does education affect risk aversion evidence from the british education reform individual risk attitudes are frequently used to predict decisions regarding education however using risk attitudes as a control variable for decisions about education has been criticized because of the potential for reverse causality causality between risk aversion and education is unclear and disentangling the different directions it may run is difficult in this study we make the first attempt to investigate the causal effects of education on risk aversion by examining the british education reform of 1972 which increased the duration of compulsory schooling from age 15 to age 16 using regression discontinuity design we find that this additional year of schooling increases the level of risk aversion which is contrary to previous findings in the literature and we also find that this result is particularly strong for individuals with less education this positive causal effect of education on risk aversion might alleviate concerns regarding the endogeneity reverse causality issue when using risk aversion as an explanatory variable for decisions about education the sign would remain credible because the coefficients are underestimated

the demand for post compulsory education in the uk and the effects of educational maintenance allowances in this paper the author develops a model of investment in postcompulsory schoolin g based on human capital theory the model is estimated using data on a sample of sixteen and seventeen year olds derived from the family expenditure survey the results reveal significant differences in the factors influencing enrollment in postcompulsory education between m ales and females mot notably household income is an important deter minant of educational participation for females but not for their ma le counterparts on the basis of these results the author assesses t he effects of the introduction of educational maintenance allowances on participation rates in the united kingdom

oppositional identities and employment for ethnic minorities evidence from england where a community or group is socially excluded from a dominant group some individuals of that group may identify with the dominant culture and others may reject that culture the aim of this article is to investigate this issue by empirically analysing the potential trade off for ethnic minorities between sticking to their own roots and labour market success we find that the social environment of individuals and attachments to culture of origin has a strong association with identity choice our results also suggest that those non whites who have preferences that accord with being oppositional do experience an employment penalty

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

information and search an alternative approach to the theory of minimum wages the peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in a concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess

unemployment and early school leaving theoretical predictions about the effect of unemployment on school leaving are ambiguous unemployment might affect the decision to leave school in a number of different ways i current youth unemployment a higher probability of current unemployment for those who choose to leave school would tend to discourage early school leaving first by reducing the expected gains from job search a discouraged worker effect and second by reducing the opportunity cost of additional education ii expected future unemployment the theoretical predictions here are less clear cut an increase in the probability of future unemployment that affected both those with and without additional education would tend to reduce the rate of return to education and hence education demand on the other hand those with more education may be less affected by rises in unemployment and this may encourage further schooling these two opposing effects have been formalised as a shift and a tilt in the unemployment probability schooling relationship kodde i988 fig i suggests that in the united kingdom both effects could have accompanied the transition from the late 1970s to the i98o the full effects of uncertainty on education investment in a two period model depend on the correlation between the uncertainty in the two periods levhari and weiss 1974 how current unemployment rates are used to form expectations of future unemployment is clearly an important issue here also some individuals may be able to undertake job search before committing themselves to leave school and whilst affected by the risk of future unemployment may be comparatively unaffected by the risk of current unemployment iii effects ofparental unemployment parents unemployment in general reduces family income their children s educational demand may fall as a consequence for three reasons first the consumption demand for education will be lower second a reduction in the first period income reduces the investment demand for education assuming decreasing absolute risk aversion kodde i 988

on some effects of international fragmentation of production on comparative advantages trade flows and the income of countries in traditional trade models whether based on technological differences or on relative factor endowments merchandise composition and directions of trade are derived from closed economy conditions but nowadays one of the basic assumptions of traditional trade models i e that production processes are integrated within just one country is being increasingly violated as previously integrated productive activities are segmented and spread over an international network of production sites as a result an increasingly large share of trade flows is made up of intermediate and unfinished goods being transferred from one country to another in order to be processed in this paper we submit that such new configuration of production processes has important effects on at least three dimensions of economic research first we show that international disintegration of production processes leads to a lessening of the power of comparative advantages when it comes to explaining both merchandise composition and directions of trade while it is the concept of absolute advantage to become increasingly relevant second we show that empirical measures of revealed comparative advantages are inherently misleading if they do not account for differences in the stage of processing of traded goods third we estimate a simple model of aggregate demand accounting for international trade in intermediates results of estimation lend support to our prior that participation of a country in the process of international fragmentation of production plays a specific and significant role in determining its year over year change in gdp

