reconciling the old and new census bureau education questions recommendations for researchers beginning with the 1990 census and the january 1992 current population survey cps the bureau of the census changed the emphasis of its educational attainment question from years of education to degree receipt using a matched sample from the 1991 and 1992 march cps this article addresses how to reconcile the old and new questions the effects of those methods on the estimated return s to education are then examined both the estimated linear return and the estimated college high school wage differential are slightly larger using information from the new question

the fisher hypothesis and the forecastability and persistence of inflation abstract for the period 1860 to 1939 the simple correlation of the u s commercial paper rate with the contemporaneous inflation rate is 0 17 the corresponding correlation for the period 1950 to 1979 is 0 71 this paper attributes this apparent change in the fisher relation to differences in the stochastic process of inflation rather than a change in any structural relationship between interest rates and expected inflation contrary to recent claims in the literature there is little evidence of inflation non neutrality in data from the pre world war i period

development fertility and childbearing age a unified growth theory during the last two centuries fertility has exhibited in industrialized economies two distinct trends the cohort total fertility rate follows a decreasing pattern while the cohort average age at motherhood exhibits a u shaped pattern this paper proposes a unified growth theory aimed at rationalizing those two demographic stylized facts we develop a three period olg model with two periods of fertility and show how a traditional economy where individuals do not invest in higher education and where income rises push towards advancing births can progressively converge towards a modern economy where individuals invest in higher education and where income rises encourage postponing births our findings are illustrated numerically by replicating the dynamics of the quantum and the tempo of births for swedish cohorts born between 1876 and 1966

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

the quality of schooling comment a recent article in this review by jere behrman and nancy birdsall 1983 raises an important issue for makers of educational policy in developing countries behrmanbirdsall break ground both in specifying a model that treats schooling quantity and quality simultaneously and systematically and in developing practical methods for evaluating social rates of return to schooling quantity and quality in the absence of externalities their model is estimated using data from brazil a country with an impressive recent record in expanding primary schooling this comment has two objectives the first is to point out methodological errors made by behrman and birdsall in the derivation of the social rate of return to schooling quantity the second is to test the robustness of this corrected finding with a data set that differs from that used by behrman and birdsall the principal finding of the behrmanbirdsall analysis is that the estimated social rate of return to schooling quantity in brazil is much lower than that to schooling quality 6 8 vs 10 4 percent if this is generally the case in developing countries the possibility of a conflict between productivity and equity goals becomes an issue to be taken into account by educational policymakers for example with the conclusions reached by behrman birdsall if only one third of the students were to attend school and the resources saved by schooling only one third of the students could be used to increase both quality and quantity by 50 percent the estimates imply an overall income gain of 32 percent p 941 the analysis that follows demonstrates that correct procedure yields an estimated social rate of return to schooling quantity which is only slightly lower than that to schooling quality 9 8 vs 10 4 percent indicating no substantial inefficiency in the allocation of educational resources between schooling quantity and quality to test the robustness of this result a model of the behrmanbirdsall type is estimated using a 1979 set of micro data from one city in the brazilian northeast using theoretically and empirically preferred variable definitions very similar estimation results are obtained with respect to relative social rates of return to quantity and quality section i contains a correction of the errors made in deriving the social rate of return to schooling quantity section ii is empirical and contains a summary of potential sources of bias a description of the data set used to estimate a behrman birdsall type model and estimation results section iii contains a discussion of some remaining problems

great expectations financialization and bank bailouts in democracies accelerating financialization and rising societal wealth have meant that democratic governments increasingly provide bailouts following banking crises using a new long run data set we show that despite frequent and virulent crises before world war ii bank bailouts to protect wealth were then exceptionally rare in recent decades by contrast governments have increasingly opted for extensive bailouts well before the major interventions of 2007 2009 we argue that this policy shift is the consequence of the great expectations of middle class voters overlooked in existing accounts associated with the growing financialization of wealth rising leverage and accumulating ex ante financial stabilization commitments by governments these expectations are suggestive of substantially altered policy preferences and political cleavages since the 1970s when severe banking crises returned as an important threat to middle class wealth this pressure from below has led elected governments to provide increasingly costly bailouts with no historical precedent

