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on Labour Economics |
| By: | Pfeifer, Christian |
| Abstract: | Human capital and deferred compensation might explain why firms employ but do not hire older workers. Adjustments of wage-tenure profiles for older new entrants are explored in the context of deferred compensation. From an equity theory perspective, such adjustments might lead to adverse incentive effects so that firms prefer to hire rather homogenous workers in terms of entry age. A personnel data set is analyzed which reveals that at least for white-collar workers entry age has a positive effect on entry wages and wage-tenure profiles are adjusted according to entry age. |
| Keywords: | deferred compensation, human capital, internal labor markets, older workers, wages |
| JEL: | J14 J24 J31 J33 M51 M52 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-413&r=lab |
| By: | Steinar Holden (University of Oslo, Norges Bank (Central Bank of Norway)and CESifo Department of Economics, University of Oslo); Fredrik Wulfsberg (Norges Bank (Central Bank of Norway)) |
| Abstract: | A number of recent studies have documented extensive downward nominal wage rigidity (DNWR) for job stayers in many OECD countries. However, DNWR for individual workers may induce downward rigidity or "a floor" for the aggregate wage growth at positive or negative levels. Aggregate wage growth may be below zero because of compositional effects, for example that old, high-wage workers are replaced by young low-wage workers. DNWR may also lead to a positive growth in aggregate wages because of changes in relative wages. We explore industry data for 19 OECD countries, over the period 1971-2006. We find evidence for floors on nominal wage growth at 6 percent and lower in the 1970s and 1980s, at one percent in the 1990s, and at 0.5 percent in the 2000s. Furthermore, we find that DNWR is stronger in country-years with strict employment protection legislation, high union density, centralised wage setting and high inflation. |
| Keywords: | Wage inflation, downward nominal wage rigidity, OECD, wage setting |
| JEL: | J3 C14 C15 E31 |
| Date: | 2009–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:bno:worpap:2009_02&r=lab |
| By: | Marjan, MAES |
| Abstract: | On the basis of a longitudinal administrative dataset (1991-2002) merged with the Census of 2001 and the National Register, the majority of the poor elderly in Belgium appear to be persistently poor. The question arises why this might be so. To the extent that individual characteristics such as low abilities persist over time, they may also be the reason that individuals persist in poverty over time. In that case, one expects that once individual characteristics are controlled for, duration dependence in poverty becomes spurious. The alternative possibility is that poverty experience has a causal impact on future poverty. This may be because of a poverty trap : people may be given an incentive not to work while at the same time they slip into poverty. Or this may be due to depreciation of human capital or loss of motivation. The reasons for dependence would suggest to focus on stigma and adverse work incentives while spurious dependence would suggest to change individualÕs characteristics. The simultaneous estimation of a multiple-spell discrete-time hazard model of transitions in and out of poverty, that allows for unobserved effects and a significant initial condition problem, lends strong empirical support for true duration dependence in poverty. This suggestion sounds reasonable since in Belgium elderly unemployed are exempted from the search for a job and thus easily exposed to depreciation of human capital and employers are reluctant to invest in the human capital of older workers. In addition in Belgium both employers and the government design retirement pathways that give elderly strong incentives to leave the labour market as soon as possible. |
| Keywords: | poverty dynamics; poverty persistence; early retirement; work disincentives; multiple spell discrete-time hazard model |
| JEL: | J14 J26 C41 I32 |
| Date: | 2008–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2008042&r=lab |
| By: | Marjan, MAES (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics) |
| Abstract: | Early retirement is often explained as resulting from a voluntary labour supply choice of a utility maximizing individual. nonetheless, a lof of individuals perceive retirement as a forced instead as a voluntary decision. This paper tries to accomodate voluntary and unvoluntary labour supply decisions within one model. On the basis of a large administrative dataset merged with Census data, we estimate a discrete-time competing risk model of transitions from Belgian private-sector employees into unemployment, early and old-age retirement while accounting for forward-looking retirement incentives. The estimated coefficients are used to simulate a cut in early retirement benefits. Although this could enhance the financial sustainability of the social security system for elderly, one might expect that this may ofrce people to retire involuntarily through elderly unemployment where they end up with a lower living standard or even in poverty. Alternatively, it could stimulate employees to work longer until they qualify for old-age pension benefits. The model predicts a strong increase of the exit rates towards unemployment between age 52 and 57 while exit towards the old-age pension system marginally increases until age 63. In particular, blue-collars with physically demanding jobs in traditional industries have a higher risk to become unemployed while white-collar workers, members of voluntary saving plans or occupational pension schemes and highly educated workers are predicted to move in the old-age pension system. |
