nep-edu New Economics Papers
on Education
Issue of 2005‒09‒11
twelve papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Job Creation and Destruction over the Business Cycles and the Impact on Individual Job Flows in Denmark 1980-2001 By Ibsen, Rikke; Westergaard-Nielsen, Niels
  2. Employment Dynamics of Married Women in Europe By Pierre-Carl Michaud; Konstantinos Tatsiramos
  3. Human Capital Intensity in Technology-Based Firms Located in Portugal: Do Foreign Multinationals Make a Difference? By Ana Teresa Tavares; Aurora A. C. Teixeira
  4. Birth Order Matters: The Effect of Family Size and Birth Order on Educational Attainment By Alison L. Booth; Hiau Joo Kee
  5. Qualitative und quantitative Aspekte einer Elternrente By Michael Voigtländer
  6. Aging, Health and Aggregate Medical Care Spending in France By Michel Grignon
  7. Is the New Immigration Really So Bad? By David Card
  8. Biology as Destiny? Short and Long-Run Determinants of Intergenerational Transmission of Birth Weight By Janet Currie; Enrico Moretti
  9. Education and Nonmarket Outcomes By Michael Grossman
  10. Determinants of City Growth in Brazil By Daniel da Mata; U. Deichmann; J. Vernon Henderson; Subir V. Lall; H.G. Wang
  11. Changing wage structure and education in Vietnam 1993-1998: The roles of demand By Amy Y.C. Liu
  12. Financial constraints, migration and inequality By Juliano Junqueira Assunção; Leandro S. Carvalho

  1. By: Ibsen, Rikke (Department of Economics, Aarhus School of Business); Westergaard-Nielsen, Niels (Department of Economics, Aarhus School of Business)
    Abstract: Job creation and destruction should be considered as key success or failure criteria of the economic policy. Job creation and destruction are both effects of economic policy, the degree of out- and in-sourcing, and the ability to create new ideas that can be transformed into jobs. Job creation and destruction are results of businesses attempting to maximize their economic outcome. One of the costs of this process is that employees have to move from destroyed jobs to created jobs. The development of this process probably depends on labor protection laws, habits, the educational system, and the whole UI-system. A flexible labor market ensures that scarce labor resources are used where they are most in demand. Thus, labor turnover is an essential factor in a well-functioning economy. <p> This paper uses employer-employee data from the Danish registers of persons and workplaces to show where jobs have been destroyed and where they have been created over the last couple of business cycles. Jobs are in general destroyed and created simultaneously within each industry, but at the same time a major restructuring has taken place, so that jobs have been lost in Textile and Clothing, Manufacturing and the other “old industries”, while jobs have been created in Trade and Service industries. Out-sourcing has been one of the causes. This restructuring has caused a tremendous pressure on workers and their ability to find employment in expanding sectors. The paper shows how this has been accomplished. Especially, the paper shows what has happened to employees involved. Have they become unemployed, employed in the welfare sector or where?
    Keywords: job creation and job destruction; turnover of personnel; duration of unemployment; and impact of business cycles
    JEL: J63 M51 O51
    Date: 2005–09–02
  2. By: Pierre-Carl Michaud (RAND Corporation and IZA Bonn); Konstantinos Tatsiramos (IZA Bonn)
    Abstract: We use eight waves from the European Community Household Panel (1994-2001) to analyze the intertemporal labor supply behavior of married women in six European countries (Netherlands, France, Spain, Italy, Germany and United Kingdom) using dynamic binary choice models with different initial condition solutions and non parametric distributions of unobserved heterogeneity. Results are used to relate cross-country differences in the employment rate to the estimated dynamic regimes. We find that cross-country differences in the employment rate and the persistence of employment transitions of married women are mostly due to composition effects related to education and unobserved characteristics rather than state-dependence effects or the dynamic effect of fertility.
    Keywords: intertemporal labor supply, female employment, dynamic binary choice models, initial conditions
    JEL: C23 C25 D91 J22
    Date: 2005–07
  3. By: Ana Teresa Tavares (CEMPRE, Faculdade de Economia, Universidade do Porto); Aurora A. C. Teixeira (CEMPRE, Faculdade de Economia, Universidade do Porto)
    Abstract: This paper contributes to the scarce empirical literature on the impact of foreign ownership on human capital intensity. New evidence is provided, based on a comprehensive, large-scale survey of technology-based firms located in Portugal. Using two alternatives measures of human capital (one based on skills, another on education), the key findings are that: (1) foreign ownership directly (and significantly) impacts on firms general human capital (education); (2) foreign ownership indirectly (and significantly) impacts on firms specific human capital (skills); (3) the total impact of foreign ownership on firms’ human capital intensity is higher for education- (general) than for skills- (specific) related human capital intensity. Other findings are that younger and smaller firms tend to be more human capital intensive, and that export patterns are not significantly related to human capital intensity. Giving the critical importance of both FDI and human capital development for an economy like Portugal (lagging behind in terms of human capital stock, and seeming to have lost part of its attractiveness as an FDI location), the paper discusses related policy implications.
