities in market equilibrium achieving diversity in the racial and ethnic makeup of the student body is one of the objectives that a college pursues in making decisions about admission and financial aid there has been a tremendous amount of debate about policies that colleges should adopt or be proscribed from adopting with respect to diversity rather than join this largely normative debate we adopt a positive focus investigating how colleges quests for ethnic and racial diversity affect admission and financial aid policies the college quality hierarchy and the distribution of whites and nonwhite students across colleges of differing qualities we provide a theoretical framework for investigating the effects of preferences for diversity augmented with results from a parallel computational model calibrated to u s data the effects of efforts to achieve diversity in colleges depend not only on the weight that colleges give to diversity but also on the value that prospective students place on diversity diversity may be of concern to no one only to colleges to both colleges and students or to colleges and a subset of students we first describe a baseline model without preferences for diversity and then examine three alternatives in which preferences for racial diversity are present

do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

a critical assessment of measures of central bank independence the methodology of measuring central bank independence suggested by bade and parkin three decades ago and inverse correlations between the measures and inflation have been widely accepted the measurement literature has made important contributions identifying elements of institutional design that establish the relationship between the central bank and the government and the measurements from an ordinal perspective provide some useful insights about the major institutional redesigns of central banks during the past several decades at the same time the measurement literature is problematic first a dummy variable bifurcating central banks into groups of independent and less independent central banks can duplicate the standard correlations suggesting the information content of the specific measures is limited second the correlations between inflation and measures of independence are not as stable as claimed and most important the measurements are subject to classification problems that have not been fully appreciated review of the institutional design and history of the bank of korea bank of japan and the federal reserve provide evidence the classification problems are important the measures of independence are more appropriately regarded as ordinal rankings of central bank independence rather than considered cardinal measures suitable for econometric modeling jel e50 e58 e65

the analytics of the pricing of higher education and other services in which the customers are inputs many services provide outputs that depend partially on the customers as inputs the presence of other customers often contributes to the output experienced by each purchaser higher education is the premier example others are legion we provide a simple model that addresses the questions of competitive pricing and allocative efficiency for these types of services prices that charge customers for what they get on net output minus input from the firm both are competitive and support efficient allocations these prices internalize the apparent external effects of customers on each other few examples of such prices exist in the real world

early decision and financial aid competition among need blind colleges and universities abstract this paper presents a stylized theoretical model of competition among need blind colleges and universities that implement early decision admissions under need blind admissions an applicant s financial aid status cannot affect their likelihood of admission in the model a need blind school can use early decision admissions as a screening mechanism to indirectly identify a student s ability to pay while superficially maintaining a need blind policy as a result in equilibrium non financial aid students are more likely to be admitted than financial aid students of comparable quality

the demand for spatially complementary national parks using a panel dataset on annual visits to each u s national park we empirically analyze the demand for these parks using a spatial lag model which accounts for the complementary nature of the parks our results suggest that increases in fuel costs temperature increases of greater than 3 f and restrictions on foreign tourism all lower visitation to u s national parks causing associated decreases in money spent by tourists jobs created and income generated these results can also be used to analyze the possible implications of proposed public policies such as international visa requirements gas taxes and carbon taxing trading

vouchers and voting an initial estimate based on the median voter model one of the major concerns associated with school voucher proposals is that they will only benefit those who leave public schools in favor of private schools the children left behind in public schools are expected to necessarily be made worse off by such policies this paper provides evidence suggesting that children left behind in public schools will also benefit the available evidence suggests that after a voucher plan voter support for public schools will rise enough to increase the human capital of public school students despite the presence of negative peer group effects

long run competition in capacity short run competition in price and the cournot model in this article we investigate the nature of equilibrium in markets in which firms choose the scale of operation before they make pricing decisions we analyze a duopoly model in which firms choose their capacities before engaging in bertrand like price competition we demonstrate that the cournot outcome is unlikely to emerge in such markets and that the equilibrium tends to be more competitive than the cournot model would predict in addition our results indicate a tendency toward asymmetric firm sizes and price dispersion that results from the mixed strategies firms use in equilibrium

competition between private and public schools vouchers and peer group effects a theoretical and computational model with tax financed tuition free public schools and competitive tuition financed private schools is developed students differ by ability and income achievement depends on own ability and on peers abilities equilibrium has a strict hierarchy of school qualities and two dimensional student sorting with stratification by ability and income in private schools high ability low income students receive tuition discounts while low ability high income students pay tuition premia tuition vouchers increase the relative size of the private sector and the extent of student sorting and benefit high ability students relative to low ability students

testing commitment models of monetary policy evidence from oecd economies in ation rates in a number of oecd follow a common trend over the past four decades in ation starts out low in the 1960s rises for a time before peaking in the 1970s or early 1980s and then falls back to initial levels this similarity in the behavior of trend in ation suggests that any explanation of long run in ation trends ought to apply across oecd countries ireland 1999 shows that a simple time inconsistency model of monetary policy modifled to allow for a time varying nairu can explain long run trends in u s in ation in this paper we show that this result cannot serve as an explanation of the common trend in oecd in ation as it flts the data only in the u s we investigate two important variants of the hypothesis i that time inconsistency was an important component of central bank behavior in earlier decades but has become less signiflcant in recent years and ii that time inconsistency problems drive u s in ation which afiects in ation rates in other countries as a result of central bankers attempts to manage nominal exchange rate movements vis a vis the u s dollar we flnd that the flrst hypothesis flts the data no better than the baseline model we flnd some support for the international spillovers version of the model but the behavior of non u s central bankers with respect to domestic unemployment rates is not well described by the time inconsistency mechanism

