a decomposition of training probabilities the determinants of workers training probabilities are analysed a distinction is made between the unconditional probability that a worker is employed by a firm that provides any training opportunities at all and the conditional probability that the worker receives training given that s he works for a firm that provides training for this analysis a censored version of the bivariate probit model is applied the results indicate that establishment size industry dummies type of schooling age and experience affect only the unconditional probability whereas the type of labour contract working hours and job level affect only the conditional probability years of formal schooling affect both probabilities more highly educated workers are both more likely to work for training providing firms and given that they work for such a firm to be selected for training programmes

equity markets transactions costs and capital accumulation an illustration poorly developed equity markets inhibit the transfer of capital ownership moreover the costs of transacting in equity markets affect not just the level of investment but the kinds of investments that are undertaken once equity markets allow the ownership of capital to be transferred economically reductions in costs tend to favor the use of longer maturity investments when there is a relationship between the maturity of an investment and its productivity transactions cost reductions are conducive to observing certain kinds of increases in productive efficiency this article analyzes savings investment and consumption decisions by using an overlapping generation s model with two period lived agents the analysis allows for several technologies for converting current output into future capital that varies by productivity and maturity and it makes ownership of capital costly to transfer a reduction in transactions costs will typically alter the composition of savings and investment and have potentially complicated consequences for capital accumulation and steady state output

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

do adjustment costs explain investment cash flow insensitivity abstract in this paper i explain two puzzles that have been observed in firm level data first firms that display a high sensitivity of investment to cash flow commonly believed to be an indicator of liquidity constraints usually have large unutilized lines of credit which presumably could be used to overcome the shortage of funds second firms that are perceived to be extremely liquidity constrained actually show very little sensitivity of investment to cash flow i show how a dynamic model of firm investment with liquidity constraints and non convex costs of adjustment of capital can explain these facts these two features together imply that firms need to have a certain threshold level of financial resources before they can afford to increase investment once they cross this threshold firms investment will be positively correlated with their financial resources until they reach their desired level of capital stock however even if investment is sensitive to cash flow firms may borrow below their credit limit to guard against future bankruptcy or binding liquidity constraints

financing constraints and investment efficiency evidence from a panel of canadian forest firms this article examines the financial constraint of 18 listed canadian forest firms between 2000 and 2014 following the stochastic frontier approach empirical results support the observation that ca

the determinants of work related training in britain in 1995 and the implications of employer size this study uses a familiar set of variables to characterize the determinants of training based around individual characteristics qualifications and workplace characteristics however it goes further by using data drawn from a recent quarter of the uk labour force survey and thus contains an up to date and extensive set of core variables the dependent variable used covers three subgroups those who have never been offered training by their current employer those who have been offered but did not receive training in the last three months and those workers who received training within the last three months the hypothesis that large employers not only provide more work related training but that they are also more willing to train workers with characteristics that indicate a lower probability of obtaining a return on any investment outlay is tested this was confirmed especially for male workers along with a range of results that mostly accord with previous studies into the determinants of uk em

a stochastic frontier analysis of financing constraints on investment is shown that investment under financing constraints can be modeled as a one sided deviation from a frictionless investment level and that effects of financing constraints can be identified and quantified by imposing a distributional assumption on the effects panel data on taiwanese manufacturing firms between 1989 and 1996 are used in the estimation it is found that 1 some of the sorting criteria used in the literature do not have significant and monotonic relationships with the degrees of financing constraint resulting in problematic sample separations and 2 the effects of financial liberalization in taiwan are such that the investment efficiency improved over time for a typical firm and the improvement was particularly large for smaller firms