| Keywords: | competing-risk model; early retirement; retirement pathways; involuntary retirement |
| JEL: | J26 C25 H55 |
| Date: | 2008–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:208041&r=lab |
| By: | Ana Sofia Lopes (Departamento de Gestão e Economia, ESTG/Instituto Politécnico de Leiria (Portugal)); Paulino Teixeira (GEMF/Faculdade de Economia, Universidade de Coimbra (Portugal)) |
| Abstract: | It is well known that unobserved heterogeneity across workers and firms seriously impacts the computation of the determinants of individual earnings in standard human capital earnings functions. Following the tradition of AKM (Abowd, Kramarz, and Margolis, 1999), this paper offers an alternative way of controlling unknown worker and firm heterogeneity by taking full advantage of a matched employee-employer dataset based on two key Portuguese micro databases. Our modelling strategy assumes that the gap between individual and firm average wages, unexplained by differences in observable characteristics, gives the extent to which the unobserved ability of a given individual deviates from the unobserved worker average ability in the firm. This methodology has, in particular, the advantage of not relying exclusively on information on job switchers to identify worker and firm effects, thus avoiding any bias arising from endogenous worker mobility. Another important aspect of our treatment is that it allows the estimation of worker effects without risk of contamination from firm effects. To test our modelling we use an original 2-year longitudinal LEED dataset, comprising of more than 400 thousand workers and 1,500 firms in each year. We focus on two separate sets of individuals (i.e. stayers and switchers) and provide a variety of robustness tests, including replication of the original AKM methodology. After controlling worker and firm effects, our results show that the acquisition of schooling, labor market experience, and training, inter al., pays off. Moreover, we do find evidence of a large bias in standard OLS return rates to typical covariates. Evidence from Monte Carlo simulation and bootstrapping also shows that our estimated rates of return to human capital do not seem to be sensitive to changes in various assumptions. Our study does provide therefore further evidence that a wide set of individual and firm characteristics is crucial to understanding the true role of human capital variables in labor markets. |
| Keywords: | Human Capital, Unobserved Heterogeneity, Earnings, LEED |
| JEL: | J24 J31 C23 C81 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:wpaper:2009-03&r=lab |
| By: | Brian Duncan (Department of Economics, University of Colorado at Denver); Stephen J. Trejo (Department of Economics, University of Texas at Austin, and CReAM) |
| Abstract: | Over the last several decades, two of the most significant developments in the U.S. labor market have been: (1) rising inequality, and (2) growth in both the size and the diversity of immigration flows. Because a large share of new immigrants arrive with very low levels of schooling, English proficiency, and other skills that have become increasingly important determinants of success in the U.S. labor market, an obvious concern is that such immigrants are a poor fit for the restructured American economy. In this chapter, we evaluate this concern by discussing evidence for the United States on two relevant topics: the labor market integration of immigrants, and the impact of immigration on the wages and employment opportunities of native workers. In these dimensions, the overall labor market performance of U.S. immigrants seems quite favorable. U.S. immigrants have little trouble finding jobs, and this is particularly true of unskilled immigrants. Most U.S. immigrants experience substantial earnings growth as they adapt to the American labor market. For most immigrant groups, the U.S.-born second generation has achieved socioeconomic parity with mainstream society; for some Hispanic groups, however, this is not the case. On the whole, immigration to the United States has not had large adverse consequences for the labor market opportunities of native workers. Therefore, with regard to the economic integration and labor market impacts of immigration, it is not obvious that the seemingly haphazard nature of U.S. immigration policy has led to unfavorable outcomes. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:0908&r=lab |
| By: | Santos, Florence Ivy M.; Park, Timothy A.; Escalante, Cesar L. |
