policy watch infrastructure investment and economic growth in the late 1980s david aschauer 1989 triggered a long overdue dialogue among economists and political leaders when he published a study arguing that much of the decline in u s productivity that occurred in the 1970s was precipitated by declining rates of public capital investment my own work confirmed these results munnell 1990a spending advocates seized on these findings as support for increased public investment the enthusiasm among policymakers for the early aschauer results was matched if not surpassed by skepticism on the part of many economists critics of these studies charged that the methodology was flawed that the direction of causation between public investment and output growth is unclear and that even if the historical empirical relationships were estimated correctly they provide no clear indications for current policy who s right what do we know and not know about the link between public infrastructure and productivity and what are the implications of these results for policy

the role of investment specific technological change in the business cycle this is a quantitative investigation of the importance of technological change speci c to new investment goods for postwar us aggregate uctuations a growth model that incorporates this form of technological change is calibrated to us data and simulated using the relative price of new equipment to identify the process driving investmentspeci c technology shocks the analysis suggests that this form of technological change is the source of about 30 of output uctuations 2000 elsevier science b v all rights reserved

using maimonides rule to estimate the effect of class size on scholastic achievement the twelfth century rabbinic scholar maimonides proposed a maximum class size of 40 this same maximum induces a nonlinear and nonmonotonic relationship between grade enrollment and class size in israeli public schools today maimonides rule of 40 is used here to construct instrumental variables estimates of effects of class size on test scores the resulting identiecation strategy can be viewed as an application of donald campbell s regression discontinuity design to the class size question the estimates show that reducing class size induces a signiecant and substantial increase in test scores for fourth and efth graders although not for third graders when asked about their views on class size in surveys parents and teachers generally report that they prefer smaller classes this may be because those involved with teaching believe that smaller classes promote student learning or simply because smaller classes offer a more pleasant environment for the pupils and teachers who are in them mueller chase and walden 1988 social scientists and school administrators also have a longstanding interest in the class size question class size is often thought to be easier to manipulate than other school inputs and it is a variable at the heart of policy debates on school quality and the allocation of school resources in many countries see e g robinson 1990 for the united states ofsted 1995 for the united kingdom and moshel ravid 1995 for israel this broad interest in the consequences of changing class size

infrastructure and development a critical appraisal of the macro level literature this survey reviews the existing macro level empirical literature on the link between infrastructure and development outcomes in a critical light after providing a general framework that casts the relevant terms of the controversy on the real effect of infrastructure on growth in the context of an aggregate production function it signals what are the relevant empirical questions to be addressed this guides the systematic review of a number of empirical studies and the discussion of the main econometric challenges to the identification of the effect of infrastructure on output and productivity finally building on related research in particular in contract theory and political economy the paper spells out several promising research avenues

measuring the impacts of teachers ii teacher value added and student outcomes in adulthood abstract are teachers impacts on students test scores value added a good measure of their quality this question has sparked debate partly because of a lack of evidence on whether high value ad

private agri food standards implications for food policy and the agri food system abstract this paper provides a brief introduction to the evolution and nature of private food safety and quality standards highlighting the resultant impacts on the structure and modus operandi of supply chains for agricultural and food products and the challenges posed for processes of agricultural development it serves as an introduction to a series of papers that provide a comprehensive overview of the current state of knowledge regarding private food safety and quality standards in both an industrialised and developing country context in so doing it aims to provide a catalyst for further research on this rapidly evolving field of inquiry

long term effects of class size this article evaluates the long term effects of class size in primary school we use rich data from sweden and exploit variation in class size created by a maximum class size rule smaller classes in the last three years of primary school age 10 to 13 are beneficial for cognitive and noncognitive ability at age 13 and improve achievement at age 16 most important we find that smaller classes have positive effects on completed education wages and earnings at age 27 to 42 the estimated wage effect is large enough to pass a cost benefit test

taxes inflation and the durability of capital the choice of capital durability is affected by the rate of inflation because nominal depreciation deductions are based on historical cost rather than replacement cost this paper analyzes a model with competitive firms and demonstrates that an increase in the rate of inflation will lead to an increase in the durability of capital if the ratio of the nominal discount rate to the rate of depreciation exceeds a critical value however if this ratio is less than the crucial value this effect is reversed the effect of costs of adjustments on the crucial value is analyzed