    Keywords: Foreign direct investment (FDI), multinational enterprises (MNEs), human capital, education, technology-based firms (TBFs).
    JEL: J24 F23
    Date: 2005–08
  4. By: Alison L. Booth (Australian National University and IZA Bonn); Hiau Joo Kee (Australian National University)
    Abstract: We use unique retrospective family background data from the 2003 British Household Panel Survey to explore the degree to which family size and birth order affect a child’s subsequent educational attainment. Theory suggests a trade off between child quantity and ‘quality’. Family size might adversely affect the production of child quality within a family. A number of arguments also suggest that siblings are unlikely to receive equal shares of the resources devoted by parents to their children’s education. We construct a composite birth order index that effectively purges family size from birth order and use this to test if siblings are assigned equal shares in the family’s educational resources. We find that they are not, and that the shares are decreasing with birth order. Controlling for parental family income, parental age at birth and family level attributes, we find that children from larger families have lower levels of education and that there is in addition a separate negative birth order effect. In contrast to Black, Devereux and Kelvanes (2005), the family size effect does not vanish once we control for birth order. Our findings are robust to a number of specification checks.
    Keywords: family size, birth order, education
    JEL: I2 J1
    Date: 2005–07
  5. By: Michael Voigtländer
    Abstract: On efficiency grounds, a social contract can be justified if not only pension payments but also the funding of education is taken into account. By introducing a pay-as-you system, which is a type of implicit social contract, each young generation can overcome its liquidity problems with regards to the financing of education and each older generation gains an attractive investment opportunity as funding human capital offers high returns and allows for an additional diversification of risks. As the marginal returns to education are decreasing, however, pension entitlements should be made contingent on educational investments and on the number of children. Given the tax-financed provision of education in Germany, especially the introduction of child pensions promises efficiency gains for the statutory pension systems. Additionally, it is shown how child pensions can be quantified. With reference to the concept of fiscal returns to education a relationship between child-rearing, education and income can be established. As the calculations suggest, one third of all pension entitlements in the German statutory pension scheme should be granted according to the number of children. Finally, the article shows how the institutional setting of the German pension system has to be changed in order to implement a child pension.
    Keywords: pension reform, child pensions, returns to education
    JEL: H55
    Date: 2005–07
  6. By: Michel Grignon
    Abstract: I investigate the role of education on health, using country level data and the production frontier framework suggested by the World Health Organization to assess performances of health care systems. I find that the role of human capital is much smaller than what appears in the WHO frontier model, and the relationship exhibits diminishing return in the observed range. Taking into account the non-linearity in this relationship generates a different ranking of countries according to the efficiency of their health care system. This suggests that the method currently used by the WHO indeed favours health care systems operating in countries which underinvested in education in the past. The relationship between education and health changes around an average value of 8 years of education per individual: above that level, the return of years of education in health is zero.
    Keywords: Human capital, Rate of return, Economic impact, Efficiency
    JEL: I38
    Date: 2005–08
  7. By: David Card
    Abstract: This paper reviews the recent evidence on U.S. immigration, focusing on two key questions: (1) Does immigration reduce the labor market opportunities of less-skilled natives? (2) Have immigrants who arrived after the 1965 Immigration Reform Act successfully assimilated? Looking across major cities, differential immigrant inflows are strongly correlated with the relative supply of high school dropouts. Nevertheless, data from the 2000 Census shows that relative wages of native dropouts are uncorrelated with the relative supply of less-educated workers, as they were in earlier years. At the aggregate level, the wage gap between dropouts and high school graduates has remained nearly constant since 1980, despite supply pressure from immigration and the rise of other education-related wage gaps. Overall, evidence that immigrants have harmed the opportunities of less educated natives is scant. On the question of assimilation, the success of the U.S.-born children of immigrants is a key yardstick. By this metric, post-1965 immigrants are doing reasonably well: second generation sons and daughters have higher education and wages than the children of natives. Even children of the least- educated immigrant origin groups have closed most of the education gap with the children of natives.