over identification tests in earnings functions with fixed effects the fixed effects model for panel data imposes restrictions on coefficients from regressions of all leads and lags of the dependent variable on all leads and lags of right side variables in the standard fixed effects model the omnibus goodness of fit statistic is shown to simplify to the degrees of freedom times the rz from a regression of analysis of covariance residuals on all leads and lags of right side variables this result is applied to test models for the union wage effect using data from the national longitudinal survey of youth nlsy identification and estimation of the return to schooling in models with fixed effects is also discussed although schooling is often treated as time invariant schooling increases over a five year period for nearly 20 of continuously employed men in the nlsy the analysis of covariance estimate of the returns to schooling is precisely estimated and roughly twice as large as the ordinary least squares estimate unlike in the union wage effects equation however

real government size automatic feedback rules and the measured effectiveness of fiscal policy this paper argues that as intervention fiscal policy means more than simply any change in government spending and this requires of fiscal analysis a measure that separates the allocative from the counter cyclical activities of government defining intervention as an optimal policy rule that responds automatically to privately unanticipated variations in output a general equilibrium model is built to separate the supply side effects of desired changes in the size of government from demand side interventions designed to stimulate aggregate demand the model is tested using the results of a public choice investigation of the real size of government ferris and west 1996 that exercise produces a measure of desired size and through its residual an implicit measure of intervention the paper tests the prediction that increases in desired size increase aggregate supply and that ex post measures of fiscal intervention can be recovered and tested for their effect on aggregate output the test uses citibase

an information interpretation of financial analyst superiority in forecasting earnings the results of recent empirical tests comparing the accuracy of financial analysts forecasts faf of firm earnings to the accuracy of predictions from univariate time series ts forecasting models are consistent with faf forecast superiority see brown et al 1987a and their references the source of this apparent superiority however is not well understood an issue related to earnings forecast superiority is that of determining the most accurate surrogate for the earnings expectations of capital market participants researchers have compared the association between earnings surprise and stock returns across alternative surrogates for earnings expectations and have argued that the best surrogate is generated from the earnings forecast model whose errors exhibit the highest

conditional cash transfers and school dropout rates this paper evaluates a united kingdom pilot study designed to test whether a means tested conditional cash transfer paid to 16 to 18 year olds for staying in full time education is an effective way of reducing the proportion of school dropouts the transfer s impact is substantial in the first year full time education participation rates increase by around 4 5 percentage points while the proportion receiving two years of education increases by around 6 7 percentage points those receiving the full payment have the largest initial increase in participation and some evidence is found suggesting that part of the effect can be explained by liquidity constraints

demand for education and labor market outcomes lessons from the abolition of compulsory conscription in france before 1997 education was a way for young french men to avoid military service in the army after the abolition of compulsory conscription in 1997 this incentive to stay on in education disappeared we show that the decrease in the benefit of pursuing education for men was followed by a fall in their educational achievement relative to women and by a decrease in their relative entry wages these results suggest that high school dropout rates could be reduced by policies increasing the immediate benefits of pursuing education and that it would yield a substantial improvement in early labor market outcomes

