nep-edu New Economics Papers
on Education
Issue of 2008‒06‒07
thirteen papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. When should I leave school? - Optimal timing of leaving school under uncertainty and irreversibility By Natasha Bilkic; Thomas Gries; Margarethe Pilichowski
  2. Local Public Funding of Higher Education when Students and Skilled Workers are Mobile By Thomas Lange
  3. Early Labour Market Returns to College Subjects By Buonanno, Paolo; Pozzoli, Dario
  4. Publicly provided private goods: education and selective vouchers By Piolatto, Amedeo
  5. The Narrowing Gap in New York City Teacher Qualifications and its Implications for Student Achievement in High-Poverty Schools By Donald Boyd; Hamilton Lankford; Susanna Loeb; Jonah Rockoff; James Wyckoff
  6. Must conditional cash transfer programs be conditioned to be effective?: The impact of conditioning transfers on school enrollment in Mexico By de Brauw, Alan; Hoddinott, John
  7. Recent Investments in Human Capital and its Effect on the Chances of Escaping from Low-Paid Jobs: The Spanish Case By Blázquez Cuesta, Maite; Ramos, Jose
  8. Teorías y algunas experiencias internacionales en el financiamiento de la Educación Superior: lecciones para Colombia By David Bardey; Nohora Forero Ramírez
  9. Does Your Cohort Matter? Measuring Peer Effects in College Achievement By Scott E. Carrell; Richard L. Fullerton; James E. West
  10. Restriction on Stating Preferences in CollegeAdmissions in Turkey By Tolga Yuret; Kadir Doğan
  11. Under the Weather: Health, Schooling, and Economic Consequences of Early-Life Rainfall By Sharon L. Maccini; Dean Yang
  12. Child labor and schooling responses to production and health shocks in northern Mali: By Dillon, Andrew
  13. The Transition to Work for Italian University Graduates By Pozzoli, Dario

  1. By: Natasha Bilkic (University of Paderborn); Thomas Gries (University of Paderborn); Margarethe Pilichowski (University of Paderborn)
    Abstract: Education is a sequence of risky investments in human capital over a long period of time. At each moment a student decides to leave school and enter the labor market, or stay in the education system. Their departure from school will eventually determine their academic attainment level. Therefore, the major purpose of this paper is to derive a timing rule for leaving school and thus answer the question: How long should I go to school? To solve this problem we apply the real option approach. Real option theory offers a different perspective of the human capital investment decision under uncertainty and irreversibility. As future income is uncertain, we model future earnings as a continuous stochastic process. We use dynamic programming techniques to derive an income threshold at which a student should finally leave school irreversibly, and we determine the expected optimal duration of education. Unlike other approaches using real option theory we are able to provide a full analytical discussion of various determinants affecting the timing decision to start work. Among other things, we find that an increasing initial income differential, and the expected income growth extend the duration of education. Education costs and future income risk reduce the years of schooling.
    Keywords: human capital theory, uncertainty, irreversibllity, optimal stopping
    JEL: J24 I2 D8
    Date: 2008–05
  2. By: Thomas Lange (University of Konstanz, ifo Institute for Economic Research Munich & University of Paderborn)
    Abstract: The interregional mobility of high skilled workers might induce an underinvestment in local public higher education when sub-federal entities independently decide on education expenditures to maximize local output. This well-known result is due to interregional spillovers and provides a justification for coordinated education policy or rather a federal intervention. However, things might change completely when taking into account the interregional mobility of students. Now, local education expenditures not only affect labor migration (through wage differentials) but also student migration flows. The model in this paper then shows that local output maximization does not necessarily imply underprovision of higher education, since regions now have an incentive to attract students as future human capital. The stay rates of graduates in equilibrium and the sensitivity of wages to migration are key determinants of local policy. Furthermore, results depend on local government objectives or rather the weighting of natives relative to foreigners. Therefore, the paper also considers natives’ preferred local policy.
    Keywords: higher education, student mobility, labor mobility, local public finance
    JEL: I22 J61 H77
    Date: 2008–05
  3. By: Buonanno, Paolo (Dipartimento di Scienze Economiche); Pozzoli, Dario (Department of Economics, Aarhus School of Business)
    Abstract: This paper aims at estimating early labour market outcomes of Italian university graduates across college subjects. We devote great attention to endogenous selection issues using alternative methods to control for potential self-selection associated with the choice of the degree subject in order to unravel the causal link between college major and subsequent outcomes in the labour market. Our results suggest that “quantitative” fields (i.e. Sciences, Engineering and Economics) increase not only the speed of transition into the first job and employment probability but also early earnings, conditional on employment.
