nep-edu New Economics Papers
on Education
Issue of 2006‒10‒07
seven papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Mind the Gap? Estimating the Effects of Postponing Higher Education By Bertil Holmlund; Qian Liu; Oskar Nordström Skans
  2. Efficiency and Equity of European Education and Training Policies By Ludger Woessmann
  4. Taxing Human Capital Efficiently: The Double Dividend of Taxing Non-Qualified Labour More Heavily Than Qualified Labour By Wolfram F. Richter
  5. Education, Growth, and Redistribution in the Presence of Capital Flight By Debajyoti Chakrabarty
  6. Migrant Opportunity and the Educational Attainment of Youth in Rural China By Alan de Brauw; John Giles

  1. By: Bertil Holmlund; Qian Liu; Oskar Nordström Skans
    Abstract: This paper estimates the effects on earnings of “gap years” between high school and university enrollment. The effect is estimated by means of standard earnings functions augmented to account for gap years and a rich set of control variables using administrative Swedish data. We find that postponement of higher education is associated with a persistent and non-trivial earnings penalty. The main source of the persistent penalty appears to be the loss of work experience after studies. The reduction of lifetime earnings associated with two years postponement of higher education amounts to 40-50 percent of annual earnings at age 40.
    Keywords: timing of education, schooling interruptions, returns to work experience
    JEL: I23 J24 J31
    Date: 2006
  2. By: Ludger Woessmann
    Abstract: This paper reviews empirical evidence, especially from Europe, on how education and training policies can be designed to advance both efficiency and equity. Returns to educational investments tend to decrease over the life cycle. Moreover, they seem to be highest for children from disadvantaged families at early stages and for the well-off at late stages of the life cycle. This creates complementarities between efficiency and equity at early stages and trade-offs at late stages. The paper goes on to discuss specific policies for efficiency and equity at each educational stage, ranging from early childhood education and schools over vocational and higher education to training and lifelong learning. The available evidence suggests that both efficiency and equity can be enhanced by output-oriented reforms properly designed to each stage, where the state generally sets a regulatory framework that ensures accountability and funding and uses the forces of choice and competition to deliver best results. Designed this way, education and training systems can advance efficiency and equity at the same time.
    Keywords: education, training, Europe, efficiency, equity, life cycle, trade-off
    JEL: D60 H52 I28 J24
    Date: 2006
  3. By: Gema Zamarro (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: This paper presents a method for estimating returns to schooling that takes into account that returns may be heterogeneous among agents and that educational decisions are made sequentially. A sequential decision model is interesting because it explicitly considers that the level of education of each individual is the result of previous schooling choices and so, the variation of supply-side instruments over time will emerge as a source of identification of the desired parameters. A test for heterogeneity in returns from sequential schooling decisions is developed and expressions for Marginal Treatment Effects are obtained in this context. Returns are estimated and tested from cross-sectional data from a Spanish household survey that contains rich family background information and useful instruments. This data is stratified by level of education and so estimators are adapted to take this feature into account. Finally, this methodology is used to analyze possible effects of the 1970 reform of the Spanish education system.
    Keywords: Schooling, selection models, heterogeneity, sequential decisions, policy evaluation.
    JEL: I21 I28 C10 J31
    Date: 2006–06
  4. By: Wolfram F. Richter (University of Dortmund and IZA Bonn)
    Abstract: Assuming decreasing returns to education and the endogenous supply of qualified and nonqualified labour it is shown to be efficient to supplement a consumption tax with positive incentives for education. If the return from education is isoelastic and if the choice is between (i) subsidizing the monetary cost of education and (ii) taxing non-qualified labour income more heavily than qualified labour income while keeping the effective cost of education constant, the latter policy is shown to be second-best efficient. In particular, any tax distortions should be constrained to labour choices while the choice of education should remain undistorted. The result holds for arbitrary utility functions.
    Keywords: endogenous choice of labour and education, efficient taxation, human capital investment, double dividend hypothesis
    JEL: H2 I2 J24
    Date: 2006–09
  5. By: Debajyoti Chakrabarty
    Abstract: We construct an overlapping generations model to study the effect of capital controls on human capital investments and the incidence of redistributive politics in a growing economy. We argue that the conventional wisdom linking higher capital controls to lower growth is reproduced only when an economy is sufficiently developed. For under-developed countries, higher capital controls are beneficial for human capital accumulation suggesting that the wisdom does not apply. In an augmented version of the model, we show that a modern sector, characterized by positive levels of investment in education, may not exist unless capital controls are sufficiently high. In particular, higher capital controls make it feasible for a modern sector to exist by lowering the threshold income level required by workers to invest in human capital. These results are consistent with recent evidence suggesting that capital account liberalization positively affects growth only after a country has achieved a certain threshold level of absorptive capacities.
    Keywords: Capital Flight, Economic Growth, Human Capital, Income Distribution, Long Term Capital Movements, Optimal Taxation
    JEL: D33 E62 F21 O19 O40
    Date: 2006–09
  6. By: Alan de Brauw (International Food Policy Research Institute); John Giles (Michigan State University and IZA Bonn)
    Abstract: In this paper, we investigate how reductions of barriers to migration affect the decision of middle school graduates to attend high school in rural China. Change in the cost of migration is identified using exogenous variation across counties in the timing of national identity card distribution, which made it easier for rural migrants to register as temporary residents in urban destinations. We show that timing of ID card distribution is unrelated to local rainfall shocks affecting demand for migration, and not related to proxies reflecting time-varying changes in village policy or administrative capacity. We find a robust negative relationship between migrant opportunity and high school enrollment. The mechanisms behind the negative relationship are suggested by observed increases in subsequent local and migrant non-agricultural employment of high school age young adults as the size of the current village migrant network increases.
    Keywords: migration, educational attainment, rural China
    JEL: O12 O15 J22 J24
    Date: 2006–09
  7. By: K. SUNDARAM (Delhi School of Economics)
    Abstract: Against the backdrop of policy of reservation of seats in Higher Education for the Other Backward Castes in India, this paper examines two inter-related yet distinct issues: (i) the use of economic criteria for assessing the backwardness of different social groups and (ii) assessment of fairness of access to higher education of an identified “backward” social group. On an analysis of the NSS 55th Round Surveys for 1999-2000 we show that on a range of economic criteria there is a clear hierarchy across (essentially) caste-based social groups with the Scheduled Castes (in Urban India) and the Scheduled Tribes (in Rural India) at the bottom, the Other Backward Castes (OBCs) in the middle and the non-SC/ST Others at the top. However, for the poor among them, there is more of a continuum across caste-groups with surprisingly small differences between the OBCs and the non-SC/ST Others. On the issue of fair access to higher education, it is argued that the extent of under-(or over-) representation of a social group can only be judged by a comparison of a social group’s share in enrollments in a given level of education with its share in the population eligible for entry into that level of education. And it is shown that for the OBCs as a group, and especially for over 70 percent of them who are above the poverty line, the extent of under-representation of the OBCs in enrollments at the under-graduate and post-graduate levels is less than 5 percent. We conclude, therefore, that a 27 percent quota for the OBCs, which would effectively raise their share in enrollments to over 50 percent when their share in the eligible population is 30 percent or less, is totally unjustified.
    Keywords: India, Social Groups, Backwardness, Poverty, Caste-based Reservations, Fair Access to Higher Education.
    JEL: I
    Date: 2006–09

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