on the decomposition property for a dynamic inventory rationing problem with multiple demand classes and backorder in this paper we study a dynamic inventory rationing problem of a single item with multiple demand classes and backorder demand classes are differentiated by their unit backlogging costs the corresponding dynamic programming problem is multidimensional and computationally challenging with a novel state transformation we find that the optimal policy can be described by a nested base stock policy in particular we can decompose the value function as the sum of single variable convex functions this property breaks the curse of dimensionality and significantly reduces computational effort in computing optimal policies our approach allows us to extend the results to systems with ordering exogenous supply priority upgrading

racial discrimination in the labor market theory and empirics we review theories of race discrimination in the labor market taste based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread but no existing model explains the unemployment rate differential models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment at their current state of development models of statistical discrimination based on rational stereotypes have little empirical content it is plausible that models combining elements of the search models with statistical discrimination could fit the data we suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy jel j15 j31 j64 j71

counterfactual decomposition of changes in wage distributions using quantile regression we propose a method to decompose the changes in the wage distribution over a period of time in several factors contributing to those changes the method is based on the estimation of marginal wage distributions consistent with a conditional distribution estimated by quantile regression as well as with any hypothesized distribution for the covariates comparing the marginal distributions implied by different distributions for the covariates one is then able to perform counterfactual exercises the proposed methodology enables the identification of the sources of the increased wage inequality observed in most countries specifically it decomposes the changes in the wage distribution over a period of time into several factors contributing to those changes namely by discriminating between changes in the characteristics of the working population and changes in the returns to these characteristics we apply this methodology to portuguese data for the period 1986 1995 and find that the observed increase in educational levels contributed decisively towards greater wage inequality copyright 2005 john wiley sons ltd

decomposing the composition effect the role of covariates in determining between group differences in economic outcomes in this article we study the structure of the composition effect which is the part of the observed between group difference in the distribution of some economic outcome that can be explained by differences in the distribution of covariates using results from copula theory we derive a new representation that contains three types of components i the direct contribution of each covariate due to between group differences in the respective marginal distributions ii several two way and higher order interaction effects due to the interplay between two or more marginal distributions and iii a dependence effect accounting for between group differences in dependence patterns among the covariates we show how these components can be estimated in practice and use our method to study the evolution of the wage distribution in the united states between 1985 and 2005 we obtain some new and interesting empirical findings for example our estimates suggest that the dependence effect alone can explai

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

the determinants of earnings a behavioral approach we survey the determinants of earnings and propose a framework for understanding labor market success we suggest that the advantages of the children of successful parents go considerably beyond the benefits of superior education the inheritance of wealth or the genetic inheritance of cognitive ability we suggest that noncognitive personality variables such as attitudes towards risk ability to adapt to new economic conditions hard work and the rate of time preference affect both earning and the transmission of economic status across generations

the effect of schooling on cognitive skills how schooling a ects cognitive skills is a fundamental question forstudies of human capital and labor markets while scores on cognitive ability testsare positively associated with schooling it ha

a dynamic rationing policy for continuous review inventory systems stock rationing is an inventory policy that allows differential treatment of customer classes without using separate inventories in this paper we propose a dynamic rationing policy for continuous review inventory systems which utilizes the information on the status of the outstanding replenishment orders for both backordering and lost sales environments we conduct simulation studies to compare the performance of the dynamic policy with the static critical level and the common stock policies and quantify the gain obtained we propose two new bounds on the optimum dynamic rationing policy that enables us to tell how much of the potential gain the proposed dynamic policy realizes we discuss the conditions under which stock rationing both dynamic and static is beneficial and assess the value of the dynamic policy

the changing roles of education and ability in wage determination this study examines changes in returns to formal education and cognitive skills over the past 20 years using the 1979 and 1997 waves of the national longitudinal survey of youth we show that cognitive skills had a 30 50 larger effect on wages in the 1980s than in the 2000s returns to education were higher in the 2000s these developments are not explained by changing distributions of workers observable characteristics or by changing labor market structure we show that the decline in returns to ability can be attributed to differences in the growth rate of technology between the 1980s and 2000s

optimal timing of college subsidies enrollment graduation and the skill premium abstract the large increase in the skill premium has led many policy makers to propose increasing college subsidies as a strategy to increase college enrollment and reduce inequality existing analyses typically assume that there is no distinction between enrollment and graduation but in fact more than 50 of college enrollees do not graduate this highlights the need to explicitly model the decision to drop out in assessing the effect of subsidies i build a general equilibrium model of education choice that features an explicit dropout decision calibrate it to match key features of the us economy and use it to evaluate the impact of college subsidies on the supply of college educated labor i show that moving to a system in which subsidies are back loaded i e higher for juniors and seniors than for freshmen and sophomores will increase the supply of college educated labor even holding total subsides constant in fact this effect is larger than what would be accomplished by a uniform 50 increase in subsidies