how teachers unions affect education production this study helps to explain why measured school inputs appear to have little effect on student outcomes particularly for cohorts educated since 1960 teachers unionization can explain how public schools simultaneously can have more generous inputs and worse student performance using panel data on united states school districts i identify the effect of teachers unionization through differences in the timing of collective bargaining especially timing determined by the passage of state laws that facilitate teachers unionization i find that teachers unions increase school inputs but reduce productivity sufficiently to have a negative overall effect on student performance union effects are magnified where schools have market power

measures of fit for rational expectations models this survey provides a detailed description of some of the recent theoretical and empirical literature on rational expectations econometrics the survey pays special attention to non stationarity of the data and to the various methods for evaluating rational expectations models that have been developed as alternatives to the classical statistical approach of testing overidentifying restrictions these methods have become very popular and widely used in empirical research we provide an illustration using danish stock market data and we summarize the many results obtained recently using these measures in areas as diverse as stock prices the term structure of interest rates exchange rates consumption and saving the balance of payments tax smoothing hyperinflation and linear quadratic adjustment cost models for inventories labour demand and money demand

school expenditures and post schooling earnings evidence from high school and beyond studies based on inputs measured at the state level generally report that school expenditures have substantial effects on students adult wages whereas studies based on less aggregated measures report small effects the author uses wage data from high school and beyond to analyze this discrepancy and to estimate the effect of school expenditures on students post schooling earnings the author finds that the discrepancy in the literature stems mostly from two factors measurement error in district level expenditures and omitted state effects in the earnings regression the author also finds that the effect of school expenditures on earnings is significant but small a 10 increase in school spending would increase students adult wages by only 0 68 copyright 1996 by mit press

measuring investment in education historic debates about the measurement of capital are even more complicated in the case of education and human capital as extensive research demonstrates education resources are not consistently related to student performance in existing elementary and secondary schools this inefficiency in public schools implies that spending and resource measures do not accurately capture variations in school quality this finding then has clear implications for both education policy and economic research because school inputs are poor policy instruments an alternative policy focus that appears much more productive is performance incentives related to student achievement

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

the contribution of schooling in development accounting results from a nonparametric upper bound how much would output increase if underdeveloped economies were to increase their levels of schooling we contribute to the development accounting literature by describing a nonparametric upper bound on the increase in output that can be generated by more schooling the advantage of our approach is that the upper bound is valid for any number of schooling levels with arbitrary patterns of substitution complementarity another advantage is that the upper bound is robust to certain forms of endogenous technology response to changes in schooling we also quantify the upper bound for all economies with the necessary data compare our results with the standard development accounting approach and provide an update on the results using the standard approach for a large sample of countries

symposium on primary and secondary education this article introduces the symposium on primary and secondary education it points out that considerable controversy surrounds the issues treated by the articles in the symposium the effect of the level of resources invested in education on student outcomes and the educational financing structure that would optimize desirable outcomes of the system including allocative and productive efficiency and equity given rising wage inequality in the labor market associated with increasing demands for skill concerns over slow u s productivity growth and burgeoning public school enrollments resolving these issues has become increasingly important

the effect of literacy on immigrant earnings we examine the impact of literacy on immigrant earnings and the sources of lower returns to education and experience among immigrants we find that the native born literacy distribution dominates that for immigrants however the two groups obtain similar returns to literacy skills contrary to discrimination based explanations for immigrant native born earnings differentials among the university educated literacy differences account for about two thirds of the earnings gap however low returns to foreign experience have a larger impact on this differential among the less educated literacy differences and differences in the returns to experience have similar effects on the earnings differential

unemployment and real interest rates econometric testing of inflation neutrality roeconomics has in its simpler characterizations asserted three hypotheses about the economy first the short run expectationsaugmented phillips curve is vertical second the real rate of interest is independent of anticipated inflation third expectations are formed rationally in the sense that people use mathematical expectations conditional on available information the three propositions together suggest the neutrality of the economy with respect to anticipated inflation in this paper i propose a set of regression based econometric tests of these three neutrality propositions i carry out simple versions of these tests for the postwar american economy such neutrality propositions distinguish the modern neoclassical school from the traditional american keynes hicks school of macroeconomics it is true that these state