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 wage effects of training in portugal differences across skill groups genders sectors and training types this article investigates the determinants and wage effects of training in portugal in a first stage we show that there are considerable differences in training participation across groups of workers with elder and low educated individuals participating substantially less in a second stage we show that training has a positive and significant impact on wages the estimated wage return is about 30 for men and 38 for women discriminating between levels of education and working experience and the public and private sector reveals important differences across categories of workers we find that women low educated workers and workers with long working experience earn larger returns from training the average effect of training is similar in the private sector and the public sector however differences across experience groups are larger in the private sector while differences across education groups are larger in the public sector we use three alternative classifications of training activities and f

firm sponsored training in regulated labour markets evidence from spain using data from the 1994 european community household panel survey the author examines who receives formal firm sponsored training in spain the author finds that the distribution of firm sponsored training in the work force is uneven and concentrated among more skilled workers in the upper deciles of the wage distribution the data show that the likelihood of receiving firm sponsored training for a low education employee is much lower also the better educated employees in high wage occupations of the largest establishments have higher probabilities of receiving specific training spain has a highly regulated labour market and the labour market frictions and institutions compress and distort the structure of wages however the results suggest that the highly compressed wage structure do not provide firms with the incentive to invest in general training

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

how to quickly get a job the transition from higher education to french labour market by a survival model this article analyses how long former university students stay unemployed when searching for a new job after the leaving of the french higher education cox duration models are used to account for the proportional hypothesis the main result of this article is that the worker s recruitment is based more on the choice of the faculty of initial training than the educational level attainment some policy implications are derived from our results to give some recommendations for individual job search and policy makers in education

nonparametric regression techniques in economics this introduction to nonparametric regression emphasizes techniques that might be most accessible and useful to the applied economist the paper begins with a brief overview of the class of models under study and central theoretical issues such as the curse of dimensionality the bias variance trade off and rates of convergence the paper then focuses on kernel and nonparametric least squares estimation of the nonparametric regression model and optimal differencing estimation of the partial linear model constrained estimation and hypothesis testing is also discussed empirical examples include returns to scale in electricity distribution and hedonic pricing of housing attributes

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

a stochastic frontier approach to modelling financial constraints in firms an application to india we propose the use of stochastic frontier approach to modelling financial constraints of firms the main advantage of the stochastic frontier approach over the stylised approaches that use pooled ols or fixed effects panel regression models is that we can not only decide whether or not the average firm is financially constrained but also estimate a measure of the degree of the constraint for each firm and for each time period and also the marginal impact of firm characteristics on this measure we then apply the stochastic frontier approach to a panel of indian manufacturing firms for the 1997 2006 period in our application we highlight and discuss the aforementioned advantages while also demonstrating that the stochastic frontier approach generates regression estimates that are consistent with the stylised intuition found in the literature on financial constraint and the wider literature on the indian credit capital market

the effect of financial liberalization on the capital structure and investment decisions of indonesian manufacturing establishments this article analyzes the consequences of financial liberalization using a large panel of indonesian manufacturing establishments it discusses whether financial reforms have had an impact on investment and on the allocation of credit and whether the effects differ depending on the type of firms the overall conclusion is that shifting from administrative toward market based allocation of credit has increased borrowing cost particularly for smaller firms but at the same time has benefited firms by giving them widened access to finance

financial liberalisation and private investment evidence from turkey abstract the paper tests for shifts in aggregate private investment functions for turkey as a consequence of financial liberalisation in the early 1980s results for a neoclassical model in error correction form suggest that the short run dynamics of investment were altered by financial liberalisation with reduced sensitivity to the availability of credit but with no evidence of increased sensitivity to the cost of capital estimation of an euler equation model indicates that credit constraints remained binding after liberalisation we interpret this as evidence of significant structural change to private investment functions after financial liberalisation but with credit constraints continuing to operate

general and specific training evidence and implications using data from the employer opportunity pilot project eopp survey and the national longitudinal survey of youth nlsy we explicitly document the specificity and generality of employer provided training and we analyze how wage growth and mobility are influenced by our direct measures of specific and general training in spite of the emphasis that labor economists have placed on specific training we find that employers in the eopp and workers in the nlsy indicate that most of the skills learned in training are useful elsewhere our results are consistent with several recent models that predict that employers will often extract some of the returns to the general training they provide