    JEL: J61
    Date: 2005–08
  8. By: Janet Currie; Enrico Moretti
    Abstract: Little is known about the mechanisms underlying the transfer of economic status between generations. This paper addresses the question of whether inter-generational correlations in health contribute to the perpetuation of economic status. We examine inter-generational correlations in birth weight, a key indicator of the health of newborns that we link to future educational attainment and earnings using a unique data set based on California births from 1960s to the present. We use names and birth dates to link the records of mothers and children. We also identify mothers who are siblings. We show that there is a strong intergenerational correlation in the birth weight of mothers and children, but that a measure of household income at the time of the mother's birth is also predictive of low birth weight and that there is an interaction between maternal low birth weight and poverty in the production of low birth weight. Together these findings suggest that intergenerational correlations in health could play a role in the intergenerational transmission of income. Parent's income affects child health, and health at birth affects future income.
    JEL: I1
    Date: 2005–08
  9. By: Michael Grossman
    Abstract: I explore the effects of education on nonmarket outcomes from both theoretical and empirical perspectives. Examples of outcomes considered include general consumption patterns at a moment in time, savings and the rate of growth of consumption over time, own (adult) health and inputs into the production of own health, fertility, and child quality or well-being reflected by their health and cognitive development. I pay a good deal of attention to the effects of education on health because they are the two most important sources of human capital: knowledge capital and health capital. There is a large literature addressing the nature of their complementarities. In the conceptual foundation section, I consider models in which education has productive efficiency and allocative efficiency effects. I then modify these frameworks to allow for the endogenous nature of schooling decisions, so that observed schooling effects can be traced in part to omitted "third variables" such as an orientation towards the future. An additional complication is that schooling may contribute to a future orientation. The empirical review provides a good deal of evidence for the proposition that the education effects are causal but is less conclusive with regard to the identification of specific mechanisms.
    JEL: I10 I20
    Date: 2005–08
  10. By: Daniel da Mata; U. Deichmann; J. Vernon Henderson; Subir V. Lall; H.G. Wang
    Abstract: In this paper, we examine the determinants of Brazilian city growth between 1970 and 2000. We consider a model of a city, which combines aspects of standard urban economics and the new economic geography literatures. For the empirical analysis, we constructed a dataset of 123 Brazilian agglomerations, and estimate aspects of the demand and supply side as well as a reduced form specification that describes city sizes and their growth. Our main findings are that increases in rural population supply, improvements in inter-regional transport connectivity and education attainment of the labor force have strong impacts on city growth. We also find that local crime and violence, measured by homicide rates impinge on growth. In contrast, a higher share of private sector industrial capital in the local economy stimulates growth. Using the residuals from the growth estimation, we also find that cities who better administer local land use and zoning laws have higher growth. Finally, our policy simulations show that diverting transport investments from large cities towards secondary cities do not provide significant gains in terms of national urban performance.
    JEL: O R
    Date: 2005–08
  11. By: Amy Y.C. Liu (National Centre for Development Studies, Australian National University)
    Abstract: This paper examines the changes in relative earnings of workers with different education levels during Vietnam’s transition. It is found that females enjoy a higher return to education than males do in 1998, reversing the situation observed five years ago. A large fall in the returns to vocational training for males, amid the rapid growth in the representation of better-educated females in the private sector where education is valued higher could be responsible for what have occurred. A direct assessment of the role of demand using a simple demand and supply framework developed by Katz-Murphy (1992) is undertaken. The result suggests an increase in the relative demand for better-educated workers appears to play an important role in explaining the earnings differentials between workers of different education groups. Education reform to better suit the needs of the post-reform emerging market, on-the-job training for workers, as well as equal access to education are some policy options that hold the key to reduce wage inequality between different education groups.
    Keywords: returns to education, Vietnam, wage structure
    JEL: I21 J31 P2
    Date: 2005–04
  12. By: Juliano Junqueira Assunção (Department of Economics PUC-Rio); Leandro S. Carvalho (Department of Economics Princeton University)
    Abstract: Although the self-selection of emigrants is determined by di¤erences in the returns to education, according to the celebrated Roy model, empirical evidence suggests that migrants tend to be favorably selected. This paper argues that financial con- straints might be useful to explain this controversy. These constraints might impose positive correlations between (i) wealth and education, and (ii) wealth and migra- tion, implying a positive bias in the empirical results. We also show that high levels of migration premium and return to education in the source country explain the migration of middle-class individuals, a situation in which migration increases in- equality in the home country.
    Keywords: migration, financial constraints, self-selection, human capital
    Date: 2005–02

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