the estimation of human capital by administrative archives in a static and longitudinal perspective the case of milan this paper focuses on the estimation of the latent variable human capital hc at disaggregated level worker by available routinely institutional data flows in particular we utilize the lombardy region administrative archive employment centers of the province of milan collecting information about careers of workers in the private sector of the milan area and administrative flows collecting mandatory workers individual income tax returns filed with the national internal revenue service first we propose and empirically estimate hc scores in a static referred to 2004 framework by means of a realistic measurement model within causal relationships among endogenous and exogenous investment hc indicators furthermore the model also specifies a set of concomitant indicators that not belonging to hc investment indicators have causal impact on endogenous variables and on hc scores too second we propose a longitudinal analysis period 2000 2004 aimed to investigate how workers earned income growth rates vary over workers educational levels and other personal characteristics the empirical results of both analyses confirm the characteristics of the italian job market denoted by marked inequalities and knowledge regarding the process of school to work transition characterized by a weak incidence of education on longitudinal trajectories of earned income

born in britain how are native ethnic minorities faring in the british labour market in spite of the 40 years that have passed since legislation was first introduced to combat racial discrimination british born ethnic minorities fare little better than their immigrant parents in the uk labour market

analysts use of managerial bonus incentives in forecasting earnings abstract this study presents evidence on whether analysts earnings forecasts anticipate management s discretionary accruals choices if analysts anticipate discretionary accruals earnings forecast errors are composed of at least two parts cash flow and discretionary accruals forecast errors management s bonus maximizing incentives allow for identification of circumstances in which discretionary accruals forecast errors are expected to offset cash flow forecast errors and circumstances in which they are expected to exacerbate cash flow errors controlling for the unexpected cash flow variability the empirical results are consistent with these predictions

the earnings of male immigrants in england evidence from the quarterly lfs in this paper we estimate earnings functions for native born and foreign born white and non white males in the english labour market using data from the quarterly labour force survey our results highlight the importance of distinguishing between native born and foreign born males when investigating the labour market experience of ethnic minorities furthermore the earnings performance amongst white immigrants varies considerably

an equilibrium model of search unemployment this paper develops a simple general equilibrium model with sequential search in which a nondegenerate wage offer distribution is endogenously determined we use this model to analyze the comparati

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

testing theories of real government size u s experience 1959 89 in a recent article west 17 argued that the existence of so many strands of analysis attempting to explain the growth of government calls ultimately for one consolidated or generalized theory accordingly he produced a model that integrated four such theories two on the cost side and two on the demand side the purpose of the present paper is to derive empirical measures of all four theories using u s data for the period 1959 1989 the presumption is that each one separately might contribute in its own way to a composite explanation of government growth and that what is currently most needed is a set of jointly determined empirical estimates showing relative importance while all our measures of government size consolidate federal state and local government expenditures two other measurement issues should be emphasized since they distinguish our work from other contributions to this literature the government component of our main dependent variable the real size of government is measured in two different ways the first uses the national accounts definition of government purchases which excludes transfer payments from the measure of size whereas the second includes final purchases plus net government transfer payments since we are interested in the effects of changes in the productivity of supplying government services the first of these definitions is expected to be more relevant and is so used as the basis of our empirical work however since there is a sense in which changes in the productivity of government may affect the output of transfers we also use the second definition to produce a more complete empirical exercise the other distinguishing feature of our analysis is that both definitions of government size are analyzed in real as distinct from the more usual nominal share of government in gross domestic product gdp this distinction becomes immediately more striking when it is pointed out that while most authors hitherto have attempted to explain the phenomenon of positive growth in the ratio of nominals over the past half century the ratio of reals has actually fallen for most of our

output effects of government purchases the theoretical analysis focuses on the distinction between temporary and permanent movements in government purchases under plausible conditions the temporary case involves an output response that is positive less than one to one with the change in government purchases and larger than that generated by an equal sized but permanent shift in purchase the equilibrium real rate of return rise in the temporary case but changes little in the permanent one defense purchases are divided empirically into permanent and temporary components by considering the role of temporary wars no temporary shifts in nondefense purchases were isolated empirical results verify an expansionary output effect for temporary purchases that exceeds that of permanent purchases the results for some other expectational hypotheses are found to be generally supportive of the theory