how sensitive is investment to cash flow when financing is frictionless i analyze the sensitivity of a rm s investment to its own cash ow in the benchmarkcase where nancing is frictionless this sensitivity has been proposed as a measure of nancing constraints in earlier studies i nd that the investment cash ow sensitivities that obtain in the frictionless benchmarkare very similar both in magnitude and in patterns they exhibit to those observed in the data in particular the sensitivity is higher for rms with high growth rates and low dividend payout ratios tobin s q is shown to be a more noisy measure of near term investment plans for these rms does a high sensitivityof a rm s investment to its own cash ow indicate that the rm is nancially constrained a large body of research starting with fazzari hubbard and petersen 1988 hereafter fhp suggests that rms facing nancing constraints should exhibit high investment cash ow sensitivities re ecting the wedge between the costs of external and internal funds empirical ndings seem to give support to this hypothesis since rms classi ed as constrained on a priori criteria such as size dividend payout or leverage do have higher cash ow sensitivities even after controlling for their investment opportunities by conditioning on tobin s q however the reliability of these results critically depends on whether q is a proper control for the investment opportunity set if q performs worse for certain classes of rms higher sensitivities may obtain for these rms simply because cash ow re ects information about investment opportunities this critique is not new in his discussion of fhp poterba 1988 was the rst to point out that measurement error in q may cloud the empirical results similar concerns have been raised in subsequent studies as well while the qualitative point is well known its quantitative impact on the investment cash ow sensitivity has not been analyzed can the linkbetween cash ow and the investment opportunity set account for the observed magnitudes of the sensitivity or are these magnitudes too large to be explained without nancing frictions

why do low educated workers invest less in further training several studies document that low educated workers participate less often in further training than high educated workers this article investigates two possible explanations low educated workers invest less in training because of 1 the lower economic returns to these investments or 2 their lower willingness to participate in training controlling for unobserved heterogeneity we find that the economic returns to training for low educated workers are positive and not significantly different from those for high educated workers however low educated workers are significantly less willing to participate in training we show that this lesser willingness to train is driven by economic preferences and personality traits

the effects of cognitive ability and high school quality on college entry decisions nonparametric estimation of parameters of interest the decisions to attend college are analysed and nonparametric predictions compared to those obtained from the widely used logit model the impacts of measured cognitive ability and proxies for high school quality on the decisions to attend college are examined for a sample of white and black males and females from the usa two different parameters of interest which isolate the effects of ability and high school quality on college entry decisions are described and estimated by integrating out the effect of other covariates it is found that measured cognitive ability is an extremely important determinant of college entry for all race and gender groups at the same point in the ability distribution blacks are more likely to select into college than whites and females more likely than males of the same racial group proxies for high school quality such as teacher education student teacher ratios school enrolment and library size are shown to have little or no effects on the likelihood of college entry

evidence on the role of cash flow for investment abstract recent work in macroeconomics argues that imperfections in capital markets may lead to business cycle fluctuations by propagating relatively modest shocks evidence for such a mechanism also known as the financial accelerator consists largely of firm level studies showing that cash flow is an important predictor of investment but this evidence is often viewed with skepticism because cash flow is also a good indicator of investment opportunities in this paper we develop a framework for estimating the extent to which the predictive power of cash flow can be attributed to its role as a fundamental versus its role in alleviating credit frictions for firms with access to commercial paper and bond markets we find that the perfect capital markets model of investment can fully account for the role of cash flow for firms with only limited access to capital markets as indicated by lack of participation in public debt markets however investment appears to be excessively sensitive to fluctuations in cash flow these results thus clarify the role of cash flow in investment equations and provide support for the existence of a financial accelerator

corporate structure liquidity and investment evidence from japanese industrial groups this paper presents evidence suggesting that information and incentive problems in the capital market affect investment we come to this conclusion by examining two sets of japanese firms the first set has close financial ties to large japanese banks that serve as their primary source of external finance and are likely to be well informed about the firm the second set of firms has weaker links to a main bank and presumably faces greater problems raising capital investment is more sensitive to liquidity for the second set of firms than for the first set the analysis also highlights the role of financial intermediaries in the investment process