collective action initiatives to improve marketing performance lessons from farmer groups in tanzania this study aims to examine the extent to which certain characteristics and asset endowments of smallholder farmer groups facilitate collective action initiatives to improve group marketing performance this is approached through an evaluation of a government led programme in tanzania which is attempting to increase smallholder farmers incomes and food security through a market oriented intervention findings suggest that more mature groups with strong internal institutions functioning group activities and a good asset base of natural capital are more likely to improve their market situation gender composition of groups also affects group marketing performance as an enabling factor for male dominated groups structural social capital in the form of membership in other groups and ties to external service providers and cognitive social capital in the form of intra group trust and altruistic behaviour are not significant factors in a group s ability to improve its market situation

managing the quality of a resource with stock and flow controls abstract we consider a class of problems which we call sfq problems in which both stocks and flows can be controlled to promote the quality of a valued resource such as environmental quality or public infrastructure under the optimal policy periodic restoration of the stock of quality complements positive but variable abatement of the flow of damages when deterioration is more rapid or highly variable or when abatement is more expensive relative to restoration the optimal policy relies relatively more on restoration when deterioration is due to private firms or individuals a flow tax equal to the present value of marginal damages provides efficient incentives for abatement this tax rises at first as quality worsens but eventually falls as restoration nears the revenues raised by such a tax approximates the cost of restoration with the two quantities converging as the variance of flows goes to zero we discuss the implications of the sfq model for a range of real world problems in the environmental arena and for the management of public infrastructure but the lessons are general and we briefly discuss how they apply to private stocks of physical and human capital

gender achievement and subject choice in english education in common with other oecd countries there is a gender gap in educational achievement in england favouring girls this carries through to tertiary education on the other hand boys are far more likely to engage in stem in post 16 vocational education and at university the underachievement of boys overall but over representation in stem presents significant challenges for policy this paper documents changes in the gender gap over the last 20 years in england and discusses findings in the light of international evidence it concludes that education policies in academic and in vocational spheres can be designed to reduce gender inequalities that exist in both

the effect of education on adult mortality and health evidence from britain there is a strong positive and well documented correlation between education and health outcomes in this paper we attempt to understand to what extent this relationship is causal our approach exploits two changes to british compulsory schooling laws that generated sharp across cohort differences in educational attainment using regression discontinuity methods we find the reforms did not affect health although the reforms impacted educational attainment and wages our results suggest caution as to the likely health returns to educational interventions focused on increasing educational attainment among those at risk of dropping out of high school a target of recent health policy efforts jel h52 i12 i21 i28

test based promotion policies dropping out and juvenile crime abstract over the past decade several states and school districts have implemented accountability systems that require students to demonstrate a minimum level of proficiency through standardized tests with many states and school districts ending social promotion policy makers and researchers have gained renewed interest in the role of grade retention and remedial education in us schools this paper examines the potential effects of summer school and grade retention on high school completion and juvenile crime to do so we use administrative data from a number of state agencies in louisiana and a regression discontinuity design to analyze louisiana s statewide test based promotion policy administered to students in fourth and eighth grades our results indicate that potential grade retention increases the propensity of a student to drop out of school in addition eighth grade remedial education assignment in the form of summer school appears to provide a positive benefit by decreasing the likelihood that a student drops out as for fourth grade students however we do not find any effect of summer school assignment finally for eighth graders we find that the net effect of the test based promotion policies is to decrease the probability of being convicted of a juvenile crime

state infrastructure and productive performance recent research on productivity growth has focused on public infrastructure and its impact on economic growth and productivity the authors construct a model of firms technology and behavior taking advantage of the analytical framework provided in the cost function based applied production theory literature and apply it to state level data for u s manufacturing they find that infrastructure investment provides a significant return to manufacturing firms and augments productivity growth the net benefits of infrastructure investment may or may not be positive depending upon the social costs of infrastructure investment and the relative growth rates of output and infrastructure copyright 1996 by american economic association

filling potholes macroeconomic effects of maintenance versus new investments in public infrastructure abstract the maintenance of existing public infrastructure has often been neglected in favor of building new infrastructure in developing countries this paper develops a dynamic general equilibrium model that analyzes the reasons and effects of such neglect first the optimal level of maintenance is shown to depend on the size of new investments as a share of existing public infrastructure and on the productivity of infrastructure second the model is parameterized and solved numerically for a sample of latin american countries quantitative results show that reallocating funds from new infrastructure to maintenance can have positive effects on these countries gdp

saving babies revisiting the effect of very low birth weight classification we reconsider the effect of very low birth weight classification on infant mortality we demonstrate that the estimates are highly sensitive to the exclusion of observations in the immediate vicinity of the 1 500 g threshold weakening the confidence in the results originally reported in almond doyle kowalski and williams 2010