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

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

changes in the characteristics of american youth implications for adult outcomes we examine changes in the characteristics of american youth between the late 1970s and the late 1990s with a focus on characteristics that matter for labor market success the current generation is more skilled than the previous one blacks and hispanics have gained relative to whites and women have gained relative to men however the skill distribution has widened overall shifts in parental education generate many of the observed changes we also provide speculative estimates suggesting that if recent trends in technology and the supply of human capital continue wage inequality will increase substantially by 2025

the changing distribution of male wages in the uk this paper uses microeconomic data from the u k family expenditure surveys fes and the general household surveys ghs to describe and explain changes in the distribution of male wages since the late 1970s wage inequality has risen very fast in the u k and this rise is characterized both by increasing education and age differentials we show that a large part of the changes in the u k can be summarized quite simply as increases in eduction differentials and a decline of growth of entry level wages which persist subsequently this fact we interpret as cohort effects we also show that like in the u s an important aspect of rising wage inequality is increased within group wage dispersion finally we use the ghs to evaluate the role of alternative education measures

a single product inventory model for multiple demand classes we consider a single product inventory system that serves multiple demand classes which differ in their shortage costs or service level requirements we assume a critical level control policy and a backorder clearing mechanism in which we treat a backorder for a lower priority class equivalent to a reserve stock shortfall for the higher priority class we show the equivalence between this inventory system and a serial inventory system based on this equivalence we develop a model for cost evaluation and optimization under the assumptions of poisson demand deterministic replenishment lead time and a continuous review q r policy with rationing we propose a computationally efficient heuristic and develop a bound on its performance we provide a numerical experiment to show the effectiveness of the heuristic and the value from a rationing policy finally we describe how to extend the model to permit service times and how to extend the model to a multi echelon setting

the persistence of early childhood maturity international evidence of long run age effects a continuum of ages exists within each starting class due to the use of a single school cut off date making the oldest children approximately twenty percent older than the youngest children at school entry we provide substantial evidence that these initial maturity differences have long lasting effects on student performance across oecd countries in particular the youngest members of each cohort score 4 12 percentiles lower than the oldest members in grade four and 2 9 percentiles lower in grade eight depending upon the country in fact data from canada and the united states shows that the youngest members of a cohort are even less likely to enroll in pre university academic track courses and high end academic universities taken together these findings point to important early relative maturity effects that propagate themselves into adulthood through the structure of education systems

dynamic inventory rationing for systems with multiple demand classes and general demand processes we consider the dynamic rationing problem for inventory systems with multiple demand classes and general demand processes we assume that backorders are allowed our aim is to find the threshold values for this dynamic rationing policy for single period systems dynamic critical level policy is developed and the detailed cost approximation subject to this policy is derived for multiperiod systems a dynamic rationing policy with periodic review is proposed the numerical study shows that our dynamic critical level policies are close to being optimal for various parameter settings

production and inventory control of a single product assemble to order system with multiple customer classes we consider the optimal production and inventory control of an assemble to order system with m components one end product and n customer classes a control policy specifies when to produce each component and whenever an order is placed whether or not to satisfy it from on hand inventory we formulate the problem as a markov decision process and characterize the structure of an optimal policy we show that a base stock production policy is optimal but the base stock level for each component is dynamic and depends on the inventory level of all other components more specifically it is nondecreasing we show that the optimal inventory allocation for each component is a rationing policy with different rationing levels for different demand classes the rationing levels for each component are dynamic and also nondecreasing in the inventory level of all other components we compare the performance of the optimal policy to heuristic policies including the commonly used base stock policy with fixed base stock levels and find them to perform surprisingly well especially for systems with lost sales

changes in college skills and the rise in the college wage premium the college wage premium for new labor market entrants rose sharply during the 1980s we ask how much of this change arose from changes in the skill level of the typical college graduate we find that skills attained prior to college as measured by standardized test scores and high school grades had no effect on the change in the college wage premium for men in contrast the returns to math ability rose considerably for women failing to account for math skills thus substantially overstates the growth in the female college wage premium skills acquired in college as reflected in the distribution of students across majors had important effects on the relative wages of men the trend away from low skill subjects such as education and toward high skill subjects such as engineering accounts for one fourth of the rise in the male college wage premium