    Keywords: University to work transition; College subject; Self-selection; Returns to education
    JEL: C34 I21 J24
    Date: 2008–05–01
  4. By: Piolatto, Amedeo
    Abstract: The literature on vouchers often concludes that a vouchers-based system cannot be the outcome of a majority vote. This paper shows that, when the value of vouchers and who is entitled to receive them are fixed exogenously, the majority of voters are in favour of selective vouchers. On top of that, as long as the introduction of vouchers does not undermine the existence of the public school system, introducing selective vouchers induces a Pareto improvement. Middle class agents are the only one using vouchers in equilibrium, while the poorest agents in the economy profit from the reduction in public school congestion.
    Keywords: public economics; education; vouchers; voting
    JEL: H42 I2 D70
    Date: 2008
  5. By: Donald Boyd; Hamilton Lankford; Susanna Loeb; Jonah Rockoff; James Wyckoff
    Abstract: The gap between the qualifications of New York City teachers in high-poverty schools and low-poverty schools has narrowed substantially since 2000. Most of this gap-narrowing resulted from changes in the characteristics of newly hired teachers, and largely has been driven by the virtual elimination of newly hired uncertified teachers coupled with an influx of teachers with strong academic backgrounds in the Teaching Fellows program and Teach for America. The improvements in teacher qualifications, especially among the poorest schools, appear to have resulted in improved student achievement. By estimating the effect of teacher attributes using a value-added model, the analyses in this paper predict that observable qualifications of teachers resulted in average improved achievement for students in the poorest decile of schools of .03 standard deviations, about half the difference between being taught by a first year teacher and a more experienced teacher. If limited to teachers who are in the first or second year of teaching, where changes in qualifications are greatest, the gain equals two-thirds of the first-year experience effect.
    JEL: I21 J24 J45
    Date: 2008–05
  6. By: de Brauw, Alan; Hoddinott, John
    Abstract: "A growing body of evidence suggests that conditional cash transfer (CCT) programs can have strong, positive effects on a range of welfare indicators for poor households in developing countries. However, the contribution of individual program components toward achieving these outcomes is not well understood. This paper contributes to filling this gap by explicitly testing the importance of conditionality on one specific outcome related to human capital formation (namely school enrollment), using data collected during the evaluation of Mexico's Programa de Educación, Salud, y Alimentación (PROGRESA) CCT program. We exploit the fact that some PROGRESA beneficiaries who received transfers did not receive the forms needed to monitor their children's attendance at school. We use a variety of techniques, including nearest neighbor matching and household fixed effects regressions, to show that the lack of these forms reduced the likelihood of children attending school, with this effect being most pronounced among children who were transitioning to lower secondary school. We provide substantial evidence that these findings are not driven by unobservable characteristics related to households or localities." from Author's Abstract
    Keywords: Conditionality, Cash transfers, School enrollment, School attendance, Progresa, Social protection, Education,
    Date: 2008
  7. By: Blázquez Cuesta, Maite (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Ramos, Jose (Universidad Europea de Madrid)
    Abstract: General education and training are major forces determining earnings. According to the human capital model, wage differentials among individuals over the life-cycle are largely the result of different patterns of investment in human capital. This paper is intended to analyze the effects of recent investments in human capital – general education, vocational/training or language courses - on workers’ relative earnings and on the probability of making an upwards transition in the earnings distribution. The analysis is done for Spain, using the European Community Household Panel (1995-2001). Our results reveal that having been recently in education or training (mainly vocational/training courses) significantly increases the probability of escaping from low pay to better paid jobs, while decreases the risk of falling into low-wage employment. Furthermore, this positive effect is significantly higher among those workers with a third level of general education completed. A separate analysis for females also reveals these positive returns of recent investments in human capital relative earnings, although in this case they appear to be none statistically significant.
    Keywords: Education; on-the-job training; low pay; bivariate probit
    JEL: C33 J24 J31
    Date: 2008–05
  8. By: David Bardey; Nohora Forero Ramírez
    Abstract: Se analizan diferentes alternativas para la financiación de la educación superior, teniendo en cuenta que la presencia de fallas de mercado -tanto por el lado de la demanda como por el de la oferta- hace de éste un sector muy particular. Las primeras se relacionan con las decisiones privadas en términos de educación de la población estudiantil, y las segundas con las asimetrías de información que caracterizan el lado de la oferta en el financiamiento de la educación. El documento hace una revisión de literatura académica y de algunas experiencias internacionales sobre las diferentes fuentes de financiación en este sector, así como sus potenciales efectos sobre ciertas variables. Así, esta revisión arroja luces sobre las alternativas para el caso Colombiano. ******************************************************************************************************** This document analyzes different options in higher education funding, through the study of the market failures –by the demand and the supply side– that make this sector a particular one. We study some financing sources such as public funding, upfront charges, bank loans, income contingent loans, graduate taxes, among others. Besides, we review some international experiences in higher education funding that could shed some light on the Colombian case, taking into account the potential effects of different financing sources on efficiency, equity and variables such as consumption.
