policy concertation in europe understanding government choice this article focuses on the european governments decision to involve unions and employers in the design and implementation of public policy based on new measures of the phenomenon the authors argue that between 1974 and 2003 no convergence on a pluralist model of policy formation is visible they then use these measures to identify and analyze the clearest cases of adoption or demise of concertation namely the contrasting responses of the british and irish governments to wage policy and of the austrian and italian governments to pension reform they argue that governments are willing to share their policy making prerogatives when they are politically weak and when unions while still representing a credible threat to policy implementation have been declining in the recent past a combination of partisanship and policy learning reinforces the push for change

defensive strategies in the quality ladders abstract this paper analyses the potentially defensive behaviour of patent race winners and the ensuing effect on aggregate r d effort we propose a quality ladder model where leaders strategically acquire a technology advantage and are able to innovate in this context product market regulation by affecting this strategic behaviour may have either a positive or negative effect on aggregate r d intensity the negative effect is likely to pertain in liberal markets whereas the positive influence arises in more regulated environments and can be stronger for larger jumps in innovation these steady state equilibrium outcomes are consistent with the puzzling patterns in data from manufacturing industries in 14 oecd countries over the 1987 2003 period

empirical evaluation of bureaucratic models of inefficiency two separate but related strands of literature exist regarding the efficiency of public sector service provision the theoretical base developed in the bureaucratic models of supply and the methodological base developed in the operations research and economic literatures most analyses focus exclusively on either the measurement or causes of inefficiency this paper seeks to empirically test bureaucratic models of supply by drawing on the measurement literature in anticipation of the results it is found that there does exist empirical evidence supporting some of the implications of these models

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

do limits matter evidence on the effects of tax limitations on student performance abstract the goal of this research is to determine if limits on the revenue raising ability of school districts translate into constraints on the ability of these districts to affect student performance we use the recent imposition of property tax limitations on school districts in the chicago metropolitan area to determine if these limits have translated into slower growth in student performance we find only limited evidence that student performance in districts subject to the tax limitations has fallen relative to student performance in districts not subject to the limitations

centralized collective bargaining and the problem of compliance lessons from the italian experience according to the neo corporatist approach to the problem of compliance worker control over union policy is incompatible with centralized wage regulation because only associations in which national leaders are insulated from their members are capable of delivering rank and file acceptance of wage moderation this analysis of centralized collective bargaining agreements in italy in the 1980s and 1990s provides a critical re examination of the traditional neo corporatist approach the author drawing on archival research and interviews argues that centralization can be entirely compatible with decision making procedures in which rank and file workers have ultimate decision making power in fact the italian labor movement s adoption of more democratic decision making procedures he claims was instrumental in generating and sustaining centralized collective bargaining arrangements in italy in the early 1990s

budget constrained frontier measures of fiscal equality and efficiency in schooling equality and efficiency are key issues in educational reform here the authors analyze the efficiency and equality consequences of various school finance reforms using a cost indirect output distance function this function readily models multiple output production under conditions of budgetary constraint and provides a natural measure of performance that is closely related to farrell type measures of efficiency the analysis suggests that despite school district inefficiency finance reforms can affect student achievement however any potential gains in output from redistribution are dwarfed by the potential gains from increased efficiency more strikingly the analysis demonstrates that budgetary reforms designed to equalize expenditures could actually increase the inequality of student achievement

caveat emptor cross country data on education and the labor force abstract cross country data on education and the labor force frequently are used to describe important dimensions of development and to estimate models of economic growth and growth determinants the impact of education and related phenomena this investigation finds 1 there are serious intertemporal and inter country comparability problems with these data that may importantly affect inferences about labor force size trends and productivity and schooling investments and impact 2 data gaps are systematically related to levels of development and literacy and 3 conclusions about the determinants or consequences of development based on constructed data that have been made available to fill data gaps can be seriously misleading

negotiating the italian pension reform with the unions lessons for corporatist theory using field research at both the national and the local levels the author reconstructs the process that led to pension reform in italy this reconstruction becomes the basis for a critical re examination of corporatist theory which has recently been challenged by the emergence of social pacts in a host of unlikely countries including italy the author argues that the theory s traditional emphasis on hierarchical and internally undemocratic interest groups is fundamentally at odds with the particular organizational mechanisms through which consensus was mobilized among both middle level union structures and rank and file workers in italy in contrast with standard neo corporatist theory the italian pension reform shows that organizational democracy far from weakening the hands of reformist union leaders may actually strengthen them