on price taking equilibria in club economies with nonanonymous crowding abstract competitive equilibrium in a coalition production economy or a club economy typically does not exist when there is free entry for two reasons first there may be an integer problem as is familiar from club theory with anonymous crowding second optimal groups may have different compositions from the population and then even if there is no integer problem it may be impossible to partition the population into optimal groups i define a notion of approximate equilibrium and show that such an equilibrium always exists in a sufficiently large economy i focus on the optimal size of the economy rather than of clubs

centralization fiscal federalism and private school attendance a cge model is used to analyze the impact of public school financing on private school attendance the common perception that public school finance centralization will necessarily lead to greater private school attendance is not correct in such a model even when that centralization involves an extreme equalization as in california furthermore if centralization is less dramatic as in most states declines in private school attendance are even more pronounced this weakens the speculation that low exit rates to private schools in centralizing states imply that general public school quality does not drop as a result of such centralization

monetary incentives on inter caste marriages in india theory and evidence abstract we study the effect of a policy in india that offers monetary incentives to inter caste marriages in which one of the spouses is of historically disadvantaged castes i e scheduled castes and the other is not we show that in theory the monetary incentives increase the incidence of exogamy but may reduce the welfare of certain caste or gender building on our theoretical analysis we estimate the effect of the monetary incentives on the incidence of exogamy the welfare and inter spousal transfers using national family and health survey data we find that a 10 000 rupee increase in the incentive raises the exogamy between scheduled caste men and non scheduled caste women by 4 percent in rural india however we also find that the same increase reduces the welfare of women in rural areas

selective versus universal vouchers modelling median voter preferences in education under the majority voting rule a system of universally available vouchers uv is politically less feasible than a system of selective vouchers sv confined to families with incomes equal to or less than median voter income after the introduction of uv public expenditure on education will have to be shared with previous private school users per capita expenditure will then drop and or tax will increase since these events will injure the median voter he will reject uv he will be indifferent between the status quo and sv indifference will turn into enthusiasm however if as can be expected the new regime sv brings effective new competition this abstract was borrowed from another version of this item

competitive equilibrium and the core in club economies with anonymous crowding in club economies with anonymous crowding competitive equilibrium states of the economy are efficient and coincide with the core when there is only one private good anonymous admission prices permit consumers with different tastes to share facilities consumers might do so when their demands for facility size and crowding coincide in which case sharing is efficient thus similarity of demands is the relevant consideration for efficiently grouping consumers with different tastes

a general equilibrium analysis of state and private colleges and access to higher education in the u s abstract we develop a general equilibrium model of the market for undergraduate higher education that captures the coexistence of public and private colleges the large degree of quality differentiation among them and the tuition and admission policies that emerge from their competition for students a quantitative version of the model matches well estimates of enrollment elasticities variation in need based and merit based institutional aid with respectively student income and ability and aggregate characteristics of u s higher education including college attendance in public and private schools tuition levels and the provision of federal aid predictions about the provision of federal aid and the distribution of students across colleges by ability and income match the empirical counterparts well we use the model to examine the consequences of federal and state aid policies a one third increase in the maximum federal aid increases college attendance by 6 of the initial college population most of the increase being in state colleges and mainly of poor students elite private colleges reduce institutional aid and use the net funding gain to spend more on educational inputs and to substitute some highly able poor students for less able rich students reductions in federal or state aid result in substantially reduced attendance mainly by poor students reductions of support to state colleges induce private colleges to increase enrollments modestly and improve in quality as demand shifts toward them

competition between private and public schools testing stratification and pricing predictions abstract when there are peer effects in education private schools have an incentive to vary tuition to attract relatively able students epple and romano american economic review 88 1 1998 33 develop a general equilibrium model characterizing equilibrium pricing and student selection into schools when peer effects are present the model predicts that competition will lead private schools to give tuition discounts to more able students and that this will give rise to an equilibrium exhibiting stratification by income and ability between the public and private sectors and to a hierarchy of schools within the private sector the model also yields a variety of comparative static predictions the predictions of the model are tested in this paper using a unique data set assembled by figlio and stone research in labor economics 1999 115 tests of equilibrium predictions of the model reveal that the propensity to attend private school increases with both income and ability and among private schools the propensity to attend the highest tuition schools rises with both income and ability within private schools tuition declines with student ability with a substantial number of even high income households paying little or no tuition the correlation between income and ability is greater in public than private schools tests of comparative static predictions of the model reveal that both income and ability become stronger predictors of private school attendance as public school expenditure falls income becomes increasingly important in determining placement in the private school hierarchy as public school expenditure falls discounts to ability in the lowest quality private school decline as public school expenditure rises while discounts to ability in the highest quality private school are little affected by changes in public school expenditure expenditure in private schools rises as expenditure in public schools increases these empirical results are consistent with the predictions of the theoretical model