    Date: 2008–05–29
  9. By: Scott E. Carrell; Richard L. Fullerton; James E. West
    Abstract: To estimate peer effects in college achievement we exploit a unique dataset in which individuals have been exogenously assigned to peer groups of about 30 students with whom they are required to spend the majority of their time interacting. This feature enables us to estimate peer effects that are more comparable to changing the entire cohort of peers. Using this broad peer group, we find academic peer effects of much larger magnitude than found in previous studies that have measured peer effects among roommates alone. We find the peer effects persist at a diminishing rate into the sophomore, junior, and senior years, indicating social network peer effects may have long lasting effects on academic achievement. Our findings also suggest that peer effects may be working through study partnerships versus operating through establishment of a social norm of effort.
    JEL: I20
    Date: 2008–05
  10. By: Tolga Yuret (Koç University); Kadir Doğan
    Abstract: A central authority designs and implements the college admissions process in Turkey. All applicants are required to take an SATlike test and submit their preferences over the departments. Then, the central authority places the applicants in departments by considering the test scores and stated preferences of the applicants and the capacities of the departments. This procedure generates a fair placement if there are no restrictions on stating preferences. How-ever, the applicants are restricted to state preferences over at most 24 departments out of 4022 available departments. In this paper, by using the college admissions data set of the year 2005, we estimate that the number of applicants who had an unfair placement due to this restriction is equivalent to 2.4 percent of the number of applicants who placed in a department.
    Keywords: college admissions, placement algoritms, fairness
    JEL: I23 I28 C78
    Date: 2008–05
  11. By: Sharon L. Maccini; Dean Yang
    Abstract: How sensitive is long-run individual well-being to environmental conditions early in life? This paper examines the effect of weather conditions around the time of birth on the health, education, and socioeconomic outcomes of Indonesian adults born between 1953 and 1974. We link historical rainfall for each individual's birth-year and birth-location with current adult outcomes from the 2000 wave of the Indonesia Family Life Survey. Higher early-life rainfall has large positive effects on the adult outcomes of women, but not of men. Women with 20% higher rainfall (relative to normal local rainfall) in their year and location of birth are 3.8 percentage points less likely to self-report poor or very poor health, attain 0.57 centimeters greater height, complete 0.22 more grades of schooling, and live in households that score 0.12 standard deviations higher on an asset index. These patterns most plausibly reflect a positive impact of rainfall on agricultural output, leading to higher household incomes and food availability and better health for infant girls. We present suggestive evidence that eventual benefits for adult women's socioeconomic status are most strongly mediated by improved schooling attainment, which in turn improves socioeconomic status in adulthood.
    JEL: I1 I2 I3 O1 O15 Q5
    Date: 2008–05
  12. By: Dillon, Andrew
    Abstract: "This paper investigates children's time allocation to schooling, home production, and market production using a unique data set collected from northern Mali. Production shocks from harvest period pest infestations induce households to withdraw children from school and increase the probability that they are selected into farm work. Health shocks to women increases the probability that a child participates in the family business and childcare activities. These results are robust to varying assumptions about the structure of unobserved heterogeneity at the household and village levels. Different measures of household assets are also constructed to test whether assets serve as a buffer against increased child labor in response to shocks. Assets such as livestock have mixed effects on child labor and schooling, depending on the shock and asset type. However, household durables are substitutes for increased child labor when households face health shocks." from Author's Abstract
    Keywords: Child labor, Production shocks, Health shocks, Labor substitution effects, Schooling, Education, Gender, Women,
    Date: 2008
  13. By: Pozzoli, Dario (Department of Economics, Aarhus School of Business)
    Abstract: This study investigates the hazard of rst job for Italian graduates. The anal- ysis is in particular focused on the transition from university to work, taking into account the graduates' characteristics and the eects relating to degree subject. It is used a large data set from a survey on job opportunities for the 1998 Italian graduates. The paper employs a non parametric discrete-time single risk models to study employment hazard. Alternative mixing distributions have also been used to account for unobserved heterogeneity. The results obtained indicate that there is evidence of positive duration dependence after a short initial period of negative duration dependence. In addition, competing risk model with unob- served heterogeneity and non parametric baseline hazard have been estimated to characterize transitions out of unemployment.
    Keywords: discrete time survival model; unobserved heterogeneity; competing risk model
    JEL: C41 C50 J64
    Date: 2008–04–18

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