nep-neu New Economics Papers
on Neuroeconomics
Issue of 2024‒03‒11
two papers chosen by

  1. Math Skills, Selection in Training Firms, and Post-Training Wages By Mahdi Gholami; Samuel Muehlemann
  2. Pyramid Schemes By Gönül Doğan; Kenan Kalayci; Priscilla Man

  1. By: Mahdi Gholami; Samuel Muehlemann
    Abstract: This paper analyzes the association between an individual's mathematical skills in ninth grade, the subsequent selection process in firm-based apprenticeship training, and post-training skilled worker wages. Using data from the National Educational Panel Study and the Institute for Employment Research, we show that math skills are associated with training placements in larger and higher-paying firms, as well as higher subsequent skilled worker wages. Furthermore, we apply instrumental variables regression to account for measurement error in standardized math test scores. We find that a one-standard deviation increase in math skills is initially associated with a 36% increase in initial post-training earnings, reducing to 10% after five years. Our results suggest that math skills help school leavers find an apprenticeship in firms in which they have a comparative advantage, thereby increasing allocation efficiency. Moreover, when we control for observable cognitive and non-cognitive skills, we find that female school-leavers sort into lower-paying training firms. This selection accounts for a significant portion of the gender wage gap observed later among women who continue their careers as skilled workers within their training firms.
    Keywords: Math skills, Cognitive skills, Non-cognitive skills, Apprenticeship training, Post-training earnings
    JEL: I26 J23 J24 J31 M51 M53
    Date: 2024–02
  2. By: Gönül Doğan (Faculty of Management, Economics and Social Sciences, Chair of Corporate Development and Business Ethics, University of Cologne); Kenan Kalayci (School of Economics, University of Queensland); Priscilla Man (School of Economics, University of Queensland)
    Abstract: We invite experiment participants to invest their endowment in a pyramid scheme with a negative expected return. More than half of the participants invest regardless of their age, gender, education, income, and trust and fairness beliefs. Four interventions probe instruction tools that may deter pyramid investments. Exposure to possible payoff distributions or making payoff calculations diminishes investment rates, whereas seeing example pyramid outcomes or being exposed to a smaller pyramid scheme has no effect. Higher risk tolerance, preference for positively-skewed risk, and lower cognitive skills positively correlate with investment but explain a relatively small portion of investments.
    Keywords: pyramid schemes, instruction methods, risk preferences, experiments
    JEL: C90 D14 D81 D91
    Date: 2024–02

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