the local distribution of endowments matters modelling tax competition with heterogeneous local residents this study expands on the tax competition literature by incorporating the heterogeneity of resource endowments into the tax competition framework it theoretically elaborates that the local distribution of resource endowments affects both the level of tax rate and the degree of spatial dependence in tax competition and empirically confirms the theory using the data for 60 urban municipalities in the seoul metropolitan area sma korea in the years 2004 2006 a spatial panel model for tax cut confirms the presence of tax competition in the sma and the effects on tax cut of the resource endowment distribution another regression model for local indicators of spatial dependence uncovers the fact that the spatial dependence in tax cut is also determined by the local endowment distribution

political influence on the central bank international evidence political influence on the central bank is measured bere by looking at the probability that a central bank governor will be replaced shortly after a political change of government the governor changes about half the time witbin six months of a nonconstitutional or other radical change of government a military coup or a restoration of democracy the governor is much less likely to change within six months following a routine change in the head of government about one fourth of the time in developing countries and one tenth in industrial countries these indicators vary across countries and correlate statistically with inflation and its variability and with real growth and real interest rates differences in the vulnerability of the central bank to political instability in political instability itself and in central bank turnover in nonpolitical periods seem to be a major part of the explanation for why developing countries have on average higher and more variable inflation than industrial countries do

the united states higher education antitrust exemption and college enrollment this study examines the effect of the higher education antitrust exemption on enrollment of financial aid applicants at highly selective private colleges the antitrust exemption used since 2002

does competition among public schools benefit students and taxpayers tiebout choice among districts is the most powerful market force in american public education naive estimates of its effects are biased by endogenous district formation i derive instruments from the natural boundaries in a metropolitan area my results suggest that metropolitan areas with greater tiebout choice have more productive public schools and less private schooling little of the effect of tiebout choice works through its effect on household sorting this finding may be explained by another finding students are equally segregated by school in metropolitan areas with greater and lesser degrees of tiebout choice among districts

educational vouchers when there are peer group effects size matters in this article i study the effects various educational voucher policies have on the sorting of children across schools and the per student expenditure levels at these schools when a child s peer group matters and students differ over income and ability i find that depending on the magnitude of the voucher switching from a public system to a voucher system could entail either welfare gains or losses all voucher policies under consideration lead to greater inequality than the public system however these increases are not monotone in the voucher size several states are considering enacting or have enacted educational voucher plans which entail giving parents money to send their children to private schools both the cities of milwaukee and cleveland have started educational voucher programs during the 1996 1997 school year around 1650 students in milwaukee received vouchers worth 4400 at a total cost of over 7 million in the same year cleveland spent 6 4 million distributing an average voucher of around 2000 to 1996 students other smaller scale voucher plans have sprouted up in school districts around the country proponents claim vouchers give poor parents educational choice for their children and give poor children a chance to succeed where the public schools fail them opponents argue that by funding vouchers resources will be funneled out of the public schools to a small number of students and that the majority of students who are left behind in the public schools will suffer in order to evaluate these proposals a framework is needed that incorporates the factors important to educational outcomes along with family background and educational expenditure many empirical studies have shown that the peer group plays a significant role in educational achievement consider a change in educational policy for example adopting a voucher system such a switch will affect not only

regression toward mediocrity in economic stature this paper provides estimates of the correlation in lifetime earnings between fathers and sons intergenerational data from the national longitudinal survey are used earlier studies conducted for the united states report elasticities of children s earnings with respect to parent s earnings of 0 2 or less suggesting extensive integenerational mobility these estimates however are biased downward by error contaminated measures of lifetime economic status estimates presented in this paper correct for the problem of measurement error and find the intergenerational correlation in income to be on the order of 0 4 this suggests considerably less intergenerational mobility than previously believed jel j62

intergenerational income mobility in the united states social scientists and policy analysts have long expressed concern about the extent of intergenerational income mobility in the united states but remarkably little empirical evidence is available the few existing estimates of the intergenerational correlation in income have been biased downward by measurement error unrepresentative samples or both new estimates based on intergenerational data from the panel study of income dynamics imply that the intergenerational correlation in long run income is at least 0 4 indicating dramatically less mobility than suggested by earlier research copyright 1992 by american economic association

antitrust and higher education was there a conspiracy to restrict financial aid in 1991 the u s justice department s antitrust division accused mit and the ivy league schools of fixing prices the schools claimed that their cooperative behavior enabled them to concentrate financial aid on needy students and did not affect price we analyze the empirical determinants of tuition and find no evidence that the schools agreement raised price we also analyze the appropriate application of the antitrust laws to nonprofit institutions and conclude that in the absence of adverse price or output effects the justification for the collective action should be considered under the rule of reason

educational vouchers and cream skimming educational vouchers and cream skimming epple and romano 1998 show equilibrium provision of education by public and private schools has the latter skim off the wealthiest and most able students and universal vouchers lead to further cream skimming here we study voucher design that injects private school competition and increases technical efficiencies without cream skimming conditioning vouchers on student ability without restriction on participating schools policies fails to affect significantly cream skimming however by adding restrictions like tuition constraints such vouchers can reap the benefits of school competition without increased stratification this is accomplished while allowing voluntary participation in the voucher system and without tax increases

