alleviating transitory food crises in sub saharan africa international altruism and trade the donor community has responded to unexpected or transitory drops in domestic food production in many countries in sub sabaran africa an empirical framework estimates and analyzes the correlation between this food aid and domestic production both emergency food aid and commercial imports are used to offset the effects of negative output shocks in sub saharan african countries the major recipients of global emergency food aid on average every one ton drop in cereal production is offset by the delivery of 0 8 tons of cereal and dairy products from abroad over four years most food aid arrives within a year of a shock and correlation of shocks over time along with the differences between crop years and calendar years may explain the link between aid and production the economic and political considerations also determine the global response to the emergency food needs of countries in africa the international response is not contingent on the form of government or the level of political and human rights violations poorer countries and those with well established nonemergency food aid programs receive larger amounts of emergency aid when needed food aid has long helped low income countries to sustain domestic food supplies and cope with transitory food insecurity and it has also been used to accelerate agricultural development and increase food production but food aid has been heavily criticized in the past decade on several grounds first it has been charged that the international response to food crises is slow meager and inefficient a related accusation suggests that countries granting emergency food aid disciriminate on the basis of the political and economic orientation of the recipient country second food aid has been thought to discourage domestic food production thus leading to long term dependence on donors finally it has

pricing the strategic value of putable securities in liquidity crises putable security holders have a de facto rst claim on the rm s liquid assets and can threaten to force solvent issuers to bear nancial distress costs their threatening power implies that the puts have a strategic value larger than their intrinsic value strategic value depends on the issuer s size potential distress costs and the distribution of put ownership relative to the rm s liquidity position the analysis of kmart s put induced crisis in 1995 and a calibration to observed secondary market yield reductions on poison put bonds shows that strategic value is an important determinant of payouts received by bondholders 2001 elsevier science s a all rights reserved

signalling or human capital evidence from the finnish polytechnic school reform we use data from the finnish polytechnic reform to distinguish between human capital and signalling theories of the value of education we find that the reform increased the earnings of polytechnic graduates compared with those graduating from the same schools before the reform as predicted by both the human capital and the signalling models however we also find that the relative earnings of vocational college graduates decrease after polytechnic graduates start entering the labour market this finding is inconsistent with the pure human capital model and can be interpreted as evidence that supports the signalling model

institutions capital and growth the international development community has encouraged investment in physical and human capital as a precursor to economic progress recent evidence shows however that increases in capital do not always lead to increases in output we develop a growth model where the allocation and productivity of capital depends on a country s institutions we find that increases in physical and human capital lead to output growth only in countries with good institutions in countries with bad institutions increases in capital lead to negative growth rates because additions to the capital stock tend to be employed in rent seeking and other socially unproductive activities

the resolution of financial distress most models of financial structure embody an assumption about financial distress that causes debt to be costly to the issuing firm this approach has been criticized on the grounds that the assumed costs could be avoided by a costless financial reorganization in this article we show that despite the possibility of costless reorganization it may be rational for firms to incur significant costs in the resolution of financial distress the main assumptions that give rise to our results are the existence of asymmetric courts to impose a reorganization on the claimants of a firm article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

child labor and the labor supply of other household members evidence from 1920 america this paper analyses the effect of child labor on household labor supply using 1920 us census micro data the aim of the analysis is to understand who in the household benefits from child labor in order to identify a source of exogenous variation in child labor i use state specific child labor laws i find that a rise in the proportion of working children by household is associated with no variation in parents labor supply i also find a strong negative externality among children as the proportion of working children by household rises everything else equal the probability that each child works falls while the probability that he attends school rises this suggests that parents redistribute entirely the returns from child labor to the children in the household consistent with a model of household labor supply with fully altruistic parents

the effect of female education on fertility and infant health evidence from school entry policies using exact date of birth this paper uses age at school entry policies to identify the effect of female education on fertility and infant health we focus on sharp contrasts in schooling fertility and infant health between women born just before and after the school entry date school entry policies affect female education and the quality of a woman s mate and have generally small but possibly heterogeneous effects on fertility and infant health we argue that school entry policies manipulate primarily the education of young women at risk of dropping out of school

the returns from schooling in a diversified rural economy controlling for the endogeneity of activity choice and considering both household head and family schooling we findevid ence of high returns from schooling in both crop andnoncrop activities as schooling levels increase the returns from schooling shift away from crop production failure to control for activity selection andfamily schooling is likely to result in biasedestimates of the returns from schooling in individual activities copyright 2000 oxford university press