on low frequency estimates of long run relationships in macroeconomics abstract a number of recent studies have attempted to test propositions concerning long run economic relationships by means of frequency domain time series techniques that concentrate attention on low frequency comovements of variables the present paper emphasizes that many of these propositions involve expectational relationships that are not inherently related to specific frequencies or periodicities thus the association of low frequency time series test statistics with long run economic propositions is not generally warranted that such an association can be misleading is demonstrated by analysis of examples taken from notable papers by geweke lucas and summers

the impact of surplus schooling on productivity and earnings this article examines the impact of surplus schooling on individual productivity and earnings it proposes a model that divides workers education into two components education that is required and thus fully utilized in the job and education that exceeds the amount required and thus may be underutilized in the job the model is tested with data from the 1969 1973 and 1977 quality of working life surveys quinn and staines 1979 required schooling for each occupation is derived from estimates by job incumbents and by the dictionary of occupational titles the results show thqt surplus or underutilized education is rewarded at a lower rate than required education with the actual return dependent on the type of job

immigration wage effects by origin we estimate the direct partial wage effects of immigrant induced increases in labor supply using the national skill cell approach with longitudinal records drawn from norwegian administrative registers the results show overall negative but heterogeneous wage effects with larger effects on immigrant wages than on native wages and with native wages more responsive to inflows from nordic countries than from developing countries these patterns are consistent with natives and nordic citizens being close substitutes while natives and immigrants from developing countries are imperfect substitutes estimates are sensitive to accounting for effective immigrant experience selective native participation and variation in demand conditions and native labor supply

the demand for money and non gdp transactions abstract this paper argues that transactions in non gdp items have an important influence on the level of money demand the paper provides empirical estimates of models of both m 1 and m 2 money demand that include variables proxying for the volume of transactions in real estate and financial assets these variables have the theoretically predicted positive sign and are statistically significant their inclusion also improves out of sample forecasts

the demand for money total transactions as the scale variable abstract we examine the impact of a direct measure of total transactions in the uk economy on the demand for money by estimating three models two with proxies for transactions using the dynamic ols cointegration technique the total transactions measure outperforms both proxies

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

war international finance and fiscal capacity in the long run in this article i revisit the relationship between war and state making in modern times by focusing on two prominent types of war finance taxes and foreign loans financing war with tax money enhances the capacity to assess wealth and monitor compliance namely fiscal capacity tax financed war facilitates the adoption of power sharing institutions which transform taxation into a non zero sum game carrying on the effect of war in the long run financing war with external capital does not contribute to long term fiscal capacity if borrowers interrupt debt service and as part of the default settlement war debt is condoned or exchanged for nontax revenue the empirical evidence draws from war around the world as early as 1816 results suggest that globalization of capital markets in the nineteenth century undermined the association between war state making and political reform

human capital pricing equations with an application to estimating the effect of schooling quality on earnings this paper formulates and estimates alternative models for the pricing of labor services we present economic models that rationalize empirical specifications in the literature and we offer evidence on the validity of those specifications widely used efficiency units models of labor services are inconsistent with evidence from the u s labor market a model of heterogeneous skills provides a more accurate description of earnings data we present evidence that the pursuit of comparative advantage and selective migration are important features of the u s labor market when these features are included in the model the only support for an effect of schooling quality on earnings is through the return to college education three interactions are empirically important in explaining log wage equations a between schooling quality and education b between regional labor market shocks and education and c between region of residence and regionof birth because of this third interaction which can arise from comparative advantage in the labor market no unique quality effect on returns to education can be defined independently of the market in which it is used

the intergenerational mobility of immigrants this article analyzes the intergenerational mobility of immigrants using the 1940 70 censuses the study reveals an important link between the earnings of immigrants and the earnings of their american born children although there is some regression toward the mean the earnings of second generation americans are strongly affected by variables describing economic conditions in the source countries of their parents current immigration policy therefore not only determines how immigrants perform in the labor market but also determines tomorrow s differences in the labor market experiences of american born ethnic groups