on the measurement of congestion in the provision of local public goods abstract this paper contends that a measurement problem the zoo effect has led to upwardly biased estimates of the degree to which local public goods are subject to congestion the suggestion is that the observed positive correlation between public expenditure and population size reflects in large measure the wider range of services provided in more populous jurisdictions not simply a high propensity of these goods to become congested

an economic model of teaching effectiveness the literature on the determinants of good teaching performance has been largely devoted to empirical measurement a complete review of the publications in this area would require at least an entire issue the size of this journal yet it is virtually impossible to discover attempts to derive hypotheses about the determinants of good teaching from explicit models of behavior this has led researchers into the trap of exploring only the empirical determinants of good teaching performance typically the results of student evaluations are correlated with affective personality traits of the teachers with peer evaluations of psychological compositions or even with the results of various psychological tests examples are the works of robert isaacson et al frank costin et al and wilbert mckeachie et al in most of these studies no substantive conclusions are reached regarding the determinants of effective teaching in the few studies which do contain significant findings the independent variable in question is difficult to explain as a direct determinant of teaching effectiveness for example isaacson et al find that virtually the only statistically significant determinant of effective teaching is the personality characteristic which they label culture this may imply that simply wearing a tweed jacket and taking up pipesmoking is sufficient to improve teaching this paper takes a somewhat different approach to the analysis of teaching assume that the individual in question wishes to maximize teaching effectiveness clearly there are constraints on this maximization process one must necessarily be the time budget constraint a second constraint however adds a good deal of interest to the model this constraint is best described as the bundle of characteristics available to the individual these characteristics could be termed the components of the individual s personality such attributes include physical appearance psychological makeup speaking ability and a myriad of other variables thus this model bears a resemblance to the standard economic models of monopolistic competition see a michael spence before proceeding to a formal statement of the problem a philosophical issue must be addressed what is meant by teaching effectiveness generally this is interpreted as maximizing student evaluations of teachers however this is clearly not always equivalent to maximizing student learning unfortunately the latter variable is difficult but not impossible to measure preand posttesting with standardized tests is becoming increasingly accepted for example the meaning of teaching effectiveness in this paper must unfortunately remain ambiguous some teachers concerned perhaps with obtaining tenure will interpret good teaching as obtaining good evaluations the criterion by which they are judged others may take a more eclectic viewpoint since the problem below is an individual maximization problem the precise definition of effective teaching may simply vary from individual to individual see w r allen formally this problem is exactly analogous to one first addressed by kelvin lancaster he assumes that the consumer attempts to maximize satisfaction through purchase of bundles of attributes each commodity is possessed of certain of these characteristics by consuming various combinations of these commodities the consumer is assistant professor department of economics and director center for economic education california state university hayward i would like to thank alex cassuto nancy sanders and an anonymous referee for helpful discussion in a previously unreported experiment in the department of economics california state universitybakersfield faculty members were required to wear coats and ties in classes it was subsequently observed that teaching evaluations improved unfortunately no detailed statistical results of this experiment are available for analysis

production and innovation when techniques are tacit the case of education abstract the central theme of this paper is that the conventional economic theory of production does not hold even approximately in a field like education after examining the result of input output studies in education and the effect of government attempts to enhance education effectiveness we provide a sketch of a new production theory for sectors where techniques are poorly articulated and idiosyncratic

modeling multiple outputs in educational production functions for some time now economists have conceptualized learning as a production process most educational production functions specify only one output usually a measure of cognitive achievement some recent studies have recognized the multidimensional aspects of schooling specifying outputs in both the cognitive and affective domains introducing multiple outputs into the production function raises interesting theoretical and empirical issues one issue is the manner in which various outputs are interrelated how one models output interactions in educational production functions may be important are the outputs multiple products if so are they independently or simultaneously produced or are the outputs joint products answers to these questions may affect empirical estimates of the educational production function s this paper briefly describes how one might approach this problem we argue on conceptual grounds that modeling outputs in the cognitive and affective domains as joint products is preferable in addition we compare the three approaches empirically to evaluate the sensitivity of educational production function parameter estimates to output specification