does education improve citizenship evidence from the united states and the united kingdom abstract many studies document an association between schooling and civic participation but none credibly investigate causal links we explore the effect of extra schooling induced through compulsory schooling laws on the likelihood of becoming politically involved in the united states and the united kingdom we find that educational attainment is related to several measures of political interest and involvement in both countries we find a strong and robust relationship between education and voting for the united states but not for the united kingdom our us results approach the uk findings when conditioning on registration possibly indicating that registration rules present a barrier to participation

education gender gaps in pakistan is the labor market to blame abstract differential labor market returns to male and female education are one potential explanation for large gender gaps in education in pakistan we empirically test this explanation by estimating private returns to education separately for male and female wage earners this article contributes to the literature by using a variety of methodologies ordinary least squares heckman correction two stage least squares and household fixed effects in order to estimate economic returns to education the latest nationally representative data the pakistan integrated household survey 2002 are used earnings function estimates consistently reveal a sizable gender asymmetry in economic returns to education with returns to women s education being substantially and statistically significantly higher than men s the return to an additional year of schooling ranges between 7 and 11 for men and between 13 and 18 for women there are also large direct returns to women s education at low levels of schooling

the externalities problem of transboundary and persistent pollution abstract this paper deals with implementing the efficient allocation of transboundary and persistent pollution in particular we adapt varian s compensation mechanism varian a solution to the problem of externalities when agents are well informed amer econ rev 85 1994 1278 1293 to cover situations in which pollutants extend to neighboring regions and their effects persist over time the main contribution of this paper is the design of a mechanism that implements in subgame perfect equilibrium the efficient pollution levels in this context

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

schooling and citizenship in a young democracy evidence from postwar germany this paper examines whether schooling has a causal impact on individuals political interest voting turnout democratic values political involvement and political membership using two national representative samples between 1949 and 1969 the number of compulsory years of schooling was increased from eight to nine years in the federal republic of germany gradually over time and across federal states these legislative changes allow one to investigate the causal impact of years of schooling on citizenship in a young democracy years of schooling are found to be positively correlated with a broad range of citizenship outcomes however when exogenous increase in schooling through legislative changes is used there is little evidence of a causal efiect several potential explanations are examined 1 poor or apolitical teaching practices in the post war period 2 shortages of qualifled teachers and adequate teaching material 3 extra curricular civic education and 4 whether civic knowledge might have been acquired prior to the increase in schooling the estimates reject the flrst three explanations whereas ample historical evidence is in favour of the hypothesis that the fundamentals of democracy were learned already earlier in school

evaluating the effect of tax deductions on training dutch employers can claim an extra tax deduction when they train employees older than age 40 this discontinuity in a firm s training cost is exploited to identify the tax deduction s effects on training participation and of training participation on wages the results show that the training rate of workers just above age 40 is 15 20 higher than that of workers just below age 40 this difference mainly results from the postponement of training and is not a stimulating effect of the measure the two stage least squares estimate of the wage effect of training is not statistically different from zero

staying on in full time education reasons for higher participation rates among ethnic minority males and females individuals from ethnic minorities have a greater tendency to stay on in full time education beyond the compulsory age there are however wide variations between groups and the paper explores the role for human capital considerations such as earnings and increased employability in this choice economic considerations and socioeconomic background are found to be important but there is evidence for a separate ethnicity effect influencing choice the method used is to fit a joint leaving and employment equation for males and females aged 18 24 using combined micro data from the british labour force survey and the sample of anonymized records from the 1991 census

the investment opportunity set and accounting procedure choice abstract this paper provides evidence on the cross sectional relation between firms investment opportunities their debt and compensation contracts their size and financial leverage and their accounting procedure choices this evidence is important because previous studies hypothesize that the link between firms investment opportunities and their accounting choices helps explain extant results on the size debt equity and bonus plan hypotheses however while i find that firms investment opportunities do affect the nature of their contracts i also find that the traditional explanations for accounting choice are important after controlling for the effects of the investment opportunity set