the relationship between education and adult mortality in the united states prior research has uncovered a large and positive correlation between education and health this paper examines whether education has a causal impact on health i follow synthetic cohorts using successive u s censuses to estimate the impact of educational attainment on mortality rates i use compulsory education laws from 1915 to 1939 as instruments for education the results suggest that education has a causal impact on mortality and that this effect is perhaps larger than has been previously estimated in the literature copyright 2005 wiley blackwell

an extra year to learn english early grade retention and the human capital development of english learners abstract in this study we use microdata from 12 florida county level school districts to examine the effects of early grade retention on the short medium and long term outcomes of english learners in a regression discontinuity design we find that retention in the third grade coupled with instructional support substantially improves the english skills of these students reducing the time to proficiency by half and decreasing the likelihood of taking a remedial english course in middle school by one third grade retention also roughly doubles the likelihood of taking an advanced course in math and science in middle school and triples the likelihood of taking college credit bearing courses in high school for english learners we do not find any adverse effects of the policy on disciplinary problems or absences among english learners

does longer compulsory schooling affect mental health evidence from a british reform abstract in this paper we examine whether longer compulsory schooling has a causal effect on mental health exploiting a 1972 reform which raised the minimum school leaving age from age 15 to 16 in great britain using a regression discontinuity design we find that the reform did not improve mental health we provide evidence that extending the duration of compulsory schooling impacts mental health through channels other than increased educational attainment we argue that these effects may mitigate or offset the health returns to increased educational attainment

getting help from abroad the macroeconomics of foreign direct investment in infrastructure in low income countries infrastructure financing needs in most low income countries are substantial but funding for such needs is only partly covered by national governments and aid donors this paper introduces foreign direct investment fdi through public private partnerships as a source of infrastructure financing in low income countries a two sector open economy model is developed to assess the macroeconomic performance of fdi in infrastructure with efficient foreign investment an increase in revenue generating infrastructure investment boosts productivity and spurs private investment while stabilizing domestic prices a direct comparison between infrastructure financed by domestic versus foreign investment shows that foreign investment creates higher output growth and welfare gains and is preferable to domestically sourced investment irrespective of the underlying financing instrument the domestic economy is employing fdi in non revenue generating infrastructure is also analyzed and discussed

do dropouts drop out too soon wealth health and happiness from compulsory schooling abstract this paper uses compulsory schooling laws to evaluate high school dropout decisions the main empirical result is that lifetime wealth increases by about 15 with an extra year of compulsory schooling students compelled to stay in school are also less likely to report being in poor health unemployed and unhappy the main conclusion is that high school aversion alone is unlikely to explain why dropouts forgo substantial gains to lifetime wealth the results are more consistent with the possibility that adolescents ignore or heavily discount future consequences when deciding to drop out of school if teenagers are myopic making school compulsory or offering incentives to stay in school may help improve lifetime outcomes

new public investment and or public capital maintenance for growth the canadian experience i introduction in search of the determinants of long run growth a strand of the relevant literature has focused on the growth impact of public productive expenditures the theoretical work of barro 1990 barro and sala i martin 1992 and others and the empirical evidence by several studies surveyed by gemmel and kneller 2001 have stressed the role of government productive activities as key determinants of long run growth the impact of public expenditures typically takes the form of positive production externalities that enhance private sector productivity via private firms production function either as a flow government productive services or as a stock public or infrastructural capital 1 the adoption of this framework embeds two central assumptions on the nature of public capital expenditures first all expenditures related to the public capital accumulation process of the economy are oriented to the formation of new public capital through investment second public capital deterioration is considered as an exogenously given technical relationship hence this approach neglects a crucial choice concerning the implementation of public investment decisions namely the choice between investing in new public capital and extending the durability of the existing public capital stock the cost paid for the latter option is usually called maintenance expenditures for public capital and strictly speaking should be classified under the budgetary term public investment because it fulfills two basic criteria 1 it is financed by taxation or government borrowing and 2 it does not result in public consumption expenditures but instead increases the public capital stock available in the economy 2 despite the intuitive consensus on the crucial weight of maintenance expenditures in public capital and the trade off with expenditures in new public investment there have been few systematic attempts to investigate their macroeconomic impact an attempt to analyze this trade off has been recently made by rioja 2003 who sets up a growth model where domestic tax revenues finance maintenance expenditures for public capital whereas public infrastructure is financed solely by foreign donors the author shows that the optimal maintenance level as a share of output depends on various parameters and presents calibration results from latin american countries that confirm the importance of maintenance for the pattern of growth in these countries along this line kalaitzidakis and kalyvitis 2004 extend rioja s model by concentrating on the implications of maintenance expenditures for public capital formation on growth in their model both types of expenditures are financed by a tax on output by altering their allocation the government can use the share of maintenance as a policy instrument and raise the shadow value of private capital thus leading the economy to a higher growth rate an appealing implication is that the growth maximizing share of taxation is higher than the elasticity of public capital in the production function which reverses a standard argument put forward by among others barro 1990 glomm and ravikumar 1994 devarajan et al 1998 as the additional positive effect of maintenance expenditure on the accumulation of public capital raises the benefits of taxation compared to the standard models although theoretically sound these relationships do not translate easily into operational guidelines for policy makers on the growth effects of maintenance and new public capital expenditures 3 ideally one would like to test these implications in the context of a wide cross country data set consisting of data on each of the two components of public expenditures unfortunately published data on maintenance are very scarce involving only a handful of private activities due to inherent problems in the measurement of this type of expenditures mcgrattan and schmitz 1999 describe the difficulties in constructing aggregate measures of maintenance and repair the authors point out that for instance in the united states maintenance activities are largely carried out outside the market and thus recorded transactions are usually incomplete