earnings functions when wages and prices vary by location economists generally assume implicitly that the return to schooling is invariant across local labor markets we demonstrate that this outcome pertains if and only if preferences are homothetic a special case that seems unlikely our theory predicts that returns to education will instead be relatively low in expensive high amenity locations our analysis of u s data provides support for this contention returns to college are especially low in such cities as san francisco and seattle our findings call into question standard empirical exercises in labor economics that treat the returns to education as a single parameter

monotone instrumental variables with an application to the returns to schooling for fifty years econometric analyses of treatment response have made extensive use of instrumental variable iv assumptions holding that mean response is constant across specified subpopulations of a population of interest 2 yet the credibility of mean independence conditions and other iv assumptions has often been a matter of considerable disagreement with much debate about whether some covariate is or is not a valid instrument in an application of interest there is therefore good reason to consider weaker but more credible assumptions to this end we introduce monotone instlumental variable miv assumptions holding that mean response varies weakly monotonically across specified subpopulations we study the identifying power of these miv assumptions and give an empirical application the findings reported here add to the literature developing nonparametric bounds on treatment effects 3 this paper uses the same formal setup as manski 1997 there is a probability space j x2 p of individuals each member j of population j has observable covariates xi e x and a response function yj t y mapping the mutually exclusive and exhaustive treatments t e t into outcomes yj t e y person j has a realized treatment zj e t and a realized outcome y 1 y zi both of which are observable the latent outcomes yj t

education and economic performance simplistic theories and their policy consequences a largely unquestioned consensus proclaims that educational policy is an effective tool for delivering prosperity and increasing rates of economic growth this consensus rests on far less secure foundations than is commonly supposed international comparisons confirm that as they become richer people seek ever more education for their children but provide no clear cut evidence of economic benefits accruing to countries which are high spending in education terms analyses which extrapolate from the incomes of educated individuals rest on assumptions about how wages are determined and the extent to which rewards are for skills acquired in schooling which are highly questionable moreover an uncritical belief in educational expansion leads to target driven policies with serious negative effects on educational quality a more realistic view of education s economic impact and a move away from centralized planning for economic ends would actually improve the quality of education copyright 2004 oxford university press

heterogeneity in bank valuation of ldc debt evidence from the 1988 brazilian debt reduction program abstract using data on bank choices in the 1988 brazilian debt reduction deal we confirm predictable heterogeneity in bank valuation of brazilian claims in the presence of a functioning secondary market for ldc debt the source of this heterogeneity is unclear we introduce a model in which regulatory concerns influence bank choice bank choices in debt reduction programs are aimed at maximizing the magnitude of their transfer from regulatory agencies as a result bank choices reflect their characteristics including financial strength and exposure to the debtor country the directions of influence correspond to the predictions of our model

generalizations that aren t evidence on education and growth abstract several papers have suggested that the relationship between changes in average schooling and growth is weak in the cross country data this might call into question the relevance of micro estimates of returns to schooling at least for developing countries this paper examines the reliability of some of the aggregate evidence and presents an alternative framework for analysing these questions

recent experience with commercial bank debt reduction has the menu outdone the market abstract debt reduction at market terms has been criticized as too expensive from the point of view of the debtor the recent reduction agreements following the menu approach are partially concerted but they also possess some elements of voluntariness this raises two issues a what is the conceptual justification for such financial arrangements and b based on recent evidence to what extent have these arrangements reduced the cost of debt reduction in a review of six recent menu driven debt reduction agreements we find that the debtors achieved a far better financial result than would have been feasible with simple market buybacks

signaling versus contingent contracts with costly turnover abstract typical models of educational signaling assume firms are uncertain of worker ability however there are both theoretical and empirical problems with such models in contrast as in salop and salop quarterly journal of economics 90 1976 619 a model is considered in this paper in which individuals differ in the likelihood of quitting and firms are unaware of an individual s quit propensity education signals one s commitment to remain in a particular sector or occupation alternatively firms may offer back loaded wages contingent contracts that may avoid signaling the analysis suggests too little signaling may occur because contingent contracts may not be socially preferable to signaling and because individuals may prefer not to signal when signaling is efficient and contingent contracts are not chosen by firms