why the apple doesn t fall far understanding intergenerational transmission of human capital parents with higher education levels have children with higher education levels however is this because parental education actually changes the outcomes of children suggesting an important spillover of education policies or is it merely that more able individuals who have higher education also have more able children this paper proposes to answer this question with a unique dataset from norway using the reform of the education system that was implemented in different municipalities at different times in the 1960s as an instrument for parental education we find little evidence of a causal relationship between parents education and children s education despite significant ols relationships we find 2sls estimates that are consistently lower than the ols estimates with the only statistically significant effect being a positive relationship between mother s education and son s education these findings suggest that the high correlations between parents and children s education are due primarily to family characteristics and inherited ability and not education spillovers

determinants of the corporate decision to capitalize interest abstract until 1974 firms could choose within gaap to capitalize or expense interest costs associated with capital expenditures the predominant practice had been to treat interest as a period expense however in 1974 the securities and exchange commission imposed a moratorium on further adoption of interest capitalization by non regulated firms this study empirically examines economic factors potentially influencing firms decisions to expense or capitalize interest prior to the sec moratorium we hypothesize that the choice may be affected by 1 the existence of management compensation agreements tied to reported earnings 2 debt covenant constraints and 3 the political costs for some firms of reporting higher earnings when compared to the control group our findings are that 1 the frequency of explicit management compensation packages was not greater for the interest capitalization group 2 firms with financial ratios closer to likely debt agreement constraints on dividends interest coverage and leverage tended to elect interest capitalization and 3 other than the largest firms in the politically sensitive petroleum refining industry the larger firms were more likely to capitalize interest

compulsory schooling laws and school crime extensive literature demonstrates that compulsory schooling laws improve educational attainment well being civic involvement and labour market outcomes however at risk youth incapacitated to schools may impact the learning environment and school safety the purpose of this article is to study whether raising the minimum dropout age mda requirement above 16 increases crime committed within us public high schools a difference in difference estimation exploits changes in state level mda laws over time and indicates that schools in states that raise their mda requirement to 18 incur more overall crime relative to schools in states that do not while no effect on overall crime is identified when the mda requirement is raised to 17 furthermore these effects persist for 4 years after passage and more intensely in metropolitan areas coupling this research with existing literature suggests that when the mda requirement is raised to 18 only a small portion of the observed reduction in juvenile crime is

a model of electroral competition with interest groups abstract this letter specifies and analyzes a model of electoral competition with interest groups the assumptions used in the model are drawn from the existing literature we i show that certain assumptions that have been used in empirical analyses of voting provide a sufficient condition for the existence of an electoral equilibrium and ii characterize the equilibrium strategies embodied in the characterization is a set of parameters that can be said to measure the electoral strengths of the interest groups we also state the appropriate definition of the pareto relation for our model and note that each of the equilibrium strategies is pareto optimal

the equilibrium approach to fiscal policy this paper lays out a simple model for the purpose of bringing together the various strands of the analysis of fiscal policy in an optimizing competitive equilibrium model the discussion centers on the critic al assumptions lying behind the ricardian equivalence proposition th e role of the time profile and composition of public expenditure and the timing of distortional taxation copyright 1988 by ohio state university press

are educated workers really more productive abstract this paper presents a new method for examining the productive nature of education it outlines an econometric model which simultaneously estimates an earnings function and a production function for workers and the firms where they are employed this approach permits a direct comparison to be made between the relative wage and relative productivity of workers with different levels of education using a unique data set from ghana two primary questions are addressed 1 are educated workers more productive than workers with no formal education and 2 do earnings differentials between workers with different levels of education reflect genuine productivity differentials the results suggest that education is positively correlated with productivity in ghanaian manufacturing and that firms pay workers according to their productivity

human capital reservation wages and job competition heckman s lambda re interpreted this study integrates insights from three theories into a single model explaining the simultaneous distribution of employment and wages human capital theory is taken as the general framework whereas search theory and the more recent crowding or job competition hypothesis are used to explain selectivity in employment and the resulting bias in wage regressions an empirical test on belgian data using a two stage probit ols model indicates that the crowding theory dominates the search hypothesis for men for women it seems to be outweighed by relatively higher reservation wages probably due to women s different behaviour with respect to family responsibilities