education credentials and immigrant earnings using 1981 to 2001 census data we study how the human capital of immigrants is rewarded in canada we distinguish between years of schooling and degrees obtained in order to estimate sheepskin effects the gain in earnings associated with receipt of a degree controlling for years of schooling we find that immigrant years of schooling and immigrant work experience accumulated before arrival is valued much less than canadian experience of comparable natives however for immigrants the increase in earnings associated with completing educational programs is generally higher than that of comparable natives we provide both signalling and human capital interpretations of this finding a l aide des donnees de recensement entre 1981 et 2001 on examine la facon dont le capital humain des immigrants est reconnu et remunere au canada on fait la distinction entre les annees de scolarite et les grades obtenus afin de calibrer les effets du diplome les gains associes a l obtention du grade apres avoir pris en compte les annees de scolarite on decouvre que les annees de scolarite et d experience accumulees par les immigrants avant leur arrivee recoivent une ponderation moins grande que l experience comparable des canadiens cependant pour les immigrants le fait de completer leur programme a un effet sur l accroissement des revenus qui est plus important que pour les canadiens de souche on suggere des interpretations de ces resultats a partir de theorisations fondees sur le capital humain et la theorie des signaux

do banks have a future abstract are banks special intermediaries do they play any unique role in the economy and if so will they retain their specialness in the ever faster changing world of finance the rapid evolution of finance over the last two decades and the breathtaking e age revolution have persuaded many that eventually banks will be indistinguishable from other financial intermediaries since all their functions can at least as efficiently be carried out by nonbanks this study re explores the issue of the specialness of banks in light of the large existing literature on the subject and presents an approach which identifies the banks specialness with their unique capacity to lend out claims on their own debt which the public accepts and uses as money the study discusses various structural and policy implications deriving from the approach and draws on it to point to the continuing relevance of banking in a world where nonbanks are taking business away from banks lending to production has become relatively less important and the use of e money may soon be dominating financial transactions

cross country evidence on labor market institutions and young adult employment through the financial crisis i develop and analyze a set of cross country facts regarding employment and wage setting institutions over the decade surrounding the 2008 financial crisis among long industrialized countries young adult employment declined more than prime age employment over this time period i show that differences in countries wage setting institutions strongly predict variations in the magnitude of declines in young adult employment both unconditionally and conditional on changes in macroeconomic conditions young adult employment declined 5 percentage points less in countries where wage setting is driven by collective bargaining arrangements than in countries with statutory wage floors evidence on the evolution of legislated minimum wage rates and of an asymmetry in the relationship between growth and young adult employment suggest an important role for a standard wage rigidity mechanism

labour market impacts of school expenditure and class size evidence from china this study is a first attempt to estimate the impact of school resources on students subsequent labour market earnings in china combining unprecedented school data from the early 1950s to the 199

earnings determination and labour markets gran santiago chile 1978 abstract the purpose of this study is twofold first to ascertain whether or not there are statistical differences in the structure of earnings functions among workers in various sectors of economic activity second to provide a test of the human capital approach in the explanation of earning differentials among wage earners using individual characteristics of full time wage earners in santiago the results show that the structures of earnings functions are not statistically different across sectors of economic activity also the application of a human capital model shows that about 50 percent of the relative dispersion of earnings may be attributed to differences in schooling and experience

the human capital stock a generalized approach this paper presents a new framework for human capital measurement the generalized framework can i substantially amplify the role of human capital in accounting for cross country income dierences and ii reconcile the existing con ict between regression and accounting evidence in assessing the wealth and poverty of nations one natural interpretation emphasizes dierences across economies in the acquisition of advanced knowledge by skilled workers

