nep-edu New Economics Papers
on Education
Issue of 2005‒06‒14
fifteen papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Growth, Distance to Frontier and Composition of Human Capital By Aghion, Philippe; Meghir, Costas; Vandenbussche, Jérôme
  2. The Economics of Books By Canoy, Marcel; van der Ploeg, Frederick; van Ours, Jan C
  3. Does Longevity Cause Growth? By Hazan, Moshe; Zoabi, Hosny
  4. Demand for Education and Labour Market Outcomes: Lessons from the Abolition of Compulsory Conscription in France By Maurin, Eric; Xenogiani, Theodora
  5. Efficient Tuition & Fees, Examinations and Subsidies By Gary-Bobo, Robert J.; Trannoy, Alain
  6. Peer Effects in Austrian Schools By Schneeweis, Nicole; Winter-Ebmer, Rudolf
  7. Human Capital and Optimal Positive Taxation of Capital Income By Bovenberg, A Lans; Jacobs, Bas
  8. Must Try Harder. Evaluating the Role of Effort in Educational Attainment By De Fraja, Gianni; Oliveira, Tania; Zanchi, Luisa
  9. The French Zones D'Education Prioritaire: Much Ado About Nothing? By Bénabou, Roland; Kramarz, Francis; Prost, Corinne
  10. Do localization economies derive from human capital externalities? By Christopher H. Wheeler
  11. Education subsidies and school drop-out rates By Lorraine Dearden; Carl Emmerson; Chris Frayne; Costas Meghir
  12. The College Wage Premium, Overeducation, and the Expansion of Higher Education in the UK By Ian Walker; Yu Zhu
  13. The Impact of State Physical Education Requirements on Youth Physical Activity and Overweight By John Cawley; Chad D. Meyerhoefer; David Newhouse
  14. Firm-Level Social Returns to Education By Pedro S. Martins
  15. Tax Effects on Unemployment and the Choice of Educational Type By Annette Alstadsæter, Ann-Sofie Kolm and Birthe Larsen

  1. By: Aghion, Philippe; Meghir, Costas; Vandenbussche, Jérôme
    Abstract: We examine the contribution of human capital to economy-wide technological improvements through the two channels of innovation and imitation. We develop a theoretical model showing that skilled labour has a higher growth-enhancing effect closer to the technological frontier under the reasonable assumption that innovation is a relatively more skill intensive activity than imitation. Also, we provide evidence in favour of this prediction using a panel dataset covering 19 OECD countries between 1960 and 2000 and explain why previous empirical research had found no positive relationship between initial schooling level and subsequent growth in rich countries. In particular, we show that in OECD economies it is crucial to isolate the two separate margins of primary/secondary and tertiary education. Interestingly, the latter type of schooling proves to be a factor of economic divergence.
    Keywords: convergence; economic growth; education; human capital; imitation; innovation; technological frontier; wave
    JEL: I20 O30 O40
    Date: 2005–01
  2. By: Canoy, Marcel; van der Ploeg, Frederick; van Ours, Jan C
    Abstract: The tensions between books and book markets as expressions of culture and books as products in profit-making businesses are analysed and insights from the theory of industrial organisation are given. Governments intervene in the market for books through laws concerning prices of books, grants for authors and publishers, a lower value-added tax, public libraries and education in order to stimulate the diversity of books on offer, increase the density of retail outlets and to promote reading. An overview of the different ways by which countries differ in terms of market structures and government policies is given. Particular attention is paid to retail price maintenance. Due to differences between European countries it is not a good idea to harmonise European book policies. Our analysis suggests that the book market seems quite able to invent solutions to specific problems of the book trade and that, apart from promoting reading, there is little need for government intervention.
    Keywords: authors; books; diversity; internet; libraries; monopolistic competition; publishers; retail price maintenance; subsidies
    JEL: D40 D60 L10 L40 Z11
    Date: 2005–02
  3. By: Hazan, Moshe; Zoabi, Hosny
    Abstract: This article challenges conventional wisdom by arguing that greater longevity cannot explain the significant accumulation of human capital during the transition from stagnation to growth. This is because greater longevity raises children’s future income proportionally at all levels of education, leaving the relative return between quality and quantity unaffected. This result is consistent with historical evidence that longevity began to increase long before education did. Our theory also casts doubts on recent findings about a positive effect of health on education. This is because health raises the marginal return on quality and quantity, resulting in an ambiguous effect on the accumulation of human capital. We conclude that longevity and health have had a minor effect, if any, on the transition from stagnation to growth via investment in education.
    Keywords: education; fertility; growth; health; longevity
    JEL: I10 I20 J10 O11 O40
    Date: 2005–02
  4. By: Maurin, Eric; Xenogiani, Theodora
    Abstract: In this paper we examine the effects of the abolition of the compulsory conscription in France on the demand for education and labour market outcomes. The reform took place in 1997 and affected all men born after 1979. Before the reform, staying on in education was a way to defer the national service and get access to more interesting forms of the military service. After the reform, these specific incentives to stay on in education have disappeared and the relative cost of education for men has plausibly increased. As a matter of fact, our data reveal that the reform has been followed by a significant decrease in the number of years spent at school by male students, as well as in the proportion of male degree holders. In contrast, the reform had no significant effect on the demand for education for women nor for men of high socio-economic background. We use this exogenous variation in the demand for education to estimate the effect of education on wages as well as on the probability of being in a manual job at the early stage of one’s career.
