|
on Labour Economics |
| By: | Jean-Olivier Hairault (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, IZA - Institute for the Study of Labor); François Langot (IZA - Institute for the Study of Labor, GAINS-TEPP - Université du Mans, CEPREMAP - Centre pour la recherche économique et ses applications); Thepthida Sopraseuth (GAINS-TEPP - Université du Mans) |
| Abstract: | This paper presents a theoretical foundation and empirical evidence in favor of the view that the retirement age decision impacts on the employment of older workers before this age. Countries with a retirement age at 60 are indeed characterized by lower employment rates for workers aged 55-59. Based on the French Labor Force Survey, we show that the likelihood of employment is significantly affected by the distance from retirement, in addition to age and other relevant variables. We then extend McCall's (1970) job search model by explicitly integrating life-cycle features and the retirement decision. Using simulations, we show that the distance effect in conjunction with the generosity of unemployment benefits for older workers explains the low rate of employment just before the eligibility retirement age. Finally, we show that implementing actuarially-fair schemes, not only extends the retirement age, but also encourages a more intensive job-search by older unemployed workers. |
| Keywords: | Job Search, Older Workers, Retirement |
| Date: | 2010–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00517107_v1&r=lab |
| By: | Kamil Dybczak (DG ECFIN, European Commission.); Kamil Galuščák (Czech National Bank, Na Příkopě 28, 115 03 Prague 1, Czech Republic.) |
| Abstract: | Using the Albrecht et al. (2003) version of the Machado and Mata (2005) decomposition technique along the wage distribution, we find that immigrant workers do not affect changes in the Czech wage structure between 2002 and 2006 despite their substantial inflows. Instead, changes in the wage structure are explained solely by increasing returns of native workers, while changes in the observed characteristics of native workers, particularly a rising level of education, are responsible for increasing wage dispersion. The sizeable inflows of foreign workers in the sample years are concentrated among young workers with primary and tertiary education and are primarily due to rising labour demand. The negative immigrant-native wage gaps are persistent along the wage distribution and are explained mainly by differences in observed characteristics. We provide evidence on increasing returns to education of native workers along the wage distribution. The returns are higher in 2006 than in 2002, in line with the evidence in the previous literature. JEL Classification: J31, J21. |
| Keywords: | Wage structure, immigration, matched employer-employee data, quantile regression, wage gap decomposition. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20101242&r=lab |
| By: | Usha Jayachandran |
| Abstract: | This paper investigates the socio-economic determinants of school attendance in India, and the possible causes of disadvantage faced by the girl child. Based on Census data for 1981 and 1991, the determinants of inter-district variations in school attendance are explored, separately for boys and girls. A similar analysis is applied to the gender bias in school attendance. The results indicate that school attendance is positively related to school accessibility and parental education, and negatively related to poverty and household size. Interestingly, a positive association emerges between women’s labour-force participation and children’s school attendance; possible explanations of this pattern are discussed. The gender bias in school attendance declines with school accessibility and parental education, and rises with household size. Panel data analysis based on the random-effects model supports the cross-section findings. [Working Paper No. 103] |
| Keywords: | socio-economic, girl child, parental education, parental education, poverty, household |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2866&r=lab |
| By: | Meredith A. Kleykamp (University of Maryland) |
| Abstract: | In the more than 30 years following the all-volunteer force (AVF), the proportion of women serving in the military has increased from 1.8 percent just before the AVF to 14.2 percent in 2008. The majority of women do not stay in the military for a 20-year or longer career; like men, most women only serve a few years before transitioning to the civilian workforce. Although the fraction of the military who are women has risen, as has the fraction of veterans who are women, little research informs how female veterans of the AVF fare economically after leaving service, or whether military service benefits minority women who serve in such disproportionate numbers. This paper investigates the civilian employment experiences of female veterans of the AVF using two sources of data. First, population-based data from the American Community Survey are used to evaluate the employment experiences of female veterans. Second, data from an audit study of civilian hiring practices provides additional insight into the experiences of women veterans transitioning from military to civilian work. We find little evidence of a veteran labor market disadvantage, either for white or black women. Both groups exhibit strong patterns of labor force attachment. Only white women show slightly lower rates of employment (among those in the labor force), while black women veterans show consistently advantageous employment profiles. These positive employment outcomes among female veterans at least partly derive from employer preference for hiring veterans over equally qualified nonveteran women. |