financial liberalization credit constraints and collateral investment in the mexican manufacturing sector abstract we examine the impact of financial liberalization on fixed investment in mexico using establishment level data from the manufacturing sector in addition to analyzing changes in cash flow sensitivities an innovative approach explores the role of real estate as collateral and addresses a potential censoring problem the results suggest that financial constraints were eased for the smallest firms but not for larger ones however the importance of possessing real estate increased given banks reliance on collateral in their lending the results also provide microeconomic evidence consistent with the role attributed to financial accelerator mechanisms during lending booms and during post crisis recessions

catholic schools dropout rates and educational attainment this paper examines the effect of catholic schooling on high school dropout rates and educational attainment particular attention is given to the effect of selection into the catholic school sector after adjusting for self selection we find that sophomores in the catholic schools are still substantially more likely to graduate with their class it is also shown that seniors in the catholic schools are not more likely to acquire more schooling than other seniors if selection is taken into account

vocational training and earnings in portugal this paper examines the relationship between wages and vocational training in portugal for this purpose we estimate a semi logarithmic wage equation using ols and quantile regression techniques the results indicate that in some cases vocational training has a positive impact on wages this is valid for the mean ols and for each conditional quantile of the wage distribution the paper casts some doubt on the market value of the skills acquired within the apprenticeship system and in the vocational training schools the results also suggest that the effect of training on wages is not statistically different across different quantiles of that distribution therefore there is no loss of information when we only use the ols estimator keyworks wage equation vocational training quantile regression university of amsterdam address roetersstraat 11 1018 wb amsterdam the netherlands e mail hartog fee uva nl faculdade de economia da universidade nova de lisboa address tv estevao pinto 1099 032 lisboa portugal e mail ppereira fe unl pt universidade dos acores address rua mae de deus 9500 p delgada portugal e mail josevieira notes uac pt acknowledgements we are thankful to an anonymous referee for helpful suggestions financial support from program praxis xxi grant praxis 2 2 1 csh 781 95 sapiens 99 grant 33089 99 and feder is acknowledged

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research

the impact of cash flows and firm size on investment the international evidence abstract this paper examines the degree to which cash flow availability influences firm investment in six oecd countries in particular we are interested in the extent to which the reliance on internal funds is affected by firm size since there is general agreement that smaller firms have less access to external capital markets and thus should be more affected by the availability of internal funds earlier work has concluded that the documented positive relationship between cash flow and investment is evidence of the existence of financial constraints we first examine all firms regardless of size in each country and we find that the amount of corporate investment is affected by internal resources in all six countries that is internal financing affects firm investment we then repeat the analysis segmenting the sample using three measures of firm size contrary to our a priori expectations we find that the cash flow investment sensitivity is generally highest in the large firm size group and smallest in the small firm size group we deduce that the explanations for these findings are grounded in managerial agency considerations and in the greater flexibility enjoyed by large firms in timing their investments thus we conclude that the degree of sensitivity of a firm s investments to its cash flows cannot be interpreted as an accurate measure of its access to capital markets as do kaplan s zingales l 1997 the quarterly journal of economics 169 215 since small firms are known to have less access to external markets

why does liquidity matter in investment equations that liquidity variables affect investment spending is widely accepted despite important recent empirical work questions remain concerning the interpretation of liquidity variables in investment equations and the sources and economic importance of finance constraints these questions are addressed by estimating a variety of econometric models that exploit distinctive canadian institutional features to identify firms that face relatively severe information problems the initial econometric evidence confirms the existence of finance constraints and identifies their source as the problems faced by firms in credibly communicating private information to outsiders this conclusion is robust to biases from the capitalization of finance constraints into asset prices scale economies or imperfect competition which are accounted for directly in the econometric specifications copyright 1995 by ohio state university press