affirmative action in education evidence from engineering college admissions in india abstract this paper examines an affirmative action program for lower caste groups in engineering colleges in india we study both the targeting properties of the program and its implications for labor market outcomes we find that affirmative action successfully targets the financially disadvantaged the upper caste applicants that are displaced by affirmative action come from a richer economic background than the lower caste applicants that are displacing them targeting by caste however may lead to the exclusion of other disadvantaged groups for example caste based targeting reduces the overall number of females entering engineering colleges we find that despite poor entrance exam scores lower caste entrants obtain a positive return to admission our estimates however also suggest that these gains may come at an absolute cost because the income losses experienced by displaced upper caste applicants are larger than the income gains experienced by displacing lower caste students limited sample sizes in our preferred econometric specifications however prevent us from drawing strong conclusions from these labor market findings

does affirmative action work caste gender college quality and academic success in india public policy in modern india features affirmative action programs intended to reduce inequality that stems from a centuries old caste structure and history of disparate treatment by gender we study the effects of one such affirmative action program an admissions policy that fixes percentage quotas common across more than 200 engineering colleges for disadvantaged castes and for women we show that the program increases college attendance of targeted students particularly at relatively higher quality institutions an important concern is that affirmative action might harm intended beneficiaries by placing them in academic programs for which they are ill prepared we find no evidence of such adverse impacts

will affirmative action policies eliminate negative stereotypes a key question concerning affirmative action is whether the labor market gains it brings to minorities can continue without it becoming a permanent fixture in the labor market the authors argue that this depends on how the policy affects employers beliefs about the productivity of minority workers they study the joint determination of employer beliefs and worker productivity in a model of statistical discrimination in job assignments the authors prove that even when identifiable groups are equally endowed ex ante affirmative action can bring about a situation in which employers correctly perceive the groups to be unequally productive ex post copyright 1993 by american economic association

mobility targeting and private school vouchers simulations are derived from a three district model of low middle and highincome school districts calibrated to new york data with housing stocks that vary within and across districts in this model it is demonstrated that school district targeted vouchers are similar in their impact to nontargeted vouchers but vastly different from vouchers targeted to low income households furthermore strong migration effects are shown to significantly improve the likely equity consequences of voucher programs jel 122 128 h73 persistent frustration with the perceived low quality of public education exacerbated by concerns over the inherently unequal levels of public school quality across school districts has caused policy makers courts and researchers to investigate modifications and alternatives to the current public school system one idea that has received increasing academic and public attention is that of private school vouchers with proponents arguing that the competitive pressures of voucher programs would cause improvements in the efficiency of the publicschool system while at the same time addressing equity concerns if vouchers can be targeted to low income households or low income school districts but aside from a few limited experiments in some u s cities our experience with vouchers in the united states remains virtually nonexistent this limits the amount of information researchers can derive from standard empirical analysis in that it forces them to rely on only current nonvoucher induced differences in competition despite important suggestive results such work may not anticipate all the impacts from a large scale policy such as the voucher policies currently under discussion at the same time theoretical models of school finance are also limited in that they often either focus on only one particular aspect of the general equilibrium school finance problem or they are too rich and complex to yield crisp predictions

ability tracking school competition and the distribution of educational benefits abstract to study the effects of ability grouping on school competition we develop a theoretical and computational model of tracking in public and private schools we examine tracking s consequences for the allocation of students of differing abilities and income within and between public and private schools private schools tend to attract the most able and wealthiest students and rarely track in equilibrium public sector schools can maximize attendance by tracking students public schools retain a greater proportion of higher ability students by tracking but lose more wealthy lower ability students to the private sector consequently socioeconomic status is a predictor of track assignment in public schools for the entire population public sector tracking has small aggregate effects on achievement and welfare but results in significant redistribution from lower to higher ability students

the emergence of parallel markets in a transition economy the case of mozambique abstract the food rationing scheme in maputo mozambique was intended to ensure food security for the poor an analysis of survey data reveals that even households that possess ration cards are mainly reliant on parallel markets instead of the ration system for their purchases the results indicate that market liberalization including eliminating rationing will at worst be neutral for the poor and more likely be beneficial since the treasury will capture the rents associated with rationing that presently accrue to traders and parastatals

the effect of central bank independence on inflation in developing countries abstract ismihan and ozkan ismihan m ozkan f g 2004 does central bank independence lower inflation economics letters 84 305 309 provide theoretical support for prior studies empirical findings of positive or no significant relationship between central bank independence cbi and average inflation performance the present paper argues that these findings are spurious because the studies use an econometric methodology that does not account for the measurement error in their proxies for cbi this paper employs an econometric methodology that does account for this measurement error and finds a strong negative relationship between cbi and inflation even though the sample is limited to developing countries

ends against the middle determining public service provision when there are private alternatives abstract public provision of a service coexists with private market provision the quality of public provision is determined by majority vote preferences are not single peaked owing to the presence of private alternatives we identify two cases in one majority voting equilibrium always exists and the median income voter is pivotal in the other a necessary condition for equilibrium indentifies the pivotal voter who must have income below the median when equilibrium exists a coalition of middle income households who consume the public alternative will be opposed by a coalition of rich and poor households with the rich choosing private consumption

does the dynamic time consistency model of inflation explain cross country differences in inflations dynamics dynamic time consistency models of monetary policy imply that the size of the inflationary response to price shocks and the persistence of inflation is inversely related to factors that enhance the central bank s ability to commit to low average inflation hence these models predict that the dynamics of inflation vary over time and across countries in response to changes in measures of political support for low inflation we find support for this hypothesis in data fromeighteen oecd countries over the period 1961 94 however political variables account for only a small fraction of the variation in inflation dynamics across countries 2004 elsevier ltd all rights reserved