| Keywords: | Field Experiments, Veterans, Discrimination, Hiring, Employment |
| JEL: | J01 J24 J70 Z13 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:10-169&r=lab |
| By: | Sciulli, Dario |
| Abstract: | This paper applies propensity score matching methods to National Child Development Study dataset to evaluate the effect of conviction on labour market status, paying specific attention to gender differences. Estimation results show that employment is strongly and negatively affected by conviction, while it increases self-employment, unemployment and inactivity. This possibly indicates employers’ stigmatization against convicted and discouragement effect after a conviction. However, conviction acts differently between males and females. It reduces employment probabilities by about 10% among males and by about 20% among females. More important, while males recover part of the reduced employment probability moving toward self-employment, conviction results in a strong marginalization on the labour market for females, as unemployment and, overall, inactivity strongly increase. This suggests a stronger discouragement effect for females and a different attitude toward self-employment. Social and economic policies aimed to fight social exclusion and to promote employment of convicted individuals should take into account also the great disadvantage of convicted females. |
| Keywords: | propensity score matching; conviction; gender; labour market status. |
| JEL: | J21 K14 C21 J16 |
| Date: | 2010–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25054&r=lab |
| By: | Sly, Nicholas |
| Abstract: | This paper examines how global integration influences worker behavior regarding skill acquisition, as well as firm behavior regarding incentive contracts and occupational diversity. The approach integrates several key components of international trade and the wage distribution in developed countries: namely heterogeneous firms, trade in similar goods, and performance payments to workers that endogenously obtain different skill levels. Greater trading opportunities reduce aggregate prices, causing workers to experience a greater marginal utility derived from income, as well as the skills that aid them in fulfilling performance contracts. Firms respond to skill accumulation among the labor force by adjusting the provision of incentive contracts, and the types of jobs they offer. Labor market adjustment to trade liberalization is characterized by a more steep, but less extensive, provision of incentive contracts among the labor force; higher overall wage inequality exhibiting a U-shaped differential; and job polarization across skill-groups. |
| Keywords: | Job Polarization; Performance Pay; Trade Adjustment |
| JEL: | F16 J8 J24 |
| Date: | 2010–08–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25004&r=lab |
| By: | Bokenblom, Mattias (Department of Business, Economics, Statistics and Informatics); Ekblad, Kristin (Department of Business, Economics, Statistics and Informatics) |
| Abstract: | In this paper we use data that combines employment records with employee survey responses to study to what extent psychosocial working conditions, measured at the work group level, relate to individual short-term and long-term sick leave. In order to take interdependencies of workers and work groups into consideration we use multilevel modeling as our modeling strategy. Our results suggest that in order to reduce the number of spells of short-term sick leave (shirking), employers should increase the worker’s job autonomy. This is particularly important for male workers. In addition, increasing work group cohesion is important in order to reduce the number of women being on long-term sick leave. |
| Keywords: | Working conditions; absence; gender |
| JEL: | J28 J81 |
| Date: | 2010–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:oruesi:2010_010&r=lab |
| By: | Sajeda Amin; S. Chandrasekhar |
| Abstract: | This paper addresses gender equity in parents‘ educational investments in children in a context of rising school attendance in rural Bangladesh. Our premise is that in addition to factors such as school enrollment and aspects of school quality, attention should focus on household level private investments in education. By private investments we mean time allocated to studying at home and access to private tutoring after school. Using data from the nationally representative 2005 Bangladesh Adolescent Survey, we analyze correlates of time spent in school, studying outside school, and work, using a data set on time-use patterns of school-going children and adolescents. We find that time spent in work varies inversely with the amount of time spent studying at home, while time at school shows no such association. We find support for two hypotheses regarding household influences on education. First, time spent in school is insensitive to factors such as poverty and gender. Second, time spent studying outside school is strongly influenced by household decisions that favor boys, who appear to have about 30 minutes more discretionary study time than girls. [Working Paper No. 17] |
| Keywords: | gender, parents, education, investments, bangladesh, private investment, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2837&r=lab |
| By: | Kim, Jaesoo; Sly, Nicholas |