partial fiscal decentralization reforms and educational outcomes a difference in differences analysis for spain abstract several arguments derived from fiscal federalism theory suggest that decentralization may improve the provision of public goods and services however theory remains inconclusive regarding these effects under partial decentralization the aim of this study is to examine this hypothesis by evaluating the effects on educational outcomes of the partial fiscal decentralization reform that took place in spain during the 1980s since education competences were devolved to the regions at different points in time we can consistently estimate the effects of this reform by applying the differences in differences method and by using the non decentralized regions as the comparison group we find that the reform had a sizeable impact on the percentage of students dropping out early from school the effects are much stronger for regions with a high level of revenues we also find that the effects are concentrated in the high school program and that the reform was not able to improve educational outcomes in the vocational program we interpret these results as evidence that decentralization improved the match between education policy and population preferences

the future of pensions in europe rescuing unfunded pensions suitably amended unfunded schemes remain a good idea unfunded state pension schemes are projected to become financially unsustainable this is usually attributed to demographic trends yet trends in unemployment and in female labour force participation are quantitatively as important improvements in either or both might be sufficient to rescue existing state schemes especially if combined with an end to the practice of allowing even after retirement the value of a pension to rise with national earnings rather than prices attempts at piecemeal reform are important because nothing in economic theory suggests a switch to the alternative fully funded pensions is desirable not only would such a transition be costly and therefore politically difficult it also neglects the fact that it makes sense to diversify the retirement portfolio holding claims both on labour productivity and on capital assets one can even view pensions as part of a more sophisticated system of intergenerational transfers through which workers finance their earlier education and subsequent retirement michele boldrin juan j dolado juan f jimeno and franco peracchi

public goods club goods and the measurement of crowding abstract this paper shows that some frequently used measures of the degree of publicness of publicly provided goods and club goods are seriously affected by metrization problems the paper proposes measures that do not depend on arbitrary metrization conventions and discusses the relationship of these measures to the question of private provision and optimal club size

schooling and economic well being the role of nonmarket effects standard estimates of the economic value of additional schooling based on earnings differences associated with differences in the level of schooling attained cover only a portion of the total effects of education that are valued by citizens we first identify a catalog of nonmarketed effects many of which have been recently studied by economists and then propose a procedure for estimating a willingness to pay value for these effects using empirical estimates of the magnitude of a selection of these effects found in the literature we calculate willingness to pay values using our proposed procedure these illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments

locally provided public schooling in brazilian municipalities the objective of this paper is to assess the demand for public schooling in the brazilian municipalities within a median voter framework the quantile regression and spatial techniques proved to be useful to account for the spatial and marginal effects associated with educational services the coefficients attached to the main variables price income and population were significant and had the expected sign the relatively high values for those parameters attest the status for these merit goods as luxuries last but no least the municipal school system in brazil seems to present increasing returns to scale both at the school and the municipality level

schools and housing markets an examination of school segregation and performance in connecticut this paper estimates a dynamic model of price level school performance and school racial and ethnic composition in the state of connecticut the paper finds that increasing minority representation in a labor market area reinforces the existing pattern of school segregation changes in segregation appear to be influenced by demographic trends in urban areas and by the labour market factors that determine those trends there is no evidence however to suggest that this process affects housing prices rather the housing market appears to adjust relatively quickly

teacher training teacher quality and student achievement abstract we study the effects of various types of education and training on the productivity of teachers in promoting student achievement previous studies on the subject have been hampered by inadequate measures of teacher training and difficulties in addressing the non random selection of teachers to students and of teachers to training we address these issues by estimating models that include detailed measures of pre service and in service training a rich set of time varying covariates and student teacher and school fixed effects we find that elementary and middle school teacher productivity increases with experience informal on the job training the largest gains from experience occur in the first few years but we find continuing gains beyond the first five years of a teacher s career in contrast we do not find a consistent relationship between formal professional development training and teacher productivity however this may be partly driven by estimation issues as we find more significant positive effects of formal training in the subject grade combination where estimates should be most precise middle school math there is no evidence that teachers pre service undergraduate training or college entrance exam scores are related to productivity