public investment in infrastructure in a simple growth model abstract in this paper we examine the implications for capital accumulation when infrastructure enters as an external input into private production functions in our model infrastructure is nonexclusive but may exhibit varying degrees of nonrivalry revenues from uniform taxes on capital and labor income are used to finance public investment in infrastructure we show that the optimal tax rate is independent of the degree of nonrivalry when production exhibits constant returns to augmentable factors the equilibrium displays constant growth for most parameters the growth rate depends on the population size under decreasing returns the optimal trajectory exhibits monotonic convergence to a steady state level

intertemporal output and employment effects of public infrastructure capital evidence from 12 oecd economies this paper utilises an intertemporal optimisation framework to study the effects of public infrastructure capital on output supply and input demands in 12 oecd countries we find that in all 12 countries i public capital has positive long run effects on both output supply and input demands ii its mean short run rates of return are fairly low while the corresponding long run rates are much higher but declining over time these findings underscore important under investment gaps in infrastructure during the 1970s and 1980s these gaps however narrowed down significantly in a few cases completely by the early 1990s

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

changes in compulsory schooling and the causal effect of education on health evidence from germany in this paper we investigate the causal effect of years of schooling on health and health related behavior in west germany we apply an instrumental variables approach using as natural experiments several changes in compulsory schooling laws between 1949 and 1969 these law changes generate exogenous variation in years of schooling both across states and over time we find evidence for a strong and significant causal effect of years of schooling on long term illness for men but not for women moreover we provide somewhat weaker evidence of a causal effect of education on the likelihood of having weight problems for both sexes on the other hand we find little evidence for a causal effect of education on smoking behavior overall our estimates suggest significant non monetary returns to education with respect to health outcomes and not necessarily with respect to health related behavior

the causal effect of education on body mass evidence from europe we adopt a multi country setup to show that years of schooling have a causal protective effect on the body mass index of females living in nine european countries no such effect is found for males the protective effect for european females is not negligible but is smaller than one recently found for the united states and stronger among overweight females we discuss possible mechanisms justifying both the protective role of education and the gender difference in this role we argue that the effects of additional schooling on income the probability of employment and the frequency of vigorous physical activities both on and off the job may help explain our results

returns to education quality for low skilled students evidence from a discontinuity this paper studies the labor market returns to quality of higher education for low skilled students using a regression discontinuity design we compare students who marginally pass and marginally fail the french high school exit exam from the first attempt threshold crossing leads to an improvement in the quality but has no effect on the quantity of higher education pursued specifically students who marginally pass are more likely to enroll in stem majors and universities with better peers further marginally passing increases earnings by 13 6 percent at the age of 27 to 29 our findings show that low skilled students experience large gains from having the opportunity to access higher quality postsecondary education

inference in regression discontinuity designs with a discrete running variable we consider inference in regression discontinuity designs when the running variable only takes a moderate number of distinct values in particular we study the common practice of using confidence intervals cis based on standard errors that are clustered by the running variable as a means to make inference robust to model misspecification lee and card 2008 we derive theoretical results and present simulation and empirical evidence showing that these cis do not guard against model misspecification and that they have poor coverage properties we therefore recommend against using these cis in practice we instead propose two alternative cis with guaranteed coverage properties under easily interpretable restrictions on the conditional expectation function