| Abstract: | We examine the problem of designing performance contracts with multiple agents when principals must compete for quality teams from a heterogeneous pool of agents. The trade-off principals face between good recruiting and good team performance provides micro foundations for agents to form stable matches, and for initially identical principals to adopt different organizational schemes. The equilibrium pattern of team formation exhibits two distinct, and inversely related, forms of assortative matching. We find that a greater share of principals offering diverse performance incentives across teammates (extensive margin), leads to a lesser degree of heterogeneity in abilities within teams on average (intensive margin). We apply the model to firm behavior to examine the mix of jobs offered and the degree of performance pay in a general equilibrium environment. At the aggregate level, increases in the supply of high-skilled workers leads to a polarization of jobs offered, i.e. relatively greater use of high- and low- skill occupations, consistent with changing labor demands in recent history. Moreover, skill accumulation among the labor force induces more firms to offer a steep set of performance contracts. |
| Keywords: | Multi-Agent Contracting; Matching; Job Design |
| JEL: | D86 D2 C78 |
| Date: | 2010–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25006&r=lab |
| By: | Smith, Jennifer (Department of Economics, University of Warwick) |
| Abstract: | This paper shows that in the UK, increases in unemployment in a recession are driven by rises in the separation rate. A new decomposition of unemployment dynamics is devised that does not require unemployment to be in steady state at all times. This is important because low UK transition rates – one quarter the size of the US –imply substantial deviation of unemployment from steady state near cyclical turning points. In periods of moderation, the job finding rate is shown to have most influence on UK unemployment dynamics. Evidence comes from the first study of monthly data derived from individuals’ labour market spells recorded in the British Household Panel Survey from 1988 to 2008. |
| Keywords: | Unemployment dynamics ; Job finding rate ; Separation rate JEL Classification: E24 ; E32 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:944&r=lab |
| By: | Calo-Blanco Aitor (Pablo de Olavide University; Ivie); Villar Notario Antonio (Pablo de Olavide University; Ivie) |
| Abstract: | This working paper analyzes the performance of the Spanish educational system according to the 2006 PISA report, focussing on the equality of opportunity. The basic idea is that a good educational system should produce outcomes that depend basically on the students effort and not on the students external circumstances (parental background here). We present a simple formula to estimate the inequality of opportunity and analyze empirically the behaviour of Spain and its constituent regions, both with respect to quality (mean scores) and with respect to the inequality of opportunity. We find that Spain performs better than the European average in terms of equality of opportunity and worse in terms of quality. We also find large and systematic differences between the Spanish regions |
| Keywords: | Quality of education, equality of opportunity, PISA report, regional disparities |
| Date: | 2010–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:fbb:wpaper:20104&r=lab |
| By: | DeAnna Green with Marques Benton; Lynn Browne; Prabal Chakrabarti; Yolanda Kodrzycki; Ana Patricia Muñoz; Richard Walker; Bo Zhao |
| Abstract: | Compared to the city, the region, and the state, labor force participation rates in Springfield's downtown and surrounding neighborhoods are very low. Residents and community leaders have expressed concerns about the employment prospects for the low-income residents that make up these neighborhoods. The purpose of this discussion paper is to highlight the perspectives of residents and community-based organizations on why so few residents of Springfield’s downtown neighborhoods are employed and to look at the some of the resources available to Springfield residents to help them address barriers to employment. |
| Keywords: | Economic conditions - Massachusetts ; Job creation - Massachusetts ; Unemployment - Massachusetts |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbpc:2010-1&r=lab |
| By: | Klonner, Stefan; Nolen, Patrick |
| Abstract: | We study the labor market effects of the roll-out of mobile phone coverage in rural South Africa. We address identification issues which arise from the fact that network roll-out cannot be viewed as an exogenous process to local economic development. We combine spatially coded data from South Africas leading network provider with annual labor force surveys. We use terrain properties to construct an instrumental variable that allows us to identify the causal effect of network coverage on economic outcomes under plausible assumptions. We find substantial effects of network roll-out on labor market outcomes with remarkable gender-specific differences. Employment increases by 15 percentage points when a locality receives network coverage. A gender- differentiated analysis shows that most of this effect is due to increased employment by women, in particular those who are not burdened with large child care responsibilities at their homes. All of the employment gains accrue in wage employed occupations. Agricultural employment decreases substantially, especially among males. -- |
| Keywords: | Mobile Phones,Economic Development,Project Evaluation |
| JEL: | O15 O22 J22 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec10:56&r=lab |
| By: | Julia Bredtmann |
| Abstract: | Regarding total working hours, including both paid and unpaid labor, hardly any diff erences between German men and women exist. However, whereas men allocate most of their time to market work, women still do most of the non-market work. Using the German Time Use Surveys 1991/92 and 2001/02, this paper aims to analyze the interactions between the time use decisions of partners within one household. Thereby, an interdependent model of the partners’ times allocated to paid and unpaid work that allows for simultaneity and endogeneity of the time allocation decisions of the spouses is applied. The results suggest that male time in market and non-market work is unaff ected by their wife’s time use, while women adjust their time allocation to the time schedule of their partner. These fi ndings might partly explain why in Germany – and other European countries as well – gender diff erences in employment and wages still persist. |