affordability family incomes and net prices at highly selective private colleges and universities working from the financial aid records of individual students at 28 highly selective private colleges and universities we were able to calculate both the price the low income students at these schools actually pay for a year s education net of financial aid grants and how the schools differentiate net price in recognition of their students different family incomes their pricing policies

reconsidering the principal components of central bank independence the more the merrier we use principal component analysis to reassess the link between different attributes of central bank independence and inflation performance we suggest that coding problems may account for the fact that almost none of the attributes included in the cukierman index has a systematic plausible relationship with inflation the multi faceted cukierman index also seems to be out performed by a much narrower index focusing solely on policy independence these findings point to the importance of using public choice analysis to isolate the real problem here namely finding specific central bank structures that effectively insulate central bankers from political pressures

choice of ontario high schools and student sorting by ability to what extent can offering more choice in schooling lead to cream skimming or the sorting of students by ability i study whether increased choice leads to student sorting by ability into high schools in the greater toronto area on average 41 of students opt out of the high school to which they would normally be assigned based on their residence students are more likely to opt out in areas where accessibility to other schools is greatest due to population density and explicit open enrolment policies while students of higher ability are generally more likely to opt out an interaction term between school choice and ability is insignificant suggesting that increased choice does not have differential impacts by student ability findings are robust to changes in assumptions about instrument exogeneity

central bank independence and inflation good news and bad news abstract the bad news is that the findings of recent studies of central bank independence and inflation are very sensitive to outliers the good news is that evidence presented here reinforces the existing case for bank independence in high income economies

new evidence on the economic determinants of postsecondary schooling choices the effects of tuition costs financial aid and individual attributes on college choice are analyzed using a conditional logit model the results confirm that financial aid can be an important determinant of postsecondary school attendance and that individual academic ability relative to the academic standards of a college is an important determinant of which of available college alternatives is chosen

school vouchers a survey of the economics literature we review the theoretical computational and empirical research on school vouchers with a focus on the latter our assessment is that the evidence to date is not sufficient to warrant recommending that vouchers be adopted on a widespread basis however multiple positive findings support continued exploration specifically the empirical research on small scale programs does not suggest that awarding students a voucher is a systematically reliable way to improve educational outcomes and some detrimental effects have been found nevertheless in some settings or for some subgroups or outcomes vouchers can have a substantial positive effect on those who use them studies of large scale voucher programs find student sorting as a result of their implementation although of varying magnitude evidence on both small scale and large scale programs suggests that competition induced by vouchers leads public schools to improve moreover research is making progress on understanding how vouchers may be designed to limit adverse effects from sorting while preserving positive effects related to competition finally our sense is that work originating in a single case e g a given country or in a single research approach e g experimental designs will not provide a full understanding of voucher effects fairly wide ranging empirical and theoretical work will be necessary to make progress

inflation and central bank independence a meta regression analysis using 59 studies we perform a meta regression analysis of studies examining the relationship between inflation and central bank independence cbi the studies considered are very different with respect to the cbi indicator used the sample of countries and time periods covered model specification estimators used and publication outlet we conclude that there is a significant publication bias however we also find a significant genuine effect of cbi on inflation differences between studies are not caused by differences in cbi indicators used

what s happened to the price of college quality adjusted net price indexes for four year colleges in this paper we estimate hedonic models of the consumer price of college to construct quality adjusted net price indexes for u s four year colleges where the net price of college is defined as tuition and fees minus financial aid for academic years 1990 91 to 1994 95 we find adjusting for financial aid leads to a 22 percent decline in the estimated price index for all fouryear colleges while quality adjusting the results leads to a further albeit smaller decline nevertheless public comprehensive colleges perhaps an important gateway to college for students from low income backgrounds experienced the largest net price increases

the enforcement of equal opportunity laws under imperfect information affirmative action and alternatives more than twenty years have passed since the enactment of the civil rights act during that period the enforcement of title vii with its broad prohibition of discrimination in employment and compensation has proved to be both difficult and controversial as part of any attempt to regulate economic activity we must be able to observe violations but unequal treatment in employment relationships is difficult to identify employers must always differentiate between individuals when making hiring and promotion decisions since applicants possess diverse skills and abilities this diversity creates a fundamental problem in monitoring the compliance or noncompliance of employers with equal opportunity laws this paper examines the enforcement of equal opportunity laws in a labor market that exhibits statistical discrimination this type of discrimination may arise as a rational response by profitmaximizing firms to imperfect information about individual productivity in lundberg and startz 1983 an equal opportunity policy prohibiting raceor sex specific wage schedules was shown to be an efficiency enhancing response to statistical discrimination section ii extends this model to allow information a role in allocating heterogeneous workers among jobs in this environment restricting firms use of information through an equal opportunity policy improves workers incentives to acquire human capital at the expense of production losses and its net effect on efficiency becomes ambiguous firms will attempt to evade an equal opportunity law presenting the government and the courts with the task of monitoring and enforcing compliance the regulators are likely to possess imperfect information not only about the relationship between worker characteristics and productivity but also about the actual personnel policies followed by firms in section iii a simple costminimizing evasion policy for firms in which other worker attributes are used as imperfect proxies for race or sex is outlined in the next two sections alternative policies for enforcing compliance