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

aggregate implications of the tax reform of 2017 can taxes guide technology abstract this paper analyzes the effects of the us tax reform of 2017 using a model of endogenous technological adoption the lower tax levels induce large human capital investments that are augmented by the endogenous transition towards skill biased technologies

does school quality explain the recent black white wage trend around 1980 the trend toward racial wage convergence essentially stopped i ask whether this break in the convergence trend can be explained by school quality department of education surveys provide earnings data for the high school class of 1972 in 1979 and the class of 1980 in 1986 both linked to data from the respondents high schools by several measures differences between schools attended by blacks and whites were already rather small in the 1970s furthermore i find that measurable school inputs generally have little effect on wages thus school quality explains little of the recent black white wage trend

experimental estimates of education production functions this paper analyzes data on 11 600 students and their teachers who were randomly assigned to different size classes from kindergarten through third grade statistical methods are used to adjust for nonrandom attrition and transitions between classes the main conclusions are 1 on average performance on standardized tests increases by four percentile points the first year students attend small classes 2 the test score advantage of students in small classes expands by about one percentile point per year in subsequent years 3 teacher aides and measured teacher characteristics have little effect 4 class size has a larger effect for minority students and those on free lunch 5 hawthorne effects were unlikely

the real interest rate a multi country empirical study how real interest rates behave over time is critical to our understanding of many macroeconomic issues and much recent research has pursued this question very little of the research however has focused on real interest rates outside the united states this paper is an empirical exploration of real interest rate movements in seven oecd countries from 1967 ii to 1979 ii further research is needed on real rates in other countries for several reasons not only are measures of foreign real rates of interest in their ownright but extending an analysis of real rates to other countries also has the following additional benefits it can generate more powerful statistical tests of propositions previously tested on u s data and yield information on whether results found for the u s hold up in other countries this study pursues several questions that have arisen naturally from this earlier work is the hypothesis that the real rate is constant rejected when the analysis is extended to other countries does the real rate decline with increased inflation and money growth in other countries besides the united states how reliable is the fisher effect in which nominal interestrates reflect changes in expected inflation are movements in nominal interest rates a reliable indicator of movements in real rates what kind of variationsin real interest rates are there in different countries have real rates declined from the 60s to the 70s for other countries besides the u s this abstract was borrowed from another version of this item

the impact of host country schooling on earnings a study of male immigrants in the united states immigrants in the united states who acquire u s schooling earn higher wages than other immigrants using data from the u s censuses and the national longitudinal survey of youth we show that this wage advantage results from both greater educational attainment and higher returns to education the higher returns are not the consequence of ability bias or greater english proficiency of those who acquire u s schooling returns to years of non u s education are higher for immigrants who complete their schooling in the united states consistent with the view that u s schooling upgrades or certifies education received in the source country for those without u s schooling returns are higher for immigrants from highly developed countries and countries for which english is an official language

does compulsory school attendance affect schooling and earnings we establish that season of birth is related to educational attainment because of school start age policy and compulsory school attendance laws individuals born in the beginning of the year start school at an older age and can therefore drop out after completing less schooling than individuals born near the end of the year roughly 25 percent of potential dropouts remain in school because of compulsory schooling laws we estimate the impact of compulsory schooling on earnings by using quarter of birth as an instrument for education the instrumental variables estimate of the return to education is close to the ordinary least squares estimate suggesting that there is little bias in conventional estimates every developed country in the world has a compulsory schooling requirement yet little is known about the effect these laws have on educational attainment and earnings 1 this paper exploits an unusual natural experiment to estimate the impact of compulsory schooling laws in the united states the experiment stems from the fact that children born in different months of the year start school at different ages while compulsory schooling laws generally require students to remain in school until their sixteenth or seventeenth birthday in effect the interaction of school entry requirements and compulsory schooling laws compel students born

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

inflation real returns and capital investment we find evidence for the hypothesis of mundell 1963 and tobin 1965 that the expected real return component of interest rates is negatively related to the expected inflation component in the mundell tobin model the variation in expected real returns is caused by the variation in expected inflation our evidence suggests however that the variation in expected real returns is more fundamentally an outcome of the capital expenditures process equilibrium expected real returns vary directly with capital expenditures in order to induce equilibrium allocations of resources between consumption and investment this positive relation between expected real returns and real activity which comes out of the real sector combines with a negative relation between expected inflation and real activity which is traced to the monetary sector thus inducing the negative relation between expected inflation and expected real returns predicted by mundell and tobin but explained in terms of a model much different from theirs

