nep-edu New Economics Papers
on Education
Issue of 2018‒08‒27
six papers chosen by
Marco Novarese
Università del Piemonte Orientale

  1. Inequality in Parental Transfers, Borrowing Constraints, and Optimal Higher Education Subsidies By Youngmin Park
  2. The Changing Roles of Family Income and Academic Ability for US College Attendance By Lutz Hendricks; Christopher Herrington; Todd Schoellman
  3. Why Does Education Reduce Crime? By Brian Bell; Rui Costa; Stephen Machin
  4. Financial literacy and socialist education: Lessons from the German reunification By Davoli, Maddalena; Hou, Jia
  5. The determinants of children's use of extra-school time in Europe. By Labriola, Silvia; Pronzato, Chiara
  6. Marathon, Hurdling or Sprint? The Effects of Exam Scheduling on Academic Performance By Goulas, Sofoklis; Megalokonomou, Rigissa

  1. By: Youngmin Park (Bank of Canada)
    Abstract: This paper studies optimal education subsidies when parental transfers for college education are unequally distributed across students and cannot be publicly observed. After documenting substantial inequality in the amount of parental transfers among American college students with similar observed family resources, I examine the implications of unobservable heterogeneity in parental transfers for efficient design of education subsidy policy that minimizes the distortions generated by borrowing constraints. When inequality in educational attainment is driven by differences in parental transfers, providing larger subsidy for lower level of schooling is optimal, because additional resources given to constrained students choosing low schooling levels reduce distortions. This force is weakened if unobservable heterogeneity in returns to schooling also leads to different schooling choices. To quantify these mechanisms, I build a model with endogenous parental transfers where inequality in parental transfers among students with similar parental economic resources and returns to education is determined by heterogeneity in parental altruism. The quantitative model is calibrated to the U.S. economy and used to solve for the optimal subsidy that may assign different amounts for each year of college and parental income quartile. The optimal policy subsidizes the first two years of college much more heavily than later years. The shift of public spending towards early years of college is more pronounced for higher parental income groups, generating little variation of subsidy amounts for the first two years of college across parental income.
    Date: 2018
  2. By: Lutz Hendricks (UNC Chapel Hill); Christopher Herrington (Virginia Commonwealth University); Todd Schoellman (Federal Reserve Bank of Minneapolis)
    Abstract: We harmonize the results of three dozen historical studies stretching back to the early 20th century to construct a time series of college attendance patterns. We find an important reversal around the time of World War II: before that, family characteristics such as income were the better predictor of college attendance; after, academic ability was the better predictor. We construct a model of college choice that can explain this reversal as a consequence of the post-War surge in the demand for college, explained by the rise in the college wage premium and declining real tuition. Although these factors affected college demand for all types of students equally, they set off a chain reaction in the model: colleges hit capacity constraints; colleges institute selective admissions; colleges become more dispersed in quality; and students apply to a broader set of colleges. High-ability students become more likely to attend college because their options become more attractive, but the opposite is true of high-income students. The driving forces and mechanisms are consistent with changes in higher education after the war, documented here and elsewhere.
    Date: 2018
  3. By: Brian Bell; Rui Costa; Stephen Machin
    Abstract: Prior research shows reduced criminality to be a beneficial consequence of education policies that raise the school leaving age. This paper studies how crime reductions occurred in a sequence of state-level dropout age reforms enacted between 1980 and 2010 in the United States. These reforms changed the shape of crime-age profiles, reflecting both a temporary incapacitation effect and a more sustained, longer run crime reducing effect. In contrast to the previous research looking at earlier US education reforms, crime reduction does not arise solely as a result of education improvements, and so the observed longer run effect is interpreted as dynamic incapacitation. Additional evidence based on longitudinal data combined with an education reform from a different setting in Australia corroborates the finding of dynamic incapacitation underpinning education policy-induced crime reduction.
    Keywords: crime age profiles, school dropout, compulsory schooling laws
    JEL: I2 K42
    Date: 2018–08
  4. By: Davoli, Maddalena; Hou, Jia
    Abstract: A growing body of literature shows the importance of financial literacy in house-holds' financial decisions. However, fewer studies focus on understanding the determinants of financial literacy. Our paper fills this gap by analyzing a specific determinant, the educational system, to explain the heterogeneity in financial literacy scores across Germany. We suggest that the lower financial literacy observed in East Germany is partially caused by a different institutional framework experienced during the Cold War, more specifically, by the socialist educational system of the GDR which affected specific cohorts of individuals. By exploiting the unique set-up of the German reunification, we identify education as a channel through which institutions and financial literacy are related in the German context.
    Keywords: financial literacy determinants,socialist education,German reunification,DiD
    Date: 2018
  5. By: Labriola, Silvia; Pronzato, Chiara (University of Turin)
    Abstract: In this paper, we describe what children do in their extra-school time in Europe, and explore the determinants of the use of their time in order to assess whether differences exist across families with different characteristics, as well as between European countries. Using data for the Multinational Time Use data, we analyse children’s time engaged in sports and games, as well as social, cultural, and religious events. We also observe the time spent with parents, both playing and studying. We find parental background and family characteristics to be important: parental education increases the time spent together in both educational and playing activities, while parental work – probably as a proxy of income – increases children’s time in sports, social and cultural events.
    Date: 2018–06
  6. By: Goulas, Sofoklis (Stanford University); Megalokonomou, Rigissa (University of Queensland)
    Abstract: Would you prefer a tighter or a prolonged exam schedule? Would you prefer to take Math before Reading or the other way around? We exploit variation in end-of-course exam schedules across years and grades to identify distinct effects of the number of days between exams, the number of days since the first exam, and the exam order on subsequent performance. We find substantially different scheduling effects between STEM and non-STEM subjects. First, we find a positive relationship between exam performance in STEM subjects and exam order, controlling for other influences of scheduling, suggesting that the later in the schedule an exam is taken the higher the average performance. We call this phenomenon, exam warm-up. Second, we find a negative relationship between the number of days from the very first exam and subsequent exam performance in STEM subjects, suggesting the existence of a fatigue effect. For STEM subjects, the fatigue effect is estimated to be less than half the size of the warm-up effect. For non-STEM subjects, an additional day between exams is significantly associated with lower performance in subsequent exams. Students of lower prior performance have lower fatigue effects and higher warm-up effects in STEM subjects compared to students of higher prior performance. Also, we find that exam productivity in STEM increases faster for boys than it does for girls as they take additional exams due to a higher warm-up effect. Our findings suggest that low-cost changes in the exam schedule may have salient to student performance gaps.
    Keywords: exam schedule, cognitive fatigue, exam warm-up, practice, gender gap, STEM subjects
    JEL: I20 I24
    Date: 2018–06

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