| Keywords: | Intra-household division of labor; time allocation; structural equation model |
| JEL: | J16 J22 C34 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0200&r=lab |
| By: | Rajashri Chakrabarti; Joydeep Roy |
| Abstract: | Charter schools have been one of the most important dimensions of recent school reform measures in the United States. Currently, there are more than 4,500 charter schools spread across forty U.S. states and the District of Columbia. Though there have been numerous studies on the effects of charter schools, these have mostly been confined to analyzing the effects on student achievement, student demographic composition, parental satisfaction, and the competitive effects on regular public schools. This study departs from the existing literature by investigating the effect of charter schools on enrollment in private schools. To investigate this issue empirically, we focus on the state of Michigan, where there was a significant spread of charter schools in the 1990s. Using data on private school enrollment from decennial censuses and biennial National Center for Education Statistics private school surveys, and using a fixed-effects as well as instrumental-variables strategy that exploits exogenous variation from Michigan charter law, we investigate the effect of charter school penetration on private school enrollment. We find some evidence of a decline in enrollment in private schools - but the effect is only modest in size. This finding is reasonably robust, and survives several robustness checks. |
| Keywords: | Education - Economic aspects ; Public schools ; Private schools |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:472:x:1&r=lab |
| By: | Katja Görlitz |
| Abstract: | Using German linked employer-employee data, this paper investigates the impact of on-the-job training on wages. The applied estimation technique was fi rst introduced by Leuven and Oosterbeek (2008). The idea is to compare wages of employees who intended to participate in training but did not do so because of a random event with wages of training participants. The estimated wage returns are statistically insignifi - cant. Furthermore, the decision to participate in training is associated with sizeable selection eff ects. On average, participants have a wage advantage of more than 4% compared to non-participants. |
| Keywords: | Continuous training; wage returns; selection effect |
| JEL: | J24 J31 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0197&r=lab |
| By: | Rajashri Chakrabarti; Joydeep Roy |
| Abstract: | Charter schools have been one of the most important dimensions of recent school reform measures in the United States. Currently, there are more than 4,500 charter schools spread across forty U.S. states and the District of Columbia. Though there have been numerous studies on the effects of charter schools, these have mostly been confined to analyzing the effects on student achievement, student demographic composition, parental satisfaction, and the competitive effects on regular public schools. This study departs from the existing literature by investigating the effect of charter schools on enrollment in private schools. To investigate this issue empirically, we focus on the state of Michigan, where there was a significant spread of charter schools in the 1990s. Using data on private school enrollment from decennial censuses and biennial National Center for Education Statistics private school surveys, and using a fixed-effects as well as instrumental-variables strategy that exploits exogenous variation from Michigan charter law, we investigate the effect of charter school penetration on private school enrollment. We find some evidence of a decline in enrollment in private schools - but the effect is only modest in size. This finding is reasonably robust, and survives several robustness checks. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:472&r=lab |
| By: | Grady, Patrick |
| Abstract: | This paper discusses the performance of recent immigrants in Canada's labour market and reviews some of the literature on the causes of their poor performance. The paper concludes that, using the existing selection system, it is not possible to admit annually as many as 250,000 immigrants who are capable of doing well in the Canadian labour market, despite 16 years of economic expansion, during which the unemployment rate dropped below 6%. It also speculates that The situation can only worsen as unemployment climbs, as the economy slackens. |
| Keywords: | immigration to Canada; labour market; labour market performance of recent immigrants |
| JEL: | J31 J61 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25148&r=lab |
| By: | Thomas K. Bauer; Matthias Vorell |
| Abstract: | Using a matched employer-employee panel dataset for Germany, we analyze the external eff ects of education on individual wages. Following the basic framework of Moretti (2004), we allow spillover eff ects to occur both within a specifi c fi rm and a specifi c region rather than analyzing spillover eff ects only on a regional level. Controlling for individual- and fi rm-specifi c fi xed eff ects and using an instrumental variable strategy, our results confi rm the existence of positive but small external eff ects of human capital. Positive spillover eff ects within fi rms occur only for the group of high-skilled workers. |