school quality and returns to education of u s immigrants using the u s labor market as a common point of reference this article investigates the influence of source country school quality on the returns to education of immigrants based on 1980 and 1990 census data we first estimate country of origin specific returns to education results reveal that immigrants from japan and northern europe receive high returns and immigrants from central america receive low returns next we examine the relationship between school quality measures and these returns holding per capita gdp and other factors constant immigrants from countries with lower pupil teacher ratios and greater expenditures per pupil earn higher returns to education

human capital and the wealth of nations we reevaluate the role of human capital in determining the wealth of nations we use standard human capital theory to estimate stocks of human capital and allow the quality of human capital to vary across countries our model can explain differences in schooling and earnings profiles and consequently estimates of mincerian rates of return across countries we find that effective human capital per worker varies substantially across countries cross country differences in total factor productivity tfp are significantly smaller than found in previous studies our model implies that output per worker is highly responsive to changes in tfp and demographic variables jel e23 i25 j24 j31 o47 no question has perhaps attracted as much attention in the economics literature as why are some countries richer than others much of the current work traces back to the classic work of solow 1956 solow s seminal paper suggested that differ ences in the rates at which capital is accumulated could account for differences in output per capita more recently following the work of lucas 1988 human capital disparities were given a central role in the analysis of growth and development however the best recent work on the topic reaches the opposite conclusion klenow and rodriguez clare 1997 hall and jones 1999 parente and prescott 2000 and bils and klenow 2000 argue that most of the cross country differences in output per worker are not driven by differences in human capital or physical capital rather they are due to differences in a residual total factor productivity tfp in this paper we revisit the development problem in line with the earlier view we find that factor accumulation is more important than tfp in accounting for relative incomes across countries the key difference between our work and previous analyses is in the measurement of human capital the standard approach largely inspired by the work of mincer 1974 takes estimates of the rate of return to schooling as building blocks to directly measure a country s stock of human capital implicitly this method assumes that the marginal contribution to output of one additional year

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

testing for efficiency catching up we used advances in data envelopment analysis dea techniques to examine efficiency scores and investigate the issue of convergence and divergence in a cross country analysis specifically we used bootstrapping techniques to examine a data set of 52 developed and developing countries we found that when using the standard dea model some of the results were not robust further we broke the sample into groups to examine club convergence we found that efficiency scores were significantly different between groups and that there was some evidence of convergence of efficiency scores within each group

short term interest rates as predictors of inflation comment in this note i raise two questions regarding fama s results the first is whether similar tests based on an information set somewhat broader than the past history of consumer price inflation will support fama s findings the second is whether given fama s data and model his results fully support his hypotheses the answer to both questions is no if one accepts the accuracy of the data during fama s sample period the current monthly rate of change of consumer prices ct is significantly related to the three previous monthly rates of change of

the fisher effect in a signal extraction framework the recent brazilian experience abstract this paper derives a signal extraction framework for examining all testable implications of the fisher equation the signal is the net of taxes nominal interest rate which under the fisher model equals inflation expectation plus the real rate assumed to be constant or a constant plus a martingale difference all alternative linear models can be represented as noise added to the signal the international and brazilian literature are briefly reviewed and the empirical tests reinterpreted in the signal extraction framework the model is tested with brazilian data for the period 1973 1990 using interest rate data on non indexed certificates of deposit from a sample of major brazilian banks the framework detects little noise i e the fisher equation seems to reasonably fit the brazilian evidence this result carries the policy implication that the government cannot have the burden of financing its fiscal deficits ameliorated by issuing non indexed debt in periods when inflation is escalating given the large fluctuations observed in ex post real rates in brazil the reasonable success of the fisher equation also implies the existence of large inflation forecast errors which suggest the need for further research on how agents form inflation expectations when inflation escalates rapidly as it did in the late 1980s in brazil price indices lag behind true inflation this generates a fisher effect even for indexed securities the empirical evidence also corroborates the existence of this fisher effect for indexed securities

intergenerational progress of mexican origin workers in the u s labor market using unique current population survey data from november 1979 and 1989 this paper compares the wage structure across generations of mexican origin men ifind that the sizable earnings advantage u s born mexican americans enjoy over mexican immigrants arises not just from intergenerational improvements in years of schooling and english proficiency but also from increased returns to human capital for mexicanorigin workers who were born and educated in the united states progress stalls after the second generation however as the modest gains in human capital that occur between the second and third generations fail to raise the average earnings of mexican americans