    Keywords: demand for education; natural experiment; wages
    JEL: I20 J24 J31
    Date: 2005–03
  5. By: Gary-Bobo, Robert J.; Trannoy, Alain
    Abstract: A student's future log-wage is given by the sum of a skill premium and a random personal ‘ability’ term. Students observe only a private, noisy signal of their ability, and universities can condition admission decisions on the results of noisy tests. We assume first that universities are maximizing social surplus, and contrast the results with those obtained when they maximize rents. If capital markets are perfect, and if test results are public knowledge, then, there is no sorting on the basis of test scores. Students optimally self-select as a result of pricing only. In the absence of externalities generated by an individual's higher education, the optimal tuition is then greater than the university's marginal cost. If capital markets are perfect but asymmetries of information are bilateral, i.e., if universities observe a private signal of each student's ability, or if there are borrowing constraints, then, the optimal policy involves a mix of pricing and pre-entry selection based on the university's private information. Optimal tuition can then be set below marginal cost, and can even become negative, if the precision of the university's private assessment of students' abilities is high enough.
    Keywords: examinations; higher education; incomplete information; state subsidies; tuition fees
    JEL: D82 H42 I22 J24
    Date: 2005–04
  6. By: Schneeweis, Nicole; Winter-Ebmer, Rudolf
    Abstract: This study deals with educational production in Austria and is focused on the potential impact of schoolmates on students’ academic outcomes. We used PISA 2000 data to estimate peer effects for 15 and 16 year old students. The estimations yield substantial positive effects of the peer groups’ socioeconomic composition on student achievement. Furthermore, quantile regressions suggest peer effects to be asymmetric in favour of low-ability students, meaning that students with lower skills benefit more from being exposed to clever peers, whereas those with higher skills do not seem to be affected much. Social heterogeneity, moreover, has no big adverse effect on academic outcomes. These results imply considerable social gains of reducing stratification in educational settings.
    Keywords: education; peer effects; PISA study
    JEL: I21
    Date: 2005–04
  7. By: Bovenberg, A Lans; Jacobs, Bas
    Abstract: This paper analyzes optimal linear taxes on capital and labour incomes in a life-cycle model of human capital investment, financial savings, and labour supply with heterogenous individuals. A dual income tax with a positive marginal tax rate on not only labour income but also capital income is optimal. The positive tax on capital income serves to alleviate the distortions of the labour tax on human capital accumulation. The optimal marginal tax rate on capital income is lower than that on labour income if savings are elastic compared to investment in human capital; substitution between inputs in human capital formation is difficult; and most investments in human capital are verifiable. Numerical calculations suggest that the optimal marginal tax rate on capital income is close to the tax rate on labour income.
    Keywords: capital income taxation; education subsidies; human capital; labour income taxation; life cycle
    JEL: H2 H5 I2 J2
    Date: 2005–05
  8. By: De Fraja, Gianni; Oliveira, Tania; Zanchi, Luisa
    Abstract: This paper is based on the idea that the effort exerted by children, parents and schools affects the outcome of the education process. We test this idea using the National Child Development Study. Our theoretical model suggests that the effort exerted by the three groups of agents is simultaneously determined as a Nash equilibrium, and is therefore endogenous in the estimation of the education production function. Our results support this, and indicate which factors affect examination results directly and which indirectly via effort; they also suggest that affecting effort directly has an impact on results.
    Keywords: educational achievement; educational attainment; educational outcomes; effort at school; examination results
    Date: 2005–05
  9. By: Bénabou, Roland; Kramarz, Francis; Prost, Corinne
    Abstract: We provide an assessment of the French ZEP (Zones d’Education Prioritaire), a programme started in 1982 that channels additional resources to schools in disadvantaged areas and encourages the development of new teaching projects. Focusing on middle-schools, we first evaluate the impact of the ZEP status on resources, their utilization (teacher bonuses versus teaching hours) and key establishments characteristics such as class sizes, school enrolments, teachers’ qualifications and experience, and student composition and mobility. We then estimate the impact of the ZEP programme on four measures of individual student achievement: obtaining at least one diploma by the end of schooling, reaching 8th grade, reaching 10th grade and success at the Baccalauréat. We take into account the endogeneity of the ZEP status by using both differences in differences and instrumental variables based on political variables. The results are the same in all cases: there is no impact on student success of the ZEP programme.