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 s role in china s structural transformation abstract we explore education s role in improving the allocation of labor between china s agricultural and nonagricultural sectors and measure the portion of china s recent growth attributable to this channel using detailed micro level data and an empirical model that allows for the endogenous selection of education and sector of employment we estimate the relationship between an individual s educational attainment sector and income we find that about 11 of aggregate growth in output per worker from 1978 to 2004 is accounted for by increased education with 9 coming through the labor reallocation channel and 2 attributable to increased within sector human capital

incentive compatibility in signaling games with a continuum of types on donne deux resultats utiles pour demontrer l existence et pour caracteriser des equilibres de separation dans des jeux de signalement

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

teachers pay for performance in the long run the dynamic pattern of treatment effects on students educational and labour market outcomes in adulthood this paper examines the dynamic effects of a teachers pay for performance experiment on long term outcomes at adulthood the program led to a gradual increase in university education of the treated high school students reaching an increase of 0 25 years of schooling by age 28 30 the effects on employment and earnings were initially negative coinciding with a higher rate of enrollment in university but became positive and significant with time these gains are largely mediated by the positive effect of the program on several high school outcomes including quantitative and qualitative gains in the high stakes matriculation exams

education human capital and growth a personal perspective this article reviews the literature on the relationship of economic growth to the education levels of the labor force the emphasis is on yoram ben porath s contribution to some of the issues in this field the endogeneity of schooling the role of the public sector as an absorber of educated labor and the importance of personal human capital created by investments in reputation and personal relationships the f connection

the effects of compulsory schooling on growth income distribution and welfare abstract in this paper we consider an olg model with productive capital and human capital affecting the quality of labor in each generation parents invest in their children s education but disregard its external effect on the aggregate production function government intervention in providing compulsory schooling increases economic growth along the equilibrium path while the intragenerational income distribution becomes more equal also in the long run the majority of individuals in each generation are better off due to compulsory schooling

public schooling college subsidies and growth abstract how does the mix of public education expenditures across primary and secondary k 12 education and post secondary college education influence economic growth to address this i build an overlapping generations endogenous growth model human capital is accumulated through compulsory k 12 education and through optional college education government uses tax revenue to provide quality in k 12 schooling and to subsidize college tuition when total expenditures are small all funds should provide k 12 quality when expenditures are above a critical value a positive share should subsidize tuition the share should increase with total expenditures and with the degree of complementarity of human capital accumulated through the two types of education also increased education spending is more likely to increase growth when a larger share subsidizes tuition

the effects of financial education in the workplace evidence from a survey of households abstract we use a novel household survey to investigate the effects of employer based financial education on personal saving we explore cross sectional relations between the availability of employer based financial education and various measures of asset accumulation and we interpret these patterns in light of various potentially confounding factors our findings favor the hypothesis that employer based financial education stimulates saving both in general and for retirement

are buybacks back menu driven debt reduction schemes with heterogeneous creditors abstract we analyze the mechanics of menu driven debt reduction deals similar to those recently initiated by debtor countries in which heterogeneous banks choose freely between selling or retaining their debt claims we show that menu deals can facilitate discrimination across heterogeneous banks because of imperfections in the secondary market for debt this implies that menu deals are likely to dominate market buybacks and pure concerted relending agreements particularly when banks differ widely in their valuation of claims on the debtor

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

estimates of the economic returns to schooling from a new sample of twins this paper uses a new survey to contrast the wages of genetically identical twins with different schooling levels multiple measurements of schooling levels were also collected to assess the effect of reporting error on the estimated economic returns to schooling the data indicate that omitted ability variables do not bias the estimated return to schooling upward but that measurement error does bias it downward adjustment for measurement error indicates that an additional year of schooling increases wages by 12 to 16 percent a higher estimate of the economic returns to schooling than has been previously found copyright 1994 by american economic association

on the validity of econometric techniques with weak instruments inference on returns to education using compulsory school attendance laws we evaluate angrist and krueger 1991 and bound jaeger and baker 1995 by constructing reliable confidence regions around the 2sls and liml estimators for returns to schooling regardless of the quality of the instruments the results indicate that the returns to schooling were between 8 and 25 percent in 1970 and between 4 and 14 percent in 1980 although the estimates are less accurate than previously thought most specifications by angrist and krueger 1991 are informative for returns to schooling in particular concern about the reliability of the model with 178 instruments is unfounded despite the low first stage f statistic finally we briefly discuss bias adjustment of estimators and pretesting procedures as solutions to the weak instrument problem

schooling as human capital or a signal a new way is proposed to distinguish between the human capital and the signaling theories of the value of education if education is a signal then the essence of the signal should be distilled in the position of an individual in the distribution of education for his cohort estimating earnings equations that include both absolute years and relative percentile measures of education provides a test of the two competing theories analyzing two separate panel data sources under a range of alternative specifications we find that the years measure of schooling has a consistently significant positive effect on earnings but that the rank measure rarely does this evidence supports the conclusion that human capital rather than signaling is the predominant explanation of schooling s value