| Abstract: | Stricter immigration policies that affect an estimated 12 million unauthorized immigrants, 40% of whom are hired as farm workers, can potentially leave the highly labor-dependent organic farms more economically vulnerable. The displacement of unauthorized immigrants will expectedly create labor shortages. This study analyzes the impact of hiring constraints and changes in farm labor market conditions (due to stricter immigration policies) on the technical efficiency and financial performance of organic and conventional farms. A production function approach is used to analyze survey data that has a mix of organic and conventional farms in the Southeast region. Adjustment strategies to deal with labor shortage and providing workers with nonwage incentives have been determined to be an important determinant of farm income. Among the strategies, adjustment of wage and nonwage benefits were found to be the most effective but a combination of strategies is the most preferred approach to deal with labor shortage. Furthermore, we found productivity difference between farmers with labor shortage adjustment strategies and those who do not. |
| Keywords: | Agricultural Finance, Production Economics, Productivity Analysis, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saeana:46821&r=lab |
| By: | Conti G (Department of Economics, University of Chicago); Galeotti A (Department of Economics, University of Essex); Mueller G (Institute for Employment Research (IAB)); Pudney S (Institute for Social and Economic Research) |
| Abstract: | What makes you popular among your high-school peers? And what are the la- bor market returns to popularity? We investigate these questions using an objective measure of popularity derived from sociometric theory: the number of friendship nom- inations received from schoolmates. We provide novel evidence that early family en- vironment, school composition and school size play a signicant role in determining popularity. We show that the estimated wage return to one additional nomination is about 2 percent the popularity premium. This amounts to roughly 40 percent of the return to one more year of education. |
| Date: | 2009–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2009-03&r=lab |
| By: | Kline, Patrick (Yale U) |
| Abstract: | This paper examines the response of employment and wages in the US oil and gas field services industry to changes in the price of crude petroleum using a time series of quarterly data spanning the period 1972-2002. I find that labor quickly reallocates across sectors in response to price shocks but that substantial wage premia are necessary to induce such reallocation. The timing of these premia is at odds with the predictions of standard models-wage premia emerge quite slowly, peaking only as labor adjustment ends and then slowly dissipating. After considering alternative explanations, I argue that a dynamic market clearing model with sluggish movements in industry wide labor demand is capable of rationalizing these findings. I proceed to structurally estimate the parameters of the model by minimum distance and find that simulated impulse responses match key features of the estimated dynamics. I also provide auxiliary evidence corroborating the implied dynamics of some important unobserved variables. I conclude with a discussion of the strengths and weaknesses of the model and implications for future research. |
| JEL: | J20 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:yaleco:43&r=lab |
| By: | Willem Van Zandweghe |
| Abstract: | Models of the monetary transmission mechanism often generate empirically implausible business fluctuations. This paper analyzes the role of on-the-job search in the propagation of monetary shocks in a sticky price model with labor market search frictions. Such frictions induce long-term employment relationships, such that the real marginal cost is determined by real wages and the cost of an employment relationship. On-the-job search opens up an extra channel of employment growth that dampens the response of these two components. Because real marginal cost rigidity induces small price adjustments, on-the-job search gives rise to a strong propagation of monetary shocks that increases output persistence. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp09-03&r=lab |
| By: | Belot M (Department of Economics, University of Essex); James J (Department of Economics, University of Essex) |
| Abstract: | This paper uses the "Jamie Oliver Feed Me Better" campaign to evaluate the impact of healthy school meals on educational outcomes. The campaign introduced drastic changes in the meals offered in the schools of one Borough, shifting from low-budget processed meals towards healthier options. We evaluate the effect of the campaign on educational outcomes using a difference in differences approach; comparing key stage 2 outcomes in primary schools before and after the reform, using the neighbouring Local Education Authorities as a control group. We find evidence that healthy school meals did improve educational outcomes, in particular in English and Science. |
| Date: | 2009–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2009-01&r=lab |
| By: | Stanovnik, Tine; Verbic, Miroslav |
| Abstract: | This paper analyses the dynamics of income inequality of wage earners in Slovenia from 1991 to 2005, using two different datasets. Both are derived from the personal income tax files. The first is obtained by the Statistical Office of Slovenia, extracting all full-time employees from these files by using the central registry of the active population and tabulating the results. The second source is a large simple random sample from this same personal income tax file; for the purpose of our analysis, employees were suitably extracted from this sample. Our results show that income inequality of wage earners has increased dramatically in the very first years of transition (1991-1993), followed by less spectacular increases up to 1999. Since 1999 changes have only been small. Our analysis also shows that important increases in income have been achieved by the top wage earners. |