a new database on human capital stock in developing and industrial countries sources methodology and results abstract the paper describes the techniques and data adopted for the construction of a new series of estimates of the stock of education in 85 countries over 28 years 1960 1987 the series are built from enrollment data using the perpetual inventory method adjusted for mortality estimates are corrected for grade repetition among school goers and country specific drop out rates for primary and secondary students enrollment data series used start as far back as 1930 for most countries and even earlier for others this reduces the need for backward extrapolation of enrollments to provide the initial estimates of the investment inventory

when minority labor migrants meet the welfare state life cycle employment of minority labor migrants who entered norway in the early 1970s diverges from that of natives immigrant employment was nearly complete during early years but declined to 50 by the year 2000 compared to 87 for a native comparison group we find that immigrant employment is particularly sensitive to the business cycle and that economic downturns of the 1980s and 1990s accelerated their labor market exit we trace part of the decline to migrants being overrepresented in shrinking industries but we also identify welfare disincentives that contribute to poor life cycle employment performance of immigrants with many dependent family members

the earnings function under test abstract earnings functions of the well known mincer type based on data from five samples of german male full time workers are estimated and tested the hypotheses of normally distributed homoscedastic errors and a correctly specified functional form are nearly always rejected

is the new immigration really so bad this article reviews the recent evidence on us immigration focusing on two key questions 1 does immigration reduce the labour market opportunities of less skilled natives 2 have immigrants who arrived after the 1965 immigration reform act been successfully assimilated overall evidence that immigrants have harmed the opportunities of less educated natives is scant on the question of assimilation the success of the us born children of immigrants is a key yardstick by this metric post 1965 immigrants are doing reasonably well even children of the least educated immigrant origin groups have closed most of the education gap with the children of natives

returns to education in china we were fortunate in having access to a survey of 800 adults in nanjing that was conducted by the international wool secretariate in 1986 the survey was intended for market research e g brand recognition but questions were asked about the respondent s age occupation income and education level these questions though not ideally worded were sufficient for the undertaking of a returns to education study we believe the data to be unique and of course the issue of interest is whether a member of the workforce in china faces investment decisions on education similar to those faced elsewhere the influence of sex and marital status on the level of income achieved by an individual was also examined the basic equation modeled personal income as a nonlinear function of schooling and experience but multicollinearity problems were encountered as a result a production function approach was successfully adapted to the returns toeducation model the collinearity problem was overcome and this approach allowed the ease of substitution of education for experience in income generation to be examined more formally an additional problem of errors in variables arose from a failing in questionnaire design and was handled statistically

appropriate technology and income differences this article studies the relative productivity of skilled to unskilled workers across countries relative productivities are broken down into the human capital embodied in skilled workers and relative physical productivities reflecting production techniques i find that skilled workers from poorer countries embody less human capital and are also relatively less physically productive furthermore results show that production techniques are inappropriate for most low income countries and these countries experience large increases in gdp per capita by increasing the relative physical productivity of skilled to unskilled workers this suggests that there are significant barriers to the adoption of skill complementary technologies

education quality and development accounting this paper measures the role of quality adjusted years of schooling in accounting for cross country output per worker differences while data on years of schooling are readily available data on education quality are not i use the returns to schooling of foreign educated immigrants in the u s to measure the education quality of their birth country immigrants from developed countries earn higher returns than do immigrants from developing countries i show how to incorporate this measure of education quality into an otherwise standard development accounting exercise the main result is that cross country differences in education quality are roughly as important as cross country differences in years of schooling in accounting for output per worker differences raising the total contribution of education from 10 to 20 of output per worker differences copyright 2012 oxford university press

school quality and black white relative earnings a direct assessment the wage differential between black and white men fell from 40 percent in 1960 to 25 percent in 1980 it has been argued that this convergence reflects improvements in the relative quality of black schools to test this hypothesis we assembled data on pupil teacher ratios annual teacher pay and term length for black and white schools in the eighteen segregated states from 1915 to 1966 these data are linked to estimated returns to education for southern born men from different cohorts and states in 1960 1970 and 1980 improvements in the relative quality of black schools explain 20 percent of the narrowing of the black white earnings gap between 1960 and 1980