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

higher education elite institutions and inequality abstract we develop a model of higher education to analyze the effects of elite institutions on individual educational decisions and aggregate labor market outcomes elite institutions allow the most talented of a given population to separate themselves from the larger pool of agents enrolled in higher education and to earn the associated wage premium in the labor market as elite institutions engage in cream skimming the returns to publicly accessible education decrease and enrollment in public higher education declines the resulting effect on income inequality is ambiguous since elite education increases income dispersion at the top of the income distribution and decreases income dispersion at the bottom

long lasting effects of socialist education abstract political regimes influence the content of education and criteria used to select and evaluate students we study the impact of a socialist education on the likelihood of obtaining a college degree and on several labor market outcomes by exploiting the reorganization of the school system in east germany after reunification our identification strategy uses cutoff birth dates for school enrollment that lead to variation in the length of exposure to the socialist education system within the same birth cohort an additional year of socialist education decreases the probability of obtaining a college degree and affects longer term labor market outcomes for men

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

minimum wages and teenagers enrollment employment outcomes a multinominal logit model this paper tests the hypothesis that the effect of minimum wage legislation on teenagers education decisions is asymmetrical across family income classes with the legislation inducing children from low income families to reduce their levels of schooling and children from higher income families to increase their educational attainment we use data from the national longitudinal surveys nls and exploit the fact that although the minimum wage is fixed at a point in time its value relative to adult wages varies across areas multinomial logit models of teenagers enrollment employment outcomes are estimated the hypothesis appears to be confirmed for white teens however the evidence for nonwhites is more ambiguous

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

losers and winners in economic growth this paper examines the growth rates in 116 economies from 1965 to 1985 it finds that the lowest quintile had an average growth rate of real gross domestic product gdp per capita of 1 3 percent whereas the highest quintile averaged 4 8 percent the authors isolate five influences that discriminate reasonably well between slow and fast growers a conditional convergence effect whereby a country grows faster if it begins with lower real gdp per capita in relation to its initial level of human capital in the forms of educational attainment and health a positive effect on growth from a high ratio of investment to gdp although this effect is weaker than that reported in some previous studies a negative effect from excessively large government a negative effect from government induced distortions of markets and a negative effect from political instability overall the fitted growth rates for eighty five economies for 1965 85 had a correlation of 0 8 with the actual values the authors also find that female educational attainment has a pronounced negative effect on fertility whereas female and male attainment are each positively related to life expectancy and negatively related to infant mortality

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

identification weak instruments and statistical inference in econometrics we discuss statistical inference problems associated with identification and testability in econometrics we consider inference in non parametric models and weakly identified structural models weak instruments we point out that many ill defined statistical problems such as non testable hypotheses occur in these areas and are typically associated with asymptotic approximations in non parametric models such problems include testing moments and inference under heteroscedasticity or serial dependence of unknown form for weakly identified structural models difficulties are typically associated with improper pivots and we review recent developments aimed at proposing more reliable procedures including alternative proposed statistics bounds projection split sampling conditioning monte carlo tests jel classification c1 c12 c14 c15 c3 c5 identification instruments faibles et inference statistique en econometrie nous analysons les problemes d inference associes a l identification et a la testabilite en econometrie nous considerons l inference dans les modeles non parametriques et les modeles structurels faiblement identifies instruments faibles nous remarquons que beaucoup de problemes mal poses tels que des hypotheses non testables apparaissent dans ces domaines et que ceux ci sont typiquement associes a l emploi d approximations asymptotiques dans les modeles non parametriques de tels problemes incluent les tests sur les moments et l inference sous heteroscedasticite ou dependance serielle de forme non specifiee dans les modeles structurels faiblement identifies ces difficultes sont habituellement associees a l emploi de fonctions pivotales impropres et nous presentons un survol des methodes recentes ayant pour objectif d obtenir des procedures plus fiables ce qui comprend les differentes statistiques proposees l emploi de bornes la subdivision d echantillon les techniques de projection le conditionnement et les tests de monte carlo