roads to prosperity assessing the link between public capital and productivity does the positive correlation between infrastructure and productivity reflect causation if so in which direction the author finds that when growth in roads the largest component of infrastructure changes productivity growth changes disproportionately in u s industries with more vehicles that vehicle intensive industries benefit more from road building suggests that roads are productive at the margin however road investments do not appear unusually productive intuitively the interstate system was highly productive but a second one would not be road building thus explains much of the productivity slowdown through a one time unrepeatable productivity boost in the 1950s and 1960s

entry through the narrow door the costs of just failing high stakes exams abstract in many countries important thresholds in examinations act as a gateway to higher levels of education and or improved employment prospects this paper examines the consequences of just failing a particularly important high stakes national examination taken at the end of compulsory schooling in england it uses unique administrative data including full information on both initial and regraded exam marks to show that students of the same ability have significantly different educational trajectories depending on whether they just pass or fail this exam three years later students who just fail to achieve the required threshold have a lower probability of entering an upper secondary high level academic or vocational track and of starting tertiary education those who fail to pass the threshold are also more likely to drop out of education by age 18 without some form of employment the moderately high effects of just passing or failing to pass the threshold in this high stakes exam has high potential long term consequences for those affected

infrastructure provision and macroeconomic performance this paper studies the differences between private and government provision of infrastructure capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for fiscal policy a subsidy to private providers of infrastructure is preferable to direct government provision irrespective of how the subsidy or expenditure is financed the case for private provision is much stronger in economies characterized by high levels of congestion the choice between private and government provision also has a crucial effect on the design of optimal fiscal policy 2011 elsevier b v all rights reserved

how to promote clusters policy experiences from latin america abstract in this paper we propose to differentiate between three types of clusters when it comes to formulating cluster oriented policies in latin america survival clusters of micro and small scale enterprises owe their existence more to unfavorable macroeconomic conditions and less to entrepreneurial competence and dynamism their competitive potential is limited support measures should mainly aim at improving the conditions for survival since these clusters are important in creating employment opportunities the impetus should be to break through the low skills low investment vicious circle more advanced and differentiated mass producers have been flourishing in the import substitution era but are coming under enormous pressure with the transition to open economies in these clusters the main challenge is to create an environment that stimulates and supports learning innovation and constant upgrading clusters of transnational corporations are typically dominated by foreign firms not only at the final assembly stage but also in parts production these clusters often are showcases of best practice manufacturing this can be used to stimulate the upgrading of domestic firms notably by involving them in the supply chain of transnationals

on the macroeconomic implications of maintenance in public capital abstract an infrastructure led growth model is constructed where the durability of public capital is endogenous and varies according to its usage and the level of maintenance expenditure policy changes in total expenditures and the maintenance share are shown to be important for the steady state and the dynamic behavior of the economy the optimal growth maximizing taxation burden which goes to both new investment and maintenance expenditure is in contrast to standard results from other growth models larger than the elasticity of infrastructure in the production function the optimal shares of maintenance expenditure and investment in new capital that ensure maximum utilization of public resources are calculated

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

why can collective action fail in local agri food systems a social network analysis of cheese producers in aculco mexico collective trademark and regional product qualification in food processing industries have become a growing challenge for farmers in developing countries this challenge is the target of collective action based programs aiming at framing the cooperation context that would enable a local community to turn inherited resources and know how into new market opportunities literature acknowledges that social capital is a crucial local resource for successful collective actions since it is a source of trust and collective commitment within a community this paper deals with testing the role of this resource in the collective action case of the cheese producers in aculco mexico focusing on the connectedness dimension of social capital we propose an original methodology that relies on the multiplex and structural properties of social networks this allows us to disentangle the opposite and ambivalent effects of social capital on the ability of a community to reach the goals assigned by the collective action program our empirical study shows that these critical properties can work in favor of adherence to collective action but can also create elite capture clannish behaviors and entry barriers thus showing a failure of collective action

farmer organization collective action and market access in meso america abstract farmer organization and collective action are often seen as key factors in enhancing farmers access to markets often too little attention is directed at a the most appropriate types of organization b whether organization makes less or more sense in the case of producers of an undifferentiated commodity or a higher value product c whether the public or private sector is best placed to support farmer organizations and d the conditions necessary for ensuring their economic viability research in mexico and central america explored these issues for commodity maize and high value vegetables respectively the benefits of farmer organization are more evident in the vegetable sector characterized by high transaction costs associated with market access however horticultural farmer organizations in honduras and el salvador include less than 5 of total horticultural producers this is possibly due to farmer organizations limited business skills and non replicable organizational models there is less incentive for maize farmers to organize to access output markets as the transaction costs are relatively low the benefits of maize farmer organization are clearer when it comes to accessing inputs such as credit seed and fertilizer farmer organization is a critical factor in making markets work for the poor but the role and timing of public and private investment in these organizations is poorly understood