equity and efficiency in human capital investment the local connection a general model of community formation and human capital accumulation with social spillovers and decentralized school funding is used to analyse the causes of economic segregation and its consequences for equity and efficiency significant polarization arises from minor differences in endowments preferences or access to capital markets this makes income inequality more persistent across generations but the same need not be true for wealth equilibrium stratification tends to be excessive resulting in low aggregate surplus whether state equalization of school resources can remedy these problems hinges on how purchased social and family inputs interact in education and in mobility decisions

il legal assignments in school choice in public school choice students with strict preferences are assigned to schools schools are endowed with priorities over students incorporating constraints from different applications priorities are often modelled as choice functions over sets of students it has been argued that the most desirable criterion for an assignment is stability there should not exist any blocking pair no student shall prefer some school to her assigned school and have higher priority than some student who got into that school or the school has an empty seat we propose a blocking notion where in addition it must be possible to assign the student to her preferred school we then define the following stability criterion for a set of assignments a set of assignments is legal if and only if any assignment outside the set is blocked with some assignment in the set and no two assignments inside the set block each other we show that under very basic conditions on priorities there always exists a unique legal set of assignments and that this set has a structure common to the set of stable assignments i it is a lattice and ii it satisfies the rural hospitals theorem the student optimal legal assignment is efficient and provides a solution for the conflict between stability and efficiency

does competition among public schools benefit students and taxpayers comment school choice policies promise to align the incentives of school administrators with the demands of parents and may therefore lead to more efficient educational production milton friedman 1962 geoffrey brennan and james buchanan 1980 john chubb and terry m moe 1990 absent a large scale school voucher program in the united states however this prediction has been difficult to test several authors e g melvin v borland and roy m howsen 1992 clive r belfield and henry m levin 2002 have suggested studying the effects of tiebout choice the use of the residential location decision to select among local monopoly education providers the idea here is that fragmented governance induces competition among school districts analogous to that which would occur among schools with nonresidential choice in an influential paper caroline m hoxby 2000 points out that current governance structures are potentially endogenous to school productivity and proposes that variation in topography which may have influenced optimal jurisdiction size before modern transportation technologies provides a source of exogenous variation she estimates instrumental variables regressions of individual test scores and school spending on a metropolitan level tiebout choice index defined as one minus a herfindahl concentration index with districts enrollments as their market shares using as excluded instruments the number of larger and smaller streams in the area she reports substantial positive effects of district fragmentation on student test scores and negative effects on spending this comment presents a reanalysis of hoxby s test score results which form the core of her empirical analysis these results turn out to be quite sensitive to plausible alterations to hoxby s specification in particular the large significant effect of choice on achievement obtains

mobility housing markets and schools estimating the effects of inter district choice programs abstract in theoretical models of residential sorting a household s location decision is closely linked to its demand for local public services such as schooling since school choice programs weaken the link between residential location and schooling options they have the potential to affect both property values and residential location choices results derived from computable general equilibrium models suggest these effects could be large but there is limited empirical evidence concerning whether they actually occur this paper develops and tests predictions concerning the impact of inter district choice programs on housing values and residential location decisions our empirical results strongly confirm our theoretical predictions and the findings of the computable general equilibrium literature after their states adopt inter district choice programs districts with desirable nearby out of district schooling options experience relatively large increases in housing values residential income and population density

testing for strategic interaction among local governments the case of growth controls this paper helps to fill a gap in the public economics literature by providing empirical evidence on strategic interaction among local governments using the methodology of case et al journal of public economics 52 285 307 1993 the paper focuses on the adoption of growth control measures by cities in california and looks for evidence of policy interdependence in these choices the data are drawn from an elaborate survey of growth control practices in california cities conducted by glickfeld and levine regional growth local reaction lincoln institute of land policy cambridge ma 1992 the survey results are used to compute an index of the stringency of growth controls in each city which serves as the dependent variable for the study

educational vouchers welfare effects and voting abstract we analyze the welfare effects and voting equilibrium with vouchers for private schools the analysis shows that vouchers like tuition tax credits martinello and west 1988 frey 1983 may improve the welfare of all families including families whose children remain in public schools if public educational quality is unchanged and publicly financed educational expenditures decrease thus voters will approve a voucher only if it reduces taxes when public educational quality is endogenous a voucher may increase quality by reducing the tax cost of quality and will be approved if it reduce taxes at the pre voucher public education level and increases quality

equilibrium and inefficiency in a community model with peer group effects public service output depends on input expenditures on own personal characteristics and on the characteristics of the other residents in the community the peer group effect in a community model with public expenditures set by voting with migration between communities and with land price differentials capitalization it is shown that communities may become heterogeneous in composition and second best inefficient this equilibrium occurs when the peer group effect is neither too strong nor too weak the inefficiency arises because an externality is created by migration the land price differential does not play the part of the price of the better peer group but of a transfer payment

optimal financial aid policies for a selective university our paper provides a model of optimal financial aid policies for a selective university the model implies that the financial aid package to be offered to each category of admitted applicants depends on the elasticity of the fraction who accept offers of admission with respect to the financial aid package offered them the propensity of the category to enroll the elasticity of the category s average quality with respect to the number admitted and the relative weight the university assigns them in the utility function while the latter must be determined subjectively the former parameters are subject to empirical estimation we conclude with a study of one institution s data and illustrate how they may be estimated these estimates are then applied to illustrate what the optimal financial aid policy would be for the university