the craft of labormetrics using a wide array of examples from the literature and from original estimates the author examines the pitfalls that make good empirical research in labor economics at least as much craft as statistical technique among the subjects discussed are the appropriateness and cleanliness of data problems of extreme observations the validity of attempts to produce exogeneity using instrumental variables natural experiments and structural models and the treatment of selectivity and unobservable individual effects the author stresses the importance of testing empirical results to ensure that they make sense and of presenting them clearly and economically

reorganization in bankruptcy and the issue of strategic risk abstract the decision by creditors to force the firm into bankruptcy where bankruptcy includes reorganization is shown to involve the valuation of a lottery over cooperative games rather than a lottery over specific monetary outcomes in the absence of assumptions about strategic negotiating risk the value of creditor claims is seen to be ambiguous this paper extends van horne s model of the optimal initiation of bankruptcy proceedings to include the reorganization option and strategic risk a modified decision rule is obtained to determine the optimal solution

priceless the nonpecuniary benefits of schooling copyright 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 by the american economic association permission to make digital or hard copies of part or all of american economic association publications for personal or classroom use is granted without fee provided that copies are not distributed for profit or direct commercial advantage and that copies show this notice on the first page or initial screen of a display along with the full citation including the name of the author copyrights for components of this work owned by others than aea must be honored abstracting with credit is permitted the author has the right to republish post on servers redistribute to lists and use any component of this work in other works for others to do so requires prior specific permission and or a fee permissions may be requested from the american economic association administrative office by going to the contact us form and choosing copyright permissions request from the menu copyright 2016 aea

does education raise productivity or just reflect it education has an important effect on wages but it not clear whether this is because education raises productivity or because education is simply a signal of ability we implement a number of existing tests for discriminating between these two explanations and find that they do not support the signalling hypothesis however we have severe reservations about these results and we propose an alternative test based on changes in education incentives caused by changes in the minimum school leaving age in the 1970s using this idea we find that uk data appear to strongly support the human capital explanation an important issue in the economics of education is that an individual s education has an effect on wages paid in the labour market for example blundell et al 2003 uses detailed education and subsequent earnings information for a cohort of male individuals born in 1958 to estimate that the returns to a uk degree typically of 3 year duration relative to graduating from high school at 18 with 2 a level qualifications a necessary but not sufficient condition for admission to university is a 24 wage premium human capital explanations pioneered by becker 1962 and schultz 1963 suggest that the correlation between education and wages is due to education enhancing productivity however earnings may rise in response to education not because of any effect on productivity but simply because education may act as a signal of productivity employers believing that education is correlated with productivity will screen workers for their education and pay higher wages to the more educated the employers beliefs will be confirmed by their experience if it is the case that high productivity individuals signal this by choosing high levels of education it will be optimal for individuals to behave in this way if the cost of acquiring education is less for high productivity individuals than it is for low productivity individuals thus under reasonable conditions the market will be characterised by a separating equilibrium where higher productivity individuals choose higher levels of education than lower productivity workers and earn correspondingly higher wages the theory is largely due to spence 1973 1979 and the subsequent empirical literature was reviewed by groot and oosterbeek 1994 riley 2001 provides an excellent modern survey chevalier harmon and walker are fellows of iza in bonn and are affiliated with the institute for the study of social change issc in dublin this paper is part of the issc policy evaluation programme chevalier and walker are also affiliated with the centre for the economics of education at the london school of economics lse the support of all of these bodies for facilitating our collaboration is acknowledged harmon is grateful to university college london for their hospitality during his nuffield foundation new career development fellowship in the social sciences comments from steve machin and three anonymous referees greatly improved the exposition of this paper we are also grateful to richard blundell and to seminar participants at the lse and the tinbergen institute in amsterdam for their comments and to vincent o sullivan for excellent research assistance the usual disclaimer applies

claimholder incentive conflicts in reorganization the role of bankruptcy law when a firm is financial distress in most cases a set of mutually advantageous reorganization plans exist this article shows that the bankruptcy code by providing rules governing the negotiation process yields a unique solution to the reorganization process in addition the structure imposed by the code mitigates the holdout problem created by the individual claimant s divergent incentives article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

poverty and the political economy of public education spending evidence from brazil a large body of literature has emphasized the elite capture of democratic institutions as the explanation for the low levels of spending on public education in many low income democracies this paper provides an alternative to that longstanding hypothesis motivated by new cross country facts and evidence from brazilian municipalities we hypothesize that many democratic developing countries might invest less in public education spending because poor decisive voters prefer the government to allocate resources elsewhere one possible explanation is that low income voters could instead favor redistributive programs that increase their incomes in the short run such as cash transfers to test for this possibility we design and implement an experimental survey and an incentivized choice experiment in brazil the findings from both interventions support our hypothesis