| Keywords: | income inequality; income distribution; wages; Slovenia |
| JEL: | D31 J31 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13101&r=lab |
| By: | Guido Cozzi; Giammario Impullitti |
| Abstract: | In this paper we argue that government spending played a significant role in stimulating the wave of innovation that hit the U.S. economy in the late 1970s and in the 1980s, as well as the simultaneous increase in inequality and in education attainment. Since the late 1970’s U.S. policy makers began targeting commercial innovations more directly and explicitly. We focus on the shift in the composition of public demand towards high-tech goods which, by increasing the market-size of innovative firms, functions as a de-facto innovation policy tool. We build a quality-ladder non- scale growth model with heterogeneous industries and endogenous supply of skills, and show that increases in the technological content of public spending stimulates R&D, raise the wage of skilled workers and, at the same time, stimulate human capital accumulation. A calibrated version of the model suggests that government policy explains between 12 and 15 percent of the observed increase in wage inequality in the period 1976-91. |
| Keywords: | R&D-driven growth theory, heteregeneous industries, fiscal policy composition, innovation policy, wage inequality, educational choice. |
| JEL: | E62 H57 J31 O31 O32 O41 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2009_02&r=lab |
| By: | Regis Barnichon |
| Abstract: | Shimer (2005) argues that the Mortensen-Pissarides (MP) model of unemployment lacks an amplification mechanism because it generates less than 10 percent of the observed business cycle fluctuations in unemployment given labor productivity shocks of plausible magnitude. This paper argues that part of the problem lies with the identification of productivity shocks. Because of the endogeneity of measured labor productivity, filtering out the trend component as in Shimer (2005) may not correctly identify the shocks driving unemployment. Using a New-Keynesian framework to control for the endogeneity of productivity, this paper estimates that the MP model can account for a third, and possibly as much as 60 percent, of fluctuations in labor market variables. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2009-4&r=lab |
| By: | Ossi Korkeamäki; Tomi Kyyrä |
| Abstract: | We study the earnings losses of Finnish private sector workers who lost their jobs at two very different points in the business cycle. The first group was displaced in 1992 (depression period) and the second one in 1997 (recovery period). The focal point of the analysis is the quantile displacement effect, the change in the earnings distribution due to involuntary job separation. We use mass layoffs and plant closures to identify groups of workers who were displaced from exogenous causes. The effect of displacement is strongest at the lower end of the earnings distribution, and small or negligible at the upper end. Women and those displaced during the depression period are subject to larger earnings losses. |
| Keywords: | Displacement, earnings losses, unemployment, quantile regression |
| Date: | 2008–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:fer:dpaper:465&r=lab |
| By: | Lesia Nedoluzhko (Max Planck Institute for Demographic Research, Rostock, Germany); Victor Agadjanian |
| Abstract: | In our study we investigate interdependencies between entry into a marital union, childbirth, and migration. We apply event-history techniques to retrospective data on women aged 18-29 from a survey conducted in northern Kyrgyzstan in 2005 to examine how these events can influence one another, with a special focus on the effects of duration of exposure. In addition we analyze the impact of some individual characteristics on the propensity to get married, to become a mother, and to migrate. In our analysis we account for several duration dependences (‘clocks’). The results illustrate that months since marriage formation is the most important duration variable in the first-birth propensities model. Out-of-wedlock conception is associated with increased marriage risks. Migration is often a part of the family building process: high first-birth propensities of recent migrants as well as high migration risks among pregnant women are due to marriage-related migration. |
| Keywords: | Kyrgyzstan |
| JEL: | J1 Z0 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2009-003&r=lab |
| By: | Kai Christoffel; Keith Kuester; Tobias Linzert |