the rising college premium in the eighties return to college or return to unobserved ability the changes in the distribution of earnings during the 1980s have been studied extensively the two most striking characteristics of the decade are a a large increase in the college high school wage gap and b a substantial rise in the variance of wage residuals while this second phenomenon is typically implicitly attributed to an increase in the demand for unobserved skill most work in this area fails to acknowledge that this same increase in demand for unobserved skill could drive the evolution of the measured college premium in its simplest form if higher ability individuals are more likely to attend college then the increase in the college wage premium may be due to a increase in the relative demand for high ability workers rather than an increase in the demand for skills accumulated in college this paper develops and estimates a dynamic programming selection model in order to investigate the plausibility of this explanation the results are highly suggestive that an increase in the demand for unobserved ability could play a major role in the growing college premium the changes in the distribution of earnings during the 1980s have been studied extensively the two most striking characteristics of the decade are a a large increase in the college high school wage gap and b a substantial rise in the variance of wage residuals while this second phenomenon is typically implicitly attributed to an increase in the demand for unobserved skill most work in this area fails to acknowledge that this same increase in demand for unobserved skill could drive the evolution of the measured college premium in its simplest form if higher ability individuals are more likely to attend college then the increase in the college wage premium may be due to an increase in the relative demand for high ability workers rather than an increase in the demand for skills accumulated in college this paper develops and estimates a dynamic programming selection model in order to investigate the plausibility of this explanation the results are highly suggestive that an increase in the demand for unobserved ability could play a major role in the growing college premium there are at least two reasons to be interested in this topic first for policy makers intent on helping the american workforce adjust to the changing wage structure this distinction is crucial if the value added of attending college truly rises they may consider policies aimed at subsidizing the skills learned in college however if it results from an increase in the payoff to other types of skills then policies focused on skill acquisition earlier in life would be more appropriate second it will also aid in understanding the

changing roles of ability and education in u s intergenerational mobility using data on young adults from the 1979 and 1997 national longitudinal survey of youth we investigate the changing roles of ability and education in the transmission of economic status across generations we find that ability plays a substantially diminished role for the most recent cohort whereas education plays a much larger role the first finding results primarily from a smaller effect of children s ability on status the second from an increased correlation between parental status and educational attainment a replication of the analysis by gender reveals that the changes in the role of ability are largely driven by men whereas the changes in education s role are largely driven by women jel j62 i24

the growing importance of social skills in the labor market the labor market increasingly rewards social skills between 1980 and 2012 jobs requiring high levels of social interaction grew by nearly 12 percentage points as a share of the u s labor force math intensive but less social jobs including many stem occupations shrank by 3 3 percentage points over the same period employment and wage growth were particularly strong for jobs requiring high levels of both math skill and social skills to understand these patterns i develop a model of team production where workers trade tasks to exploit their comparative advantage in the model social skills reduce coordination costs allowing workers to specialize and work together more efficiently the model generates predictions about sorting and the relative returns to skill across occupations which i investigate using data from the nlsy79 and the nlsy97 using a comparable set of skill measures and covariates across survey waves i find that the labor market return to social skills was much greater in the 2000s than in the mid 1980s and 1990s

resources and student achievement evidence from a swedish policy reform a policy change is used to estimate the effect of teacher density on student performance we find that an increase in teacher density has a positive effect on student achievement the baseline estimate obtained by using the grade point average as the outcome variable implies that resource increases corresponding to the class size reduction in the star experiment a reduction of seven students improves performance by 2 6 percentile ranks or 0 08 standard deviations when we used test score data for men potentially a more objective measure of student performance the effect of resources appears to be twice as large

decomposing economic mobility transition matrices the intergenerational mobility literature has consistently found that the distribution of adult economic outcomes differ markedly depending on parental economic status yet much remains to be understood about the drivers or determinants of this relationship existing literature on potential drivers focuses primarily on mean effects to help provide a more complete picture of the potential forces driving economic persistence we propose a method to decompose transition matrices and related indices specifically we decompose differences between an estimated transition matrix and a benchmark transition matrix into portions attributable to differences in characteristics between individuals from different households a composition effect and portions attributable to differing returns to these characteristics between individuals from different households a structure effect we also incorporate a detailed decomposition based on copula theory that decomposes the composition effect into portions attributable to specific covariates and their interactions we illustrate our method using data on white men from the 1979 national longitudinal survey of youth estimation is based on an extended mincer equation that includes cognitive and non cognitive measures to address the potential endogeneity of education we implement an iv strategy that allows us to estimate causal effects and investigate the role of unobserved ability

borrowing constraints college enrollment and delayed entry in this article i propose and estimate a dynamic model of education borrowing and work decisions of high school graduates i examine the effect of relaxing borrowing constraints on educational attainment by simulating increases in the amount students are permitted to borrow from government sponsored loan programs my results indicate that borrowing constraints have a small impact on attainment the removal of education related borrowing constraints raises bachelor s degree completion by 2 4 percentage points tuition subsidies are necessary to obtain larger increases i find that higher subsidies for average ability students are the most cost effective targeted tuition subsidies

dynamic inventory rationing strategies for inventory systems with two demand classes poisson demand and backordering we study inventory systems with two demand classes critical and non critical poisson demand and backordering we analyze dynamic rationing strategies where the number of items reserved for critical demand depends on the remaining time until the next order arrives different from results in the literature we do not discretize demand but derive a set of formulae that determine the optimal rationing level for any possible value of the remaining time moreover we show that the cost parameters can be captured in a single relevant dimension which allows us to present the optimal rationing levels in charts and lookup tables that are easy to implement numerical examples illustrate that the optimal dynamic rationing strategy outperforms all static strategies with fixed rationing levels