schooling and monetary rewards in greece an over education false alarm the paper uses data from the 1993 94 household survey to investigate a number of issues stemming from the current educational policy debate in greece private and social returns to investment in education are estimated and a test of the screening hypothesis is conducted no evidence was found that higher education is being used as a screening device and the returns to investment in education have been maintained to just below their level in the 1960s the central finding of the paper is that the fear of further expansion of the university system is highly exaggerated and that the economy could absorb even larger amounts of highly educated manpower of course such expansion could not take place unless there is an end of the state monopoly on the financing and provision of tertiary education

do it service centers promote school enrollment evidence from india abstract globalization has changed job opportunities in much of the developing world in india outsourcing has created a new class of high skill jobs which have increased overall returns to schooling existing evidence suggests education may broadly respond to this change we use microdata to evaluate the impact of these jobs on local school enrollment in areas outside of major it centers we merge panel data on school enrollment from a comprehensive school level administrative dataset with detailed data on information technology enabled services ites center location and founding dates using school fixed effects we find that introducing a new ites center causes a 5 increase in the number of children enrolled in primary school this effect is localized to within a few kilometers we show the effect is driven by english language schools consistent with the claim that the impacts are due to changes in returns to schooling and is not driven by changes in population or income resulting from the ites center supplementary survey evidence suggests that the localization of the effects is driven by limited information diffusion

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

estimating the effect of financial aid offers on college enrollment a regression discontinuity approach an important problem faced by colleges and universities that of evaluating the effect of their financial aid offers on student enrollment decisions is complicated by the likely endogeneity of the aid offer variable in a student enrollment equation this article shows how discontinuities in an east coast college s aid assignment rule can be exploited to obtain credible estimates of the aid effect without having to rely on arbitrary exclusion restrictions and functional form assumptions semiparametric estimates based on a regression discontinuity rd approach affirm the importance of financial aid as an effective instrument in competing with other colleges for students

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

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

voluntary choices in concerted deals the menu approach to debt reduction in developing countries this article examines the mechanics and attributes of concerted debt reduction agreements that offer creditors a choice between exit and relending options the menu approach sets prices for different choices that implement a decentralized equilibrium when banks can commit to choose from the menu and are not allowed to free ride a menu can be designed that assures that the price paid for debt repurchased is equal to the marginal value of the debt claims this can be achieved by taxing the gains that accrue to nonexiters witb a request for new money the equilibrium amount of debt reduction rises when the new money request is increased the importance of banks heterogeneity for menus to dominate simple concerted buybacks and the case in which debt reduction can be financed by loans from international financial institutions are discussed

changes in life cycle earnings what do social security data show a matched sample of social security and current population survey records is used to examine life cycle earnings patterns of white males over the 1951 1976 period estimated direct effects of schooling and experience compare well with other studies but interaction effects with cohort do not younger cohorts exhibit smaller marginal returns to schooling and larger marginal returns to experience but differences between cohorts are very small when demographic factors namely veteran status are controlled direct cohort effects are linear in these data and show no tendency to vary with cohort size

happy birthday you re insured gender differences in work ethics this study investigates the potential existence of cheating within the sickness insurance program results indicate that young male workers have strong preferences for leisure linked to birthday celebrations other workers appear to consider the costs of reporting in sick around birthdays as relatively large

how large are search frictions textabstractthis paper presents strong evidence for the concavity of wages in job and worker characteristics by adding second order terms to a mincerian earnings function for 6 oecd countries under a standard normality assumption this concavity cannot be attributed to unobserved components in those characteristics an assignment model with search frictions provides a parsimonious explanation for our findings this model yields two restrictions on the coefficients which fit the data very well the impact of search frictions on wages is large our results relate to the literature on industry wage differentials on structural identification in hedonic models and on wage posting versus nash bargaining in search models

why did the ssi disabled program grow so much disentangling the effect of medicaid the number of participants in the ssi program grew by 1 1 million from 1987 to 1993 this paper examines the role of medicaid on the ssi participation decision i use the rapid growth in average medicaid expenditure as a proxy for its value ols estimates of medicaid s effect may be biased because of omitted variables bias and measurement error i therefore apply two stage least squares to estimate medicaid s effect using average medicaid expenditure for blind ssi recipients as an instrument these estimates show that rising medicaid expenditure significantly increased ssi participation among adults with low permanent incomes explaining 20 of the growth

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