the effect of language training on immigrants economic integration empirical evidence from france abstract we examine the impact of language training on the economic integration of immigrants in france the assignment to this training offered by the french ministry of the interior depends mainly on a precise rule the training is provided if the test score of an initial language exam is below a certain threshold this eligibility rule creates a discontinuity in the relation between the test result and the variables of interest which is used to estimate the causal effect of language training through the method of regression discontinuity design we find that the number of assigned hours of training significantly increases labor force participation of the treated individuals the language classes appear to have a larger effect for individuals with higher levels of education while there is no robust differential effect by type of migration gender or age our estimated coefficients are remarkably similar when we rely on local linear regressions using the optimal bandwidth with few observations around the threshold and when we control parametrically for a polynomial of the forcing variable and use the whole estimation sample we conclude with a discussion of the candidate mechanisms for the improved labor market participation of immigrants

crime scars recessions and the making of career criminals recessions lead to short term job loss lower levels of happiness and decreasing income levels there is growing evidence that workers who first join the labour market during economic downturns suffer from poor job matches that have a sustained detrimental effect on their wages and career progression this paper uses a range of us and uk data to document a more disturbing long run effect of recessions young people who leave school in the midst of recessions are significantly more likely to lead a life of crime than those graduating into a buoyant labour market these effects are long lasting and substantial

reprint to infrastructure provision and macroeconomic performance abstract this paper studies the differences between private and government provision of infrastructure capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for fiscal policy a subsidy to private providers of infrastructure is preferable to direct government provision irrespective of how the subsidy or expenditure is financed the case for private provision is much stronger in economies characterized by high levels of congestion the choice between private and government provision also has a crucial effect on the design of optimal fiscal policy

is extending compulsory schooling alone enough to raise earnings evidence from french and british compulsory schooling laws in this paper i compare two reforms that raised the minimum school leaving age to 16 in france 1967 and in england and wales 1972 using a regression discontinuity design i find that while the reform in england and wales led to a 6 7 percent increase in hourly wages per additional year of compulsory schooling the impact of the change to french law was close to zero the results suggest that the major difference between the two reforms was that the fraction of individuals holding no qualifications dropped sharply after the introduction of the new minimum school leaving age in england and wales whereas it remained unchanged in france

does early access to pension wealth improve health we examine the health impacts of early access to public pension wealth by exploiting a unique policy in singapore allowing individuals to withdraw a proportion of their pension savings after their 55th birthday for the identification we employ a regression discontinuity design by comparing individuals before and after their 55th birthday to address anticipated and lagged health impacts we adopt the donut regression discontinuity approach using nationally representative monthly panel data we find that early access to pension wealth improves self reported overall health

on the origins of gender gaps in human capital short and long term consequences of teachers biases abstract we estimate the effect of primary school teachers gender biases on boys and girls academic achievements during middle and high school and on the choice of advanced level courses in math and sciences during high school in tel aviv israel we measure bias using class gender differences in scores between school exams graded by teachers and national exams graded blindly by external examiners for identification we rely on the random assignment of teachers and students to classes in primary schools our results suggest that assignment to a teacher with a greater bias in favor of girls boys has positive effects on girls boys achievements such gender biases have also positive impact on girls boys enrollment in advanced level math courses in high school these results suggest that teachers biased behavior at early stages of schooling has long run implications for occupational choices and earnings at adulthood because enrollment in advanced courses in math and science in high school is a prerequisite for post secondary schooling in engineering computer science and so on

the long run effects of reducing early school tracking abstract this paper studies the effects of a french detracking reform on individuals long run education and labor market outcomes the reform delayed the age at which students were separated into vocational and general education by two years from age 11 to 13 the assignment of students to different types of education at age 11 was instead replaced by ability grouping whereby students followed a common general education curriculum but were divided into different classrooms based on their academic achievement using a regression discontinuity design i find that the reform raised individuals level of education and increased their wages by 6 at ages 40 to 45 these effects are concentrated among men and individuals from low socioeconomic backgrounds however the reform solely benefited individuals whose parents were born in france as it did not significantly affect children of immigrants educational and labor market outcomes