rates of return to four year university education an application of regression discontinuity design estimating the rate of return to university education is invariably difficult due to the problem of omitted variable bias using a regression discontinuity design we estimate the effect of four year university education on earnings and explore the pathways through which the effect operates our estimation exploits the centralized score based college university admission system in china where the minimum scores required for university admission are externally determined by the provincial governments our findings suggest that being eligible for four year university admission implies a sizable increase in earnings with the payoff being attributable to prolonged length of education and improvements in education quality although the quality effects may not be precisely estimated this article is protected by copyright all rights reserved

returns to university education evidence from a dutch institutional reform in 1982 the duration of university education in the netherlands was reduced from five to four years this institutional reform is here used to estimate the causal effect of one year of university education on wages i find that the fifth year of university education increased wages by 7 9 this differential is found by comparing wages of cohorts of graduates enrolling five years before and five years after the reform in a difference in differences approach

annual bonus schemes and the manipulation of earnings abstract using confidential data of executive specific short term bonus plans we investigate the extent to which executives manipulate earnings to maximize the present value of bonus plan payments as such this paper extends the work of healy 1985 like healy we find evidence consistent with the hypothesis that managers manipulate earnings downwards when their bonuses are at their maximum unlike healy we find no evidence that managers manipulate earnings downwards when earnings are below the minimum necessary to receive any bonus we demonstrate that healy s results at the lower bound are likely to be induced by his methodology

the compelling effects of compulsory schooling evidence from canada abstract compulsory school laws have existed for more than a hundred years and policies to mandate further education continue to be discussed the implications of these laws however are not well understood historical changes to compulsory schooling in canada permit an examination of their effects on would be dropouts under very different circumstances than those during changes in other countries mandating education substantially increased adult income and substantially decreased the likelihood of being below the low income cut off unemployed and in a manual occupation these findings suggest significant gains from this legislation which seem unlikely offset by the costs incurred while having to remain in school jel classification i20 i28

analysing wage differentials when workers maximize the return to human capital investment abstractthe analysis of the determinants of differences in wages across workers has traditionally relied on the estimation of average earnings functions in this article we propose a new theoretical model where it is the workers who decide the amount they wish to invest in human capital taking into account the costs of acquiring those skills for the purpose of maximizing earnings in this model both human capital and marginal productivity are likely to be influenced by the individual s unobserved characteristics such as ability or motivation potentially giving rise to endogeneity problems in this context the empirical implementation of our theoretical model allows us under certain assumptions to obtain consistent estimates even under the assumption of endogeneity we present an empirical application to the education sector using data from the spanish structure of earnings survey 2010 our results show that females and workers in the private education sector face more difficulties in achieving t

returns to education evidence from u k twins we use a new sample of uk female identical twins to estimate private economic returns to education we report findings in three areas first we use identical twins to control for family effects and genetic ability bias and the education reported by the other twin to control for schooling measurement error our estimates suggest a return to schooling for uk females of about 7 7 second we investigate within twin pair ability differences by examining within twin pair and between family correlations of education with observable correlates of ability including birthweight ability tests and reading scores our findings suggest lower ability bias in within twin pair regressions than pooled regressions third using data on twins smoking we show smoking reflects family background and using it as an instrument exacerbates ability bias this abstract was borrowed from another version of this item

intergenerational mobility in britain in this paper we use longitudinal data on children and their parents to assess the extent of intergenerational mobility in britain based on data from the national child development survey a cohort of all individuals born in a week of march 1958 we find that the extent of intergenerational mobility is limited we report an intergenerational correlation of the order 40 to 60 for fathers and sons and 45 to 70 for fathers and daughters in terms of labour market earnings and years of schooling an examination of quartile transition matrices between parental and child earnings outcomes reveals a similar pattern finally it seems on the basis of these transition matrices that there is an important asymmetry in intergenerational earnings mobility with upward mobility from the bottom of the earnings distribution being more likely than downward mobility from the top