    Keywords: class size; disadvantaged schools; education policy; education production function; School finance
    JEL: H52 I21 I22
    Date: 2005–05
  10. By: Christopher H. Wheeler
    Abstract: One of the most robust findings emerging from studies of industrial agglomeration is the rise in productivity that tends to accompany it. What most studies have not addressed, however, is the potential role played by human capital externalities in driving this relationship. This paper seeks to do so using data from the 1980, 1990, and 2000 US Census covering a collection of 77 (primarily) 3-digit manufacturing industries across a sample of more than 200 metropolitan areas. The analysis generates two primary results. First, a variety of education- and experience-based measures of average human capital rise significantly as an industry's employment in a metropolitan area increases. Hence, clusters of industry do tend to be characterized by larger stocks of human capital. However, second, even after accounting for the level of human capital in a worker's own industry, the overall size of the industry remains strongly associated with wages. Such results suggest that localization economies are largely not the product of knowledge spillovers.
    Keywords: Regional economics ; Human capital
    Date: 2005
  11. By: Lorraine Dearden (Institute for Fiscal Studies); Carl Emmerson (Institute for Fiscal Studies); Chris Frayne (Institute for Fiscal Studies); Costas Meghir (Institute for Fiscal Studies and University College London)
    Abstract: This paper evaluates whether means-tested grants paid to secondary students are an effective way of reducing the proportion of school dropouts. We look at this problem using matching techniques on a pilot study carried out in England during 1999 and 2000 using a specially designed dataset that ensures that valid comparisons between our pilot and control areas are made. The impact of the subsidy is quite substantial with initial participation rates (at age 16/17) being around 4.5 percentage points higher. Full-time participation rates one year later are found to have increased by around 6.4 percentage points which is largely due to the EMA having a significant effect on retention in post compulsory education. These effects vary by eligibility group with those receiving the full payment having the largest initial increase in participation, whilst the effects for those who are partially eligible are only significantly different from the control group in the second year of the program. There is some evidence that the participation rate effect is stronger for boys, especially in the second year, and that the policy goes some way to reducing the gap in dropout rates between boys and girls. It is also clear that the policy has the largest impact on children from the poorest socio-economic background.
    JEL: H52 I28 J24
    Date: 2005–06
  12. By: Ian Walker (University of Warwick, Institute for Fiscal Studies and IZA Bonn); Yu Zhu (University of Kent and Centre for the Economics of Education)
    Abstract: This paper provides findings from the UK Labour Force Surveys from 1996 to 2003 on the financial private returns to a degree - the "college premium". The data covers a decade when the university participation rate doubled - yet we find no significant evidence that the mean return to a degree dropped in response to this large increase in the flow of graduates. However, we do find quite large falls in returns when we compare the cohorts that went to university before and after the recent rapid expansion of HE. The evidence is consistent with the notion that new graduates are a close substitute for recent graduates but poor substitutes for older graduates. There appears to have been a very recent increase in the number of graduates getting "non-graduate" jobs but, conditional on getting a graduate job the returns seem stable. Our results are consistent across almost all degree subjects - the exception being maths and engineering where we find that for men, and especially for women, there is a large increase in the proportion with maths and engineering degrees getting graduate jobs and that, conditional on this, the return is rising.
    Keywords: human capital, higher education, college premium
    JEL: I20 J30
    Date: 2005–06
  13. By: John Cawley; Chad D. Meyerhoefer; David Newhouse
    Abstract: To combat childhood overweight, which has risen dramatically in the past three decades, many medical and public health organizations have called for students to spend more time in physical education (PE) classes. This paper is the first to exploit state PE requirements as quasi-natural experiments in order to estimate the causal impact of PE on student activity and weight. We study nationwide data from the YRBSS for 1999, 2001, and 2003 merged with data on state minimum PE requirements from the 1994 and 2000 School Health Policies and Programs Study and the 2001 Shape of the Nation Report. We find that certain state regulations are effective in raising the number of minutes during which students are active in PE. Our results also indicate that additional PE time raises the number of days per week that students report having exercised or engaged in strength-building activities, but lowers the number of days in which students report light physical activity. PE time has no detectable impact on youth BMI or the probability that a student is overweight. We conclude that while raising PE requirements may make students more active by some (but not all) measures, there is not yet the scientific base to declare raising PE requirements an anti-obesity initiative.
    JEL: I1 I2
    Date: 2005–06
  14. By: Pedro S. Martins
    Abstract: Do workers benefit from the education of their co-workers? We investigate this question drawing on a panel of large Portuguese firms and their workers, using fixed effects and instrumenting average schooling in each firm-year with its lagged value and the lagged share of retirement-age workers. We find evidence of substantial firm-level social returns (at about 19%), much larger than standard estimates of private returns to education, and of sizeable returns accruing to less educated workers but not to their more educated colleagues
    Keywords: Social Returns to Education, Education Spillovers, Matched Employer-Employee Data, Wages, Portugal.
    JEL: J24 J31 I20
  15. By: Annette Alstadsæter, Ann-Sofie Kolm and Birthe Larsen (Statistics Norway)
    Abstract: This paper examines the effect of taxes on the individuals' choices of educational direction, and thus on the economy's skill composition. A proportional labour income tax induces too many workers with high innate ability to choose an educational type with high consumption value and low effort costs. This increases the skill mismatch and aggregate unemployment in the economy. The government can correct for this distortion by use of differentiated tuition fees or tax rates.
    Keywords: Unemployment; matching; education; optimal taxation; tuition fees
    JEL: J64 J68 H21 H24
    Date: 2005–01

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