long run returns to education does schooling lead to an extended old age while there is no doubt that health is strongly correlated with education whether schooling exerts a causal impact on health is not firmly established we exploit a dutch compulsory schooling law to estimate the causal effect of education on mortality the reform provides a powerful instrument significantly raising years of schooling which in turn has a significant and robust negative effect on mortality for men surviving to age 81 an extra year of schooling is estimated to reduce the probability of dying before the age of 89 by almost three percentage points relative to a baseline of 50 percent

does education raise productivity or just reflect it education has an important effect on wages but it not clear whether this is because education raises productivity or because education is simply a signal of ability we implement a number of existing tests for discriminating between these two explanations and find that they do not support the signalling hypothesis however we have severe reservations about these results and we propose an alternative test based on changes in education incentives caused by changes in the minimum school leaving age in the 1970s using this idea we find that uk data appear to strongly support the human capital explanation an important issue in the economics of education is that an individual s education has an effect on wages paid in the labour market for example blundell et al 2003 uses detailed education and subsequent earnings information for a cohort of male individuals born in 1958 to estimate that the returns to a uk degree typically of 3 year duration relative to graduating from high school at 18 with 2 a level qualifications a necessary but not sufficient condition for admission to university is a 24 wage premium human capital explanations pioneered by becker 1962 and schultz 1963 suggest that the correlation between education and wages is due to education enhancing productivity however earnings may rise in response to education not because of any effect on productivity but simply because education may act as a signal of productivity employers believing that education is correlated with productivity will screen workers for their education and pay higher wages to the more educated the employers beliefs will be confirmed by their experience if it is the case that high productivity individuals signal this by choosing high levels of education it will be optimal for individuals to behave in this way if the cost of acquiring education is less for high productivity individuals than it is for low productivity individuals thus under reasonable conditions the market will be characterised by a separating equilibrium where higher productivity individuals choose higher levels of education than lower productivity workers and earn correspondingly higher wages the theory is largely due to spence 1973 1979 and the subsequent empirical literature was reviewed by groot and oosterbeek 1994 riley 2001 provides an excellent modern survey chevalier harmon and walker are fellows of iza in bonn and are affiliated with the institute for the study of social change issc in dublin this paper is part of the issc policy evaluation programme chevalier and walker are also affiliated with the centre for the economics of education at the london school of economics lse the support of all of these bodies for facilitating our collaboration is acknowledged harmon is grateful to university college london for their hospitality during his nuffield foundation new career development fellowship in the social sciences comments from steve machin and three anonymous referees greatly improved the exposition of this paper we are also grateful to richard blundell and to seminar participants at the lse and the tinbergen institute in amsterdam for their comments and to vincent o sullivan for excellent research assistance the usual disclaimer applies

infrastructure alternative government finance and stochastic endogenous growth abstract this paper constructs a stochastic version of an endogenously growing economy with a public good that raises the productivity of private capital we explore how growth and welfare are influenced by changes in the mean and variance of productive public spending under two alternative financing methods mixed money bond financing and wealth tax financing in addition to evaluate the differences between money financing and bond financing we consider mixed money bond financing under which a larger ratio of bonds to money is utilized to finance a given increase in public spending

public investment optimal provision of hicksian public inputs a considerable portion of government spending is devoted to commodities that are not public goods but that directly affect production possibilities examples include public infrastructure like roads and dams educational facilities and research projects in basic science and some forms of information such commodities are public inputs in a small open economy context the focus of this paper is on those that are hicksian in nature an interesting decomposition of the beneficial impact of a hicksian public input is developed then first best and second best optimality conditions for public inputs that are comparable to those for collective consumption goods are derived

productiveness and welfare implications of public infrastructure a dynamic two sector general equilibrium analysis abstract this paper develops a dynamic general equilibrium model that provides an internally consistent micro foundations framework where various effects of infrastructure policy changes can be studied devoting additional resources to infrastructure investment can payoff in terms of sizable increases in gdp and private investment in addition to this the model also makes predictions concerning changes in the welfare of agents resulting from additional infrastructure investment specific policy recommendations that attain highest welfare gains are computed the recommendation is that on average an additional 4 of gdp per year should be devoted to public investment in the latin american countries in the sample

public capital maintenance and congestion long run growth and fiscal policies abstract in this paper we study an endogenous growth model in which public maintenance expenditures affect the depreciation rate of public capital and the latter is subject to congestion we find that economies with low congestion in public infrastructure will require a threshold level of public capital maintenance for ongoing growth we also examine the fiscal implications of public capital maintenance policies and we find that the composition of public capital expenditures under congestion is a crucial determinant of optimal and growth maximizing fiscal policies the government can affect the return of public capital by re allocating public expenditures between new public investment and maintenance and hence avoid excessive taxation that is required under increasing congestion