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

educational choice families and young people s earnings this paper presents two optimizing models of educational choice discusses issues of identification estimates earnings equations in the context of these models and presents conditions under which we can test one against the other the estimates indicate that education is endogenous for young people s earnings creating a downward bias in estimated returns from education that assume exogeneity identification and estimation relies on family background information from a special sample from the british household panel study 1991 95 which matches mothers and their young adult children our estimates favor a family model over an individual model and they suggest that parents allocate resources to education to compensate for differences in their children s earnings endowments

matching the demand for and supply of training in the school to work transition this empirical paper investigates skill formation in the youth labour market using event history data collected from the administrative records of lancashire careers service we model training preferences formed at school by young people and training destinations ie the occupation of the first job training scheme we also model the duration of the individual s first unemployment spell competing risks models with flexible piece wise linear baseline hazards and unobserved heterogeneity are estimated there is evidence of occupational segregation by gender and an excess demand for general training outcomes are mainly determined by examination performance ethnicity and whether disadvantaged

labour market consequences of a high school diploma this article compares the labour market outcomes of high school dropouts to high school graduates who did not enrol into higher education but immediately entered the labour market using parental

does raising the school leaving age reduce teacher effort evidence from a policy experiment this paper examines the impact of an increase in the school leaving age on high school teachers absence behaviour we estimate differ ence in difference models of absenteeism using count data approaches employing data from the spanish labour force survey our findings suggest that high school teachers reduced their effort due to the re form that raised the age of compulsory education commencing in the academic year 1998 1999 in spain in particular they take 15 more sickness absence in the posttreatment period this result should be of interest to both policy makers and researchers who rely upon com pulsory school law changes as a source of exogenous variation in edu cational attainment

intergenerational mobility among the rich and poor results frm the national child development survey using data from the uk national child development survey we look at the relationship between sons and fathers and their position in the population income distribution particular attention is paid to those who start or end up near the top or bottom of the distribution people at these extreme ends of the distribution are found to be particularly subject to immobility across the generations among those whose fathers are at the bottom of the distribution a clear positive relationship between test scores at age seven and likelihood of moving up the distribution appears evident copyright 1996 by oxford university press

fiscal policy in general equilibrium this paper studies four classic fiscal policy experiments within a quantitatively restricted neoclassical model the authors main findings are as follows 1 permanent changes in government purchases can lead to short run and long run output multipliers that exceed one 2 permanent changes in government purchases induce larger effects than temporary changes 3 the financing decision is quantitatively more important than the resource cost of changes in government purchases and 4 public investment has dramatic effects on private output and investment these findings stem from important dynamic interactions of capital and labor absent in earlier equilibrium analyses of fiscal policy copyright 1993 by american economic association

what do twins studies reveal about the economic returns to education a comparison of australian and us findings conventional estimates of rates of return to education are constrained because they are unable to isolate the returns to schooling from the contribution of individual ability and the influence of family background potentially studies using a sample of twins may overcome these problems monozygotic twins are genetically identical and if they have been reared together share the same family background differences in income between identical twins can therefore be associated with differences in the amount of education they have undertaken in order to estimate the independent influence of education comparisons of such estimates with estimates made from a sample of dizygotic twins who are genetically similar but not identical and who are also reared together may permit evaluation of the biases associated with ability and family background in conventional estimates of the return to education in an important paper jere behrman et al 1977 analyzed data from a sample of male world war ii veteran twins and found that of the overall rate of return to schooling of 8 percent 2 7 percentage points could be attributed to schooling per se 3 2 percentage points could be attributed to genetic factors and 2 1 percentage points could be attributed to shared family environment in a recent paper however orley ashenfelter and alan krueger 1994 have estimated the economic returns to education using data on a new sample of twins which permitted them to adjust their estimate for omitted ability variables and measurement error on this basis they find that family and genetic effects make virtually no contribution to the returns to schooling measurement error however biases the estimated return to schooling downward the findings of ashenfelter and krueger 1994 are very different from previous work in this field and there is now some confusion as to what analysis of twins data really reveals about the economic returns to schooling ashenfelter and krueger s results are based on analysis of data for a sample of 298 individuals 149 pairs of identical twins who attended a twins festival in 1991 they remark at the end of their paper only additional data collection is likely to lead to better estimates of the returns to schooling p 1171