market power and price discrimination in the u s market for higher education the main purpose of this paper is to estimate an equilibrium model of private and public school competition that can generate realistic pricing patterns for private universities in the u s we show that the parameters of the model are identified and can be estimated using a semi parametric estimator given data from the npsas we find substantial price discrimination within colleges we estimate that a 10 000 increase in family income increases tuition at private schools by on average 210 to 510 a one standard deviation increase in ability decreases tuition by approximately 920 to 1 960 depending on the selectivity of the college discounts for minority students range between 110 and 5 750

inflation and central bank independence conventional wisdom redux until recently there existed a broad consensus that an important institution for combating inflation is a central bank insulated from political influence this conventional wisdom has been challenged by among others campillo and miron 1997 who present evidence purporting to show that if an inflation regression equation is expanded to include not only their proxy for central bank independence cbi but other regressors as well then the negative correlation between inflation and cbi vanishes the present paper argues that allegations of the demise of this nexus should not be accepted uncritically this paper which reports the results of an analysis of covariance structures finds a strong negative relationship between inflation and cbi

some urban facts of life implications for research and policy abstract this review of recent literature explores the challenges to urban food and nutrition security in the rapidly urbanizing developing world the premise of the manuscript is that the causes of malnutrition and food insecurity in urban and rural areas are different due primarily to a number of phenomena that are unique to or exacerbated by urban living these areas include a a greater dependence on cash income b weaker informal safety nets c greater labor force participation of women and its consequences for child care d lifestyle changes particularly diet and exercise patterns e greater availability of public services but questionable access by the poor f greater exposure to environmental contamination and g governance by a new possibly nonexistent set of property rights the main focus is on identifying what is different about urban areas so as to better frame the program and policy responses

a general equilibrium model of statistical discrimination we study a general equilibrium model with endogenous human capital formation in which ex ante identical groups may be treated asymmetrically in equilibrium the interaction between an informational externality and general equilibrium effects creates incentives for groups to specialize discrimination may arise even if the corresponding model with a single group has a unique equilibrium the dominant group gains from discrimination rationalizing why a majority may be reluctant to eliminate discrimination the model is also consistent with reverse discrimination as a remedy against discrimination since it may be necessary to decrease the welfare of the dominant group to achieve parity

spatial competition with changing market institutions summary competition across space can be fundamentally altered by changes in market institutions we propose a framework that integrates market altering policy changes in the spatial analysis of competitive behavior and incorporates endogenous breaks in explanatory variables for spatial panel datasets this paper fills a gap in the literature between work focusing on spatial price responsiveness of agents and work on changes in market regulations that affect competition we apply the framework to an important current fishery management policy to explore how a change from aggregate to individual fishing quotas affects the spatial price responsiveness of fish processors copyright 2012 john wiley sons ltd

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

finishing high school and starting college do catholic schools make a difference in this paper we consider two measures of the relative effectiveness of public and catholic schools finishing high school and starting college these measures are potentially more important indicators of school quality than standardized test scores in light of the economic consequences of obtaining more education single equation estimates suggest that for the typical student attending a catholic high school raises the probability of finishing high school or entering a four year college by thirteen percentage points in bivariate probit models we find almost no evidence that our single equation estimates are subject to selection bias

urban food subsidies in the context of adjustment the case of zambia abstract one of the most complex policy issues facing many developing country governments over the next decade particularly in sub saharan africa concerns the problem of providing the impoverished sections of urban populations with adequate food at prices they can afford while both meeting the fiscal requirements of adjustment programmes and promoting domestic agricultural production the pressure to reduce urban food subsidies is in many cases already immense and the implications for urban household food security are considerable this article looks at recent zambian experience and suggests that new and more efficient ways of targeting subsidies may be required if levels of food consumption are not to deteriorate still further

affirmative action in a competitive economy abstract we consider a model of endogenous human capital formation with competitively determined wages discrimination is sustainable in equilibrium in the presence of two distinguishable but ex ante identical groups of workers an affirmative action policy consisting of a quota may fail in the sense that there still may be equilibria where groups are treated differently however the incentives to invest for agents in the discriminated group are improved by affirmative action if the initial equilibrium is the most discriminatory equilibrium in the model without the policy the welfare effects are ambiguous it is possible that the policy makes the intended beneficiaries worse off even if the starting point is the most discriminatory equilibrium the expected payoff may decrease for all agents in the target group

peer effects teacher incentives and the impact of tracking evidence from a randomized evaluation in kenya to the extent that students benefit from high achieving peers tracking will help strong students and hurt weak ones however all students may benefit if tracking allows teachers to better tailor their instruction level lower achieving pupils are particularly likely to benefit from tracking when teachers have incentives to teach to the top of the distribution we propose a simple model nesting these effects and test its implications in a randomized tracking experiment conducted with 121 primary schools in kenya while the direct effect of highachieving peers is positive tracking benefited lower achieving pupils indirectly by allowing teachers to teach to their level jel i21 j45 o15

spatial competition and strategic firm relocation firms compete spatially for customers who have some degree of brand loyalty the number and attractiveness of the alternatives available to these customers dictates the level of competition facing firms in this study data on ticket pricing in four professional sports leagues are used to empirically examine the existence of spatial competition in sports and the impact of space on team relocations results allowing for structural breaks over time while using spatial autoregressive techniques suggest that sports franchises spatially compete when pricing their tickets and that spatial characteristics including the level of spatial competition have influenced the relocation of teams jel d40 l11 r30 l83