| Abstract: | In this paper, we explore the role of labor markets for monetary policy in the euro area in a New Keynesian model in which labor markets are characterized by search and matching frictions.> We first investigate to which extent a more flexible labor market would alter the business cycle behavior and the transmission of monetary policy. We find that while a lower degree of wage rigidity makes monetary policy more effective, i.e. a monetary policy shock transmits faster onto inflation, the importance of other labor market rigidities for the transmission of shocks is rather limited. Second, having estimated the model by Bayesian techniques we analyze to which extent labor market shocks, such as disturbances in the vacancy posting process, shocks to the separation rate and variations in bargaining power are important determinants of business cycle fluctuations. Our results point primarily towards disturbances in the bargaining process as a significant contributor to inflation and output fluctuations. In sum, the paper supports current central bank practice which appears to put considerable effort into monitoring euro area wage dynamics and which appears to treat some of the other labor market information as less important for monetary policy. |
| Keywords: | Labor market - Europe ; European Union countries ; Monetary policy - Europe |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:09-1&r=lab |
| By: | Popp, Jennie; Abdula, Arby; Newton, Doris; Pittman, Dianne; Danforth, Diana |
| Abstract: | Research in the mid 1900s suggested that salary gaps existed between men and women in academia. Though the research helped bring attention to salary gaps, less focus was on causes of salary differences. More recent research suggested differences in salaries were based on performance. A survey was sent to agricultural economics professionals at land grant intuitions to identify the factors that influence their salaries. Results of the ordered probit model suggest that seven variables can be used to explain salaries: having attained tenure, working at an 1862 institution, the amount of grant dollars, the number of journal articles, highest academic rank and the percentage of appointment that is in administration (positive influences) and importance of family time (negative influence). Other variables tested – gender, ethnicity and other preferences – were not found to influence salary levels. |
| Keywords: | salary and performance, tracking survey, Institutional and Behavioral Economics, A11, A14, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saeana:46722&r=lab |
| By: | David Lee; Alexandre Mas |
| Abstract: | We estimate the effect of new unionization on firms' equity value over the 1961-1999 period using a newly assembled sample of National Labor Relations Board (NLRB) representation elections matched to stock market data. Event-study estimates show an average union effect on the equity value of the firm equivalent to a cost of at least $40,500 per unionized worker. At the same time, point estimates from a regression-discontinuity design -- comparing the stock market impact of close union election wins to close losses -- are considerably smaller and close to zero. We find a negative relationship between the cumulative abnormal returns and the vote share in support of the union, allowing us to reconcile these seemingly contradictory findings. Using the magnitudes from the analysis, we calibrate a structural "median voter" model of endogenous union determination in order to conduct counterfactual policy simulations of policies that would marginally increase the ease of unionization. |
| JEL: | J01 J08 J5 J51 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14709&r=lab |
| By: | Juan A. Rojas (Banco de España) |
| Abstract: | In this paper we study the quantitative properties of a policy reform aimed at funding the pension system in the standard model economy with perfect substitution across workers with different experience levels and a model economy where this substitutability is imperfect. With compulsory retirement, the welfare gains for young cohorts are underestimated in the standard model economy with perfect substitution as compared to the imperfect substitution case. However these additional welfare gains displayed in the imperfect substitution case come at the cost of higher welfare losses for the generations living at the time of the policy reform, due to the fall in the experience premium that follows after the elimination of social security. When the policy reform consists of the elimination of both social security and compulsory retirement, we find that in the standard model the status quo problem disappears. However, such policy change is not able to solve the status quo problem when less and more experienced workers are imperfect substitutes because the fall in the experience premium is more pronounced, providing a rationale for the lack of political support in favour of pension reform in the Spanish economy. |
| Keywords: | Social Security, overlapping generations |
| JEL: | E62 H55 J11 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0832&r=lab |
| By: | Marjan, MAES (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics) |