changes in compulsory schooling education and the distribution of wages in europe using data from 12 european countries and the variation across countries and over time in the changes of minimum school leaving age we study the effects of the quantity of education on the distribution of earnings we find that compulsory school reforms significantly affect educational attainment especially among individuals belonging to the lowest quantiles of the distribution of ability there is also evidence that additional education reduces conditional wage inequality and that education and ability are substitutes in the earnings function

effect of investor speculation on earnings management this paper considers how the presence of a speculative investor who bets on a firm s future earnings report affects how the firm s management manipulates that report we examine the influence of the speculator s information on earnings management behavior quality of reported earnings and stock price efficiency we also provide predictions for and interpretations of short window event studies and long window association studies

from school to university the demand for post compulsory education in britain the work reported here was done at the centre for labour economics lse and it is a revision of earlier work done at the national bureau of economic research this revision owes much to the comments and suggestions of richard layard and to the technical expertise of george alogoskoufis thanks are also due to the department of education and science for their comments and help with the data and to the manpower services commission the department of employment and the ford foundation for finance

an income strategy approach to the positive theory of accounting standard setting choice abstract this paper is designed to provide additional evidence on the positive theory of accounting policy choice by combining individual accounting principles into firm income strategies these strategies were the dependent variable in a probit analysis where the independent variables were size management compensation industry concentration ratio systematic risk capital intensity and the total debt to total asset ratio the results indicate that four of these factors size management compensation concentration ratio and the total debt to total asset ratio have a significant association with the choice of a firm s income strategy this test provides strong evidence consistent with the positive theory of accounting standard setting choice we also present evidence that smaller firms and or firms in less concentrated industries do not appear to make accounting policy choice decisions that are consistent with this theory

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

estimates of the returns to schooling from sibling data fathers sons and brothers data on brothers and on fathers and sons from the national longitudinal survey are used to consider the impact of omitted variables and measurement errors on the economic returns to schooling the analysis suggests that the upward bias in estimated returns due to omitted variables is likely offset by an equal downward bias resulting from measurement errors in reported schooling controlling for both of these potential sources of bias yields results comparable to conventional regression estimates of the economic return to schooling

estimating the variance of wages in the presence of selection and unobserved heterogeneity abstract identification of potential wage distributions by education is important to the study of the causal links between education inequality and uncertainty potential wage inequality within an educational group that is the variance in wages if all workers had the same education exceeds the observed statistics because self selected education truncates wage distributions decomposing potential wage inequality into heterogeneity known to the agent making the educational choice and uncertainty unknown to the agent suggests that wage uncertainty does not necessarily rise with education it is unobserved heterogeneity not uncertainty that explains the observed relationship between college graduation and higher wage inequality

the raising of the school leaving age returns in later life using the recently released uk household longitudinal study we examine whether the raising of the school leaving age in 1972 had a permanent impact on earnings for individuals in their early 50s

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

life cycle earnings education premiums and internal rates of return using norwegian population panel data with nearly career long earnings histories we provide a detailed picture of the causal relationship between schooling and earnings over the life cycle to address selection bias we apply three commonly used identification strategies we find that additional schooling gives higher lifetime earnings and a steeper age earnings profile in line with predictions from human capital theory our preferred estimates imply an internal rate of return of around 11 suggesting that it was highly profitable to acquire additional schooling our analysis reveals that mincer regressions dramatically understate the returns to schooling because key assumptions are violated

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

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item