anticipating the consequences of school reform a new use of dea we use dea type linear programming techniques to simulate a basic component of educational reform eliminating restrictions on the allocation of school personnel our technique allows us to identify potential output gains or equivalently potential cost savings from reform we can also identify which personnel groups are likely to gain and lose under this reform when we apply our model to a sample of texas school districts we find evidence that the educational establishment has substantial economic rents to protect from school reform and that the primary beneficiaries of reform are likely to be affluent school districts with few minority students the technique which relies on the relationship between the direct and indirect distance functions can be easily generalized to measure the potential gains from removing other input restrictions such as union work rules environmental regulations or deed restrictions

causal effects in education abstract in recent years a wave of new studies on the effects of educational interventions on student performance has emerged the realization that inputs in the education process are endogenous is important for the validity of traditional findings because of ignoring endogeneity bias all traditional estimates might be wrong recent studies exploit exogenous variation in interventions in education produced by controlled or natural experiments results generated by this methodological innovation differ substantially from the traditional findings this article reviews this new literature illustrates new methods for identifying causal effects of interventions in education and compares the findings with the traditional literature

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

school decentralization helping the good get better but leaving the poor behind abstract the decentralization of public services is a major feature of institutional innovation the main argument in support of decentralization is that it brings decisions closer to the people thereby alleviating information asymmetries and improving accountability however decentralization can also degrade service provision in poor communities that lack the ability to voice and defend their preferences in this paper we analyze the average and distributional effects of school decentralization on educational quality in argentina we find that decentralization had an overall positive impact on student test scores the decentralization gains however did not reach the poor thus although bringing decisions closer to the people may help the good get better the already disadvantaged may not receive these benefits

dollars and performance treating alcohol misuse in maine abstract if public funds are allocated efficiently then an increase in funding should improve the performance of substance abuse treatment programs in the data used in this paper performance measured as abstinence rates and expenditures per patient are not positively correlated one explanation is that funding is endogeneous i e programs treating more difficult patients receive more funding the data comes from all maine s outpatient drug free programs that received public funding between 1991 and 1994 after controlling for endogeneity this paper concludes that the marginal impact of expenditures per patient on abstinence rates is small and statistically insignificantly different from zero

the median voter model in public choice theory the changing perception by public choice theorists about the relevance of the median voter model is a result of excessive extrapolation of the conclusions of theoretical models to the real world early in the 1970s the median voter model was often accepted as implying that the output produced in the public sector was what was most preferred by the median voter this claim is excessive because the median voter model is only a model of demand aggregation under majority rule and has little to say about the supply side of the public sector in the late 1970s many scholars identified several circumstances under which the model would not apply in theory but these critiques of the model were often viewed as reasons to abandon the median voter model altogether the model went from having excessive claims that made the model appear to be more powerful than it really is to excessive claims that made the model appear to be less powerful than it really is these latter claims were often in response to the earlier claims rather than to the model appropriately applied

self fulfilling prophecies in the quality ladders economy if r d difficulty increases as it accumulates as recent evidence suggests then there is a value in the diversification of the aggregate r d efforts over the whole range of industries in the economy however this paper proves that the quality ladders models allow for self fulfilling prophecies to divert r d from an arbitrary number of sectors with potentially dramatic effects on the dynamics of industry structure and on the long run aggregate growth performance moreover in developing countries perfect markets might allow stagnant monopolies to resist despite the removal of fundamental entry barriers to dynamic competition this kind of coordination failure implies potentially strong effects of socio cultural factors on growth and suggests a positive role for public r d policy even in a framework of semi exogenous growth

the effect on black white wage differences of differences in the quantity and quality of education using data from the national longitudinal survey of youth for the years 1979 88 the author examines the extent to which black white differences in educational attainment educational quality and unmeasured individual ability can explain black white wage differences an analysis that corrects for both selectivity and ability biases inherent in estimating the education wage relationship shows that the main source of the black white wage differential is the racial difference in the quality rather than quantity of schooling in fact the author concludes closing the racial gap in the basic skills learned in school could reduce the wage differential by two thirds

intergenerational transfers production and income distribution abstract we consider an overlapping generations economy where the aggregative production process uses physical capital and human capital intergenerational transfers from parents to their children are motivated by altruism we distinguish between two types of transfers investment of parents in the education of their offspring and capital transfer the gift bequest motive we show that the intensity of each type of altruism and hence the composition of the two types of transfers affect significantly the equilibrium output and the intragenerational income distributions comparing competitive equilibria from the same initial distributions of capital transfers and human capital we derive a the economy with the higher education inclined altruism attains lower output and more equal intragenerational income distributions if either the production function s elasticity of substitution is not large or the altruism is weak b for more bequest inclined altruism the effects are usually reversed c under public provision of education higher bequest inclined altruism results in lower output and less equal distribution of income in all dates