the effects of human capital on wages and the determinants of labor supply in a developing country abstract the heckman procedure is used to correct for sample selection bias in estimating wage offer and net labor market supply equations the findings show that wages are affected by education and experience in addition the wage offer is influenced by other genetic and environmental influences captured in the wage of one s father calories as predicted by exogenous instruments are also shown to influence the wage offer suggesting that better nutrition increases labor productivity the probability of market labor participation as well as the amount of net market labor supply declined with the size of paddy landholding in addition to the net market supply elasticity increasing with the amount of land owned and being lower for urban than rural workers

long run substitutability between more and less educated workers evidence from u s states 1950 1990 we estimate the aggregate long run elasticity of substitution between more educated workers and less educated workers the slope of the inverse demand curve for more relative to less educated workers at the u s state level our data come from the five 1950 1990 decennial censuses our empirical approach allows for state and time fixed effects and relies on time and state dependent child labor and compulsory school attendance laws as instruments for endogenous changes in the relative supply of more educated workers we find the aggregate long run elasticity of substitution between more and less educated workers to be around 1 5

the quality of schooling quantity alone is misleading although much research discusses the quantity of schooling as an effective impact on productivity and earnings most such research leaves out the idea of the quality of schooling which may cause biases in the estimated returns to schooling this paper consequently attempts to extend the standard mincerian approach to incorporate school quality as well as quantity it demonstrates how exclusion of quality in the standard procedure may cause biases in the estimated returns to years of schooling probably in the upward direction the paper explores the implications of this extension of the standard model for the case of young brazilian males it shows that the estimate of the private return to years of schooling using the preferred quality inclusive specification is only one half the estimate using the standard procedure indicating substantial upward bias in the standard estimates it further outlines a method for estimating a social return to quality and finds that it exceeds substantially the social return to quantity the paper then shows why this in turn suggests there may be an equity productivity trade off in schooling investments

human capital in the long run abstract this study presents new data sets on long run enrollment ratios educational attainment and human capital stock measures for numerous countries we construct a complete data set of historical enrollment ratios subdivided by education level and gender for 111 countries from 1820 to 1945 at five year intervals by using newly compiled census observations and information on the year of establishment of the oldest school in individual countries then by utilizing these enrollment ratios as well as available census data from 1945 onward on different age groups educational attainment we construct a data set of estimated educational attainment disaggregated by gender and age group and aggregate human capital stock that spans from 1870 to 2010 the data show that over the past two centuries there has been remarkable growth in average educational attainment and human capital stock as well as a narrowing of the gap in average educational attainment between nations

short term interest rates as predictors of inflation on testing the hypothesis that the real rate of interest is constant in an innovative and provocative paper in this review eugene fama presents evidence which appears to be consistent with the joint hypothesis that the real rate of interest ignoring taxes is a constant and that the market for u s treasury bills is efficient in the sense of embodying rational expectations those findings are strikingly at variance with a long list of previous studies which seemed to support the view that the real rate of interest varies over time and can be related to economic variables such as real output monetary policy and so forth 2 the methodologies which lead to these contradictory conclusions are quite different previous studies had followed the lead of irving fisher by relating nominal interest rates to distributed lags on past rates of inflation 3 these distributed lags are generally interpreted as approximations to the market s expected rate of inflation and thus any remaining variation is attributed to variation in the real rate 4 fama s methodology on the other hand draws on the fact that the difference between the market interest rate and the subsequently observed rate of inflation the ex post real interest rate consists by definition of the ex ante real interest rate plus a pure forecasting error 5 the hypothesis of market efficiency implies that these forecasting errors must be serially random thus observing ex post real rates is equivalent to observing ex ante real rates with random measurement error these errors of course confound the problem of identifying variation in the ex ante real rate in this paper we will argue that the relative magnitude of these measurement errors is such that the tests carried out by fama were not powerful enough to reject the joint hypothesis that the ex ante real rate is a constant and expectations are rational more powerful tests which are presented in this paper using the same data do lead to rejection of that hypothesis of course rejection

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