spatial competition and the price of college i introduction over the last half century the u s higher educational system has been transformed from a collection of local independent college fiefdoms into a regionally and nationally integrated market in which universities compete for both resources and students as in hoxby 1997a concurrently duffy and goldberg 1998 contend that the most salient feature of the u s higher education market has been tuition increases that exceed both the rate of inflation and income growth combined with financial aid packages that increasingly emphasize merit over need the rising real cost of college in the midst of growing competition has become a source of considerable angst for parents university administrators and public policy analysts who are concerned that need blind admission goals are being sacrificed in favor of strategic enrollment management policies designed to attract the best and the brightest thus mcpherson and shapiro 1998 have asked if the rapidly rising cost of college begs the question of whether universities compete on price as opposed to some other metric such as reputation or resources this article is the first to empirically examine price setting practices among universities by questioning whether list tuitions i e the posted price or net tuitions i e the posted price minus financial aid of private universities respond to the geographic and qualitative proximity of competitors there are theoretical reasons to expect that the increasing integration of the higher education sector might affect tuitions particularly for selective private universities that are relatively unfettered by outside pricing constraints as discussed in bowen 1967 for example hoxby 1997b models integration as the opening of trade among autarkic colleges of varying quality trade is found to reduce the monopsony power of universities over local consumers and intensify their competition for high quality students who because they are both inputs into and consumers of a college education can improve institutional quality thus despite applicant pools well in excess of the number of enrollment slots ehrenberg 2000 has documented that most selective and well endowed institutions increasingly spend significant sums recruiting top applicants and use a combination of enrollment management tools such as merit aid early decision policies and campus amenities to lure top applicants to enroll the advent of individual college rankings further raised the enrollment management stakes by providing an easily observed quality metric as this measure has been found in monks and ehrenberg 1999 to influence a student s college choice one may anticipate that select institutions may have been afforded an ability to ramp up their list tuitions using their substantial endowments and the tuition revenue collected from the most financially able students to price discriminate in favor of needy academically able students as discussed in cook and frank 1993 ehrenberg and rizzo 2004 and hill winston and boyd 2004 nonetheless heller 2004 notes that the collective impact of such enrollment management practices in higher education as a whole is of particular policy concern because empirical evidence suggests needy students increasingly rely on non need based aid often in the form of loans to finance their college educations on the other hand a number of studies including those of allen and shen 1999 moore et al 1991 and parker and summers 1993 have documented that less selective private institutions also appear to be cognizant that their more selective competitors have greater resources and deeper applicant pools which yield greater demand elasticities for these institutions moreover as discussed in kane and orszag 2003 and rizzo 2004 less selective private institutions must increasingly ward off the potential flight of students to lower cost public institutions that have also been forced to manage enrollments in response to declining state government support

affirmative action and the quality fit trade off this paper reviews the literature on affirmative action in undergraduate education and law schools focusing especially on the trade off between institutional quality and the fit between a school and a student we discuss the conditions under which affirmative action for underrepresented minorities urm could help or harm their educational outcomes we provide descriptive evidence on the extent of affirmative action in law schools as well as a critical review of the contentious literature on how affirmative action affects urm law school student performance our review then discusses affirmative action in undergraduate admissions focusing on the effects such admissions preferences have on college quality graduation rates college major and earnings we conclude by examining the evidence on percent plans as a replacement for affirmative action

regulation in the market for education and optimal choice of curriculum we analyze educational institutions incentives to set up demanding or lax curricula in duopolistic markets for education with endogenous enrolment of students we assume that there is a positive externality of student achievement on the local economy comparing the case of regulated tuition fees with an unregulated market we identify the following ine ciencies under regulated tuition fees schools will set up ine ciently lax curricula in an attempt to please low quality students even if schools internalize some of the externality on the other hand unregulated schools set up excessively di erentiated curricula in order to relax competition in tuition fees deregulation gets more attractive if a larger fraction of the externality is internalized

heterogeneity stratification and growth macroeconomic implications of community structure and school finance this paper examines how socioeconomic stratification and alternative systems of education finance affect inequality and growth agents interact through local public goods or externalities school funding neighborhood effects and economywide linkages complementary skills knowledge spillovers sorting families into homogeneous communities often minimizes the costs of existing heterogeneity but mixing reduces heterogeneity faster integration therefore tends to slow down growth in the short run yet raise it in the long run a move to state funding of education presents society with a similar intertemporal trade off local and global complementarities play major roles in determining the efficient social and educational structures copyright 1996 by american economic association

admission tuition and financial aid policies in the market for higher education we present an equilibrium model of the market for higher education our model simultaneously predicts student selection into institutions of higher education financial aid educational expenditures and educational outcomes we show that the model gives rise to a strict hierarchy of colleges that differ by the educational quality provided to the students we also develop a new estimation procedure that exploits the observed variation in prices within colleges identification is based on variation in endowments and technology it does not rely on observed variation in potentially endogenous characteristics of colleges such as peer quality measures and expenditures we estimate the structural parameters using data collected by the national center for education statistics and aggregate data from peterson s and the national science foundation