educational reform ability and family background in this paper we evaluate the impact of a major school reform that took place in the 1950s in sweden on educational attainment and earnings the reform which has many common elements with reforms in other european countries including the uk consisted of increasing compulsor schooling imposing a national curriculum and abolishing selection by ability into academic and non academic streams at the age of 12 comprehensive school reform our data combines survey data with administrative sources we find that the reform increased both the educational attainment and the earnings of children whose fathers had just compulsory education however the earnings of those with educated parents declined possibly because of a dilution of quality at the top end of the education levels the overall effect of the reform was however positive

collective action for smallholder market access abstract the opportunity for smallholders to raise their incomes increasingly depends on their ability to compete in the market yet there are many failures in rural markets in developing countries that make it difficult for them to do this understanding how collective action can help address the inefficiencies coordination problems or barriers to market access is particularly important this paper draws on the case studies in this special issue and on other literature to examine the conceptual issues and empirical evidence on the role of collective action institutions in improving market access for the rural poor applying insights from studies of collective action in natural resource management the paper examines what conditions facilitate effective producer organizations for smallholders market access with special attention to the characteristics of user groups institutional arrangements types of products staples perishables and other commodities markets local domestic and international and external environment the paper also identifies policies and interventions that facilitate collective action for market access among smallholders and examines whether the public sector private sector and or civil society is best positioned to provide such interventions

the social value of health insurance results from ghana this paper uses the roll out of the national health insurance in ghana to assess the cushioning effect of coverage on the financial consequences of health shocks and resulting changes in coping behaviors the analysis finds a strong reduction in medical expenditures preventing households from cutting non food consumption and causing a decrease in the volume of received remittances as well as the labor supply of healthy adult household members moreover the paper presents evidence that the insurance scheme reduced the likelihood that households experiencing a health shock pulled their children out of school to put them to work avoidance of such costly coping mechanisms is potentially an important part of the social value of formal health insurance

the composition of public expenditure and economic growth abstract noting that the literature has focused on the link between the level of public expenditure and growth we derive conditions under which a change in the composition of expenditure leads to a higher steady state growth rate of the economy the conditions depend not just on the physical productivity of the different components of public expenditure but also on the initial shares using data from 43 developing countries over 20 years we show that an increase in the share of current expenditure has positive and statistically significant growth effects by contrast the relationship between the capital component of public expenditure and per capita growth is negative thus seemingly productive expenditures when used in excess could become unproductive these results imply that developing country governments have been misallocating public expenditures in favor of capital expenditures at the expense of current expenditures

estimating average and local average treatment effects of education when compulsory schooling laws really matter the change to the minimum school leaving age in the united kingdom from 14 to 15 had a powerful and immediate effect that redirected almost half the population of 14 year olds in the mid twentieth century to stay in school for one more year the magnitude of this impact provides a rare opportunity to a estimate local average treatment effects late of high school that come close to population average treatment effects ate and b estimate returns to education using a regression discontinuity design instead of previous estimates that rely on difference in differences methodology or relatively weak instruments comparing late estimates for the united states and canada where very few students were affected by compulsory school laws to the united kingdom estimates provides a test as to whether instrumental variables iv returns to schooling often exceed ordinary least squares ols because gains are high only for small and peculiar groups among the more general population i find instead that the benefits from compulsory schooling are very large whether these laws have an impact on a majority or minority of those exposed

the impact of educational standards on the level and distribution of earnings the goal of this paper is to present the following finding an egalitarian policy maker might prefer higher standards than would a policy maker whose goal was to maximize the sum of earnings the result is based on the observation that if workers are differentiated with respect to ability an increase in educational standards will increase the earnings of both the most able and the least able workers the only workers whose earnings fall are those workers who after the increase fail to continue meeting the standard

a simple model of educational standards the author models standards for educational credentials such as high school diplomas standard setters maximize their conception of social welfare knowing that utility maximizing students choose whether to meet the standard the author shows that more egalitarian policymakers set lower standards the median voter would prefer higher standards under symmetric distributions and decentralization lowers standards among identical communities optimal standards do not necessarily fall with increased student preference for leisure deterioration of nonstudent inputs to education or increased student heterogeneity superseding binary credentials by perfect information increases average achievement and social welfare for plausible degrees of heterogeneity egalitarianism and pooling under decentralization