| Abstract: | The effects of three reforms of the Belgian old-age pension system were examined on retirement behaviour, government budget and income distribution of the old-age retired. On the basis of a large administrative micro-dataset used to estimate and simulate a discrete-time hazard model we found that reforms of the old-age pension system that penalize early retirement, and in particularly penalize early retirement of the rich more than the poor, are not only the ones that enhance the financial sustainability of the system at most but at the same time lead to the strongest decrease of income ineduality and relative poverty among the old-age retired. On the contrary, reforms that compensate retirement beyond the age of eligibility like the Òpension bonusÓ recently implemented in Belgium lead to budget deficits and at the same time to a higher income ineduality among the old-age retired. Finally, it was shown that the impact of reforming the old-age pension system may be limited by individuals that have the prospect of receiving occupational pension benefits, among others because in Belgium these are subject to an extremely generous fiscal treatment |
| Keywords: | early retirement; retirement incentives; pension reforms; hazard model; micro-simulation |
| JEL: | J26 C35 H23 |
| Date: | 2008–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2008040&r=lab |
| By: | Neri, Marcelo; Buchmann, Gabriel |
| Abstract: | The increasing availability of social statistics in Latin America opens new possibilities in terms of accountability and incentive mechanisms for policy makers. This paper addresses these issues within the institutional context of the Brazilian educational system. We build a theoretical model based on the theory of incentives to analyze the role of the recently launched Basic Education Development Index (Ideb) in the provision of incentives at the sub-national level. The first result is to demonstrate that an education target system has the potential to improve the allocation of resources to education through conditional transfers to municipalities and schools. Second, we analyze the local government’s decision about how to allocate its education budget when seeking to accomplish the different objectives contemplated by the index, which involves the interaction between its two components, average proficiency and the passing rate. We discuss as well policy issues concerning the implementation of the synthetic education index in the light of this model arguing that there is room for improving the Ideb’s methodology itself. In addition, we analyze the desirable properties of an ideal education index and we argue in favor of an ex-post relative learning evaluation system for different municipalities (schools) based on the value added across different grades |
| Date: | 2008–12–29 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:epgewp:686&r=lab |
| By: | Pfeffer, Jeffrey (Stanford U); DeVoe, Sanford E. (U of Toronto) |
| Abstract: | Recent research shows that hourly payment affects decisions about time use in ways that disfavor uncompensated activities such as volunteering. This paper extends that argument by showing that the activation of money and economics as aspects of a person's self-concept is one mechanism possibly producing these results. Study 1 showed that employed adults explicitly primed to think about their own time in terms of money were less willing to volunteer compared to those primed to think about another person's time in terms of money, illustrating the importance of the self-concept in the economic evaluation of time. Mediation analyses showed that participants' view of themselves as economic evaluators fully accounted for both the effect of the manipulation and variation in prior experience with hourly payment on willingness to volunteer. Study 2 showed the undergraduates supraliminally primed with either money or economic concepts were less willing to volunteer their time. The findings suggest that economic evaluation is one causal mechanism affecting attitudes about time use. |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:1996&r=lab |
| By: | Campante, Filipe R. (Harvard U); Chor, Davin (Singapore Management U) |
| Abstract: | We investigate how the link between individual schooling and political participation is affected by country characteristics. We introduce a focus on a set of variables--namely factor endowments--which influence the relative productivity of human capital in political versus production activities. Using micro data on individual behavior, we find that political participation is more responsive to schooling in land-abundant countries, and less responsive in human capital-abundant countries, even while controlling for country political institutions and cultural attitudes. We develop these ideas in a model where individuals face an allocation decision over the use of their human capital. A relative abundance of land (used primarily in the least skill-intensive sector) or a scarcity of aggregate human capital will increase both the level of political participation and its responsiveness to schooling, by lowering the opportunity cost of production income foregone. In an extension, we further consider the problem of how much schooling a utility-maximizing ruler would choose to provide. An abundance of land tends to increase political participation ex post, and hence will lead the ruler to discourage human capital accumulation, a prediction for which we find broad support in the cross-country data. Our model thus offers a framework which jointly explains patterns of political participation at the individual level and differences in public investment in education at the country level. |
| JEL: | D72 D78 I20 I21 O15 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp08-043&r=lab |