intellectual property rights and foreign direct investment a welfare analysis abstract this paper examines how intellectual property rights ipr protection affects innovation and foreign direct investment fdi using a north south quality ladder model incorporating the exogenous and costless imitation of technology and subsidy policies for both r d and fdi we show that for the interior steady state to be stable either r d or fdi subsidy rates must be positive our findings also indicate that strengthening ipr protection promotes both innovation and fdi moreover a strengthening of ipr protection can also improve welfare if the initial ipr protection in the south is weak and the r d subsidy rate is not too high

schools and housing values this study combines historical and quantitative methods to determine the market response to a major nineteenth century american urban architectural form the speculatively built row house the paper estimates a hedonic price index which decomposes the

tiebout bias and the demand for local public schooling institute of university of ii business and california economic research berkeley center for real estate and urban economics working paper series working paper 86 109 tiebout bias and the demand for local public schooling by daniel l rubinfeld perry shipiro judith roberts these papers are preliminary in nature th urpose 39 to stimulate 39 ussion comment therefore they are not t cited or quoted 39 ny p ation wit express permissio the author graduate school of business administration

endogenous growth without scale effects comment segerstrom 1998 demonstrates that the social optimum requires radical technological breakthroughs to be treated less favorably than incremental innovations in a growing economy the aim of this note is to assess the robustness of this welfare result on the basis of two levels of generalization i the elasticity of substitution between any two goods is allowed to be larger than one and ii inter industry spillovers are introduced we show that segerstrom s results can be reversed it is also shown that in contrast to segerstrom r d subsidies can be globally optimal irrespective of the size of innovation when inter industry spillovers are large

on the contract curve a test of alternative models of collective bargaining the traditional model of collective bargaining confines unions to settlements constrained by the employer s labor demand curve but an alternative model places wage employment outcomes on a contract curve that extends beyond the labor demand curve this paper derives a multidimensional hedonic contract curve model in which employment security provisions are used to maintain efficient bargains outside the employer s demand curve and distinguishes empirically between the contract curve and demand constraint models using data for public school teachers in new york state estimates clearly support the contract curve model over the demand constraint model by linking the gap between compensation and the value of the marginal product to the strength of employment security provisions

intellectual property rights multinational firms and economic growth abstract this paper develops a model of north south trade with multinational firms and economic growth in order to analyze formally the effects of stronger intellectual property rights ipr protection in developing countries in the model northern firms invent new higher quality products multinational firms transfer manufacturing operations to the south and the southern firms imitate products produced by multinational firms it is shown that stronger ipr protection in the south i e the adoption and implementation of the trips agreement leads to a permanent increase in the rate of technology transfer to the south within multinational firms a permanent increase in r d employment by southern affiliates of northern multinationals a permanent decrease in the north south wage gap and a temporary increase in the northern innovation rate

human capital vs signalling explanations of wages increases wages by directly increasing the worker s productivity this learning explanation is usually associated with human capital theory however it seems unlikely that learning explains all the wage differences associated with schooling and work history better educated workers are not a random sample of workers they have lower propensities to quit or to be absent are less likely to smoke drink or use illicit drugs and are generally healthier it is unlikely that employers make full use of differences in propensities to quit or to be absent or sick when hiring workers these characteristics are often not directly observed and the americans with disabilities act precludes firms from using either poor health or the likelihood of future sickness as a hiring criterion unless it is directly related to job performance however if low levels of education are associated with these unfavorable employee characteristics and employers are allowed to take education into account when hiring workers we would expect employers to favor better educated workers as a means of reducing their costs of sickness and job turnover in turn students will take these hiring criteria into account when deciding how long to stay in school students will choose a length of schooling to signal their ability to employers and employers will demand a minimum level of schooling

what causes over investment in r d in endogenous growth models endogenous growth models may exhibit either under or over investment in r d the possibility of over investment is generally attributed to a business stealing effect that arises as the latest innovator destroys and or appropriates previous incumbent s rents we argue that this conventional wisdom is misleading in standard models business stealing by itself cannot result in excessive r d we explain the other effects that must be at work here thus contributing towards a better understanding of when and why the market may be biased towards excessive r d

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