| Keywords: | External eff ects; human capital; employer-employee matched data |
| JEL: | C23 D62 J31 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0195&r=lab |
| By: | Garrouste, Christelle; Kozovska, Kornelia; Arjona Perez, Elena |
| Abstract: | This paper investigates the relationship between education and long-term unemployment when considering regional economic differences and other relevant variables at the individual and at the local level, using data from the 2004-2006 EU-SILC (11 countries). The analysis has been run using both a binary logit model and a binary scobit model. Our results suggest that the probability of an individual to be in long-term unemployment decreases with her educational level. There is a decrease in returns to education after the age of 40, which confirms the assumption of an obsolescence of skills defended in the human capital literature. With regard to the regional settings, younger workers (20-30) and older workers (50-65) tend to benefit more from the dynamics offered by highly competitive regions. |
| Keywords: | unemployment differentials; education and long-term unemployment; regional competitiveness |
| JEL: | J01 J64 J24 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25073&r=lab |
| By: | Burger, Rulof; von Fintel, Dieter; Grün, Carola |
| Abstract: | This paper will have a closer look at the role of South African welfare programs on the labour supply decision across generations. From a theoretical point of view, a change in non-labour household income will affect the decision to participate in the labour market. Previous studies have focused on prime age adults and elderly and could confirm a significant decrease in labour supply of individuals living in a pensioners household. However, past research did not look at the intergenerational pattern and broader socio-economic conditions when evaluating the impacts of social grants. Our preliminary results suggest that the behavioural response to welfare programs differs by age group. In particular, labour supply of the young living in a pensioner's household has increased. Also, intergenerational differences in participation rates can be explained by educational policies, designed specifically to address over-age students in the public schooling system. -- |
| Keywords: | labour market participation,social grants,South Africa |
| JEL: | J22 H53 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec10:26&r=lab |
| By: | Mark M. Pitt (Brown University); Mark Rosenzweig (Department of Economics, Yale University); Nazmul Hassan (Dhaka University) |
| Abstract: | We use a model of human capital investment and activity choice to explain facts describing gender differentials in the levels and returns to human capital investments. These include the higher return to and level of schooling, the small effect of healthiness on wages, and the large effect of healthiness on schooling for females relative to males. The model incorporates gender differences in the level and responsiveness of brawn to nutrition in a Roy-economy setting in which activities reward skill and brawn differentially. Empirical evidence from rural Bangladesh provides support for the model and the importance of the distribution of brawn. |
| Keywords: | brawn, health, schooling, gender |
| JEL: | O1 J1 J2 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:989&r=lab |
| By: | Franz Buscha (Centre of Employment Research, University of Westminster, London, UK); Anna Conte (Strategic Interaction Group, Max-Planck-Institut für Ökonomik, Jena, Germany) |
| Abstract: | This paper investigates the relationship between educational attainment and truancy. Using data from the Youth Cohort Study of England and Wales, we estimate the causal impact that truancy has on educational attainment at age 16. Problematic is that both truancy and attainment are measured as ordered responses requiring a bivariate ordered probit model to account for the potential endogeneity of truancy. Furthermore, we extent the 'naïve' bivariate ordered probit estimator to include mixed effects which allows us to estimate the distribution of the truancy effect on educational attainment. This estimator offers a more flexible parametric setting to recover the causal effect of truancy on education and results suggest that the impact of truancy on education is indeed more complex than implied by the naïve estimator. |
| Keywords: | educational attainment, truancy, bivariate ordered probit, mixed effects |
| JEL: | I20 C35 C51 |
| Date: | 2010–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2010-062&r=lab |
| By: | Hagen, Jens; Omar Mahmoud, Toman; Trofimenko, Natalia |
| Abstract: | Losing a parent is a trauma that has consequences for human capital formation. Does it matter at what age this trauma occurs? Using longitudinal data from the Kagera region in Tanzania that span thirteen years from 1991-2004, we find considerable impact heterogeneity across age at bereavement, but less so for the death of opposite-sex parents. In terms of long-term health status as measured by body height, children who lose their same-sex parent before teenage years are hit hardest. Regarding years of formal education attained in young adulthood, boys whose fathers die before adolescence suffer the most. Maternal bereavement does not fit into this pattern as it affects educational attainment of boys and girls in a similar way. The generally strong interaction between age at parental death and sex of the late parent suggests that the preferences of the surviving parent partly protect same-sex children from orphanhoods detrimental effects on human capital accumulation. -- |
| Keywords: | orphans,health,education,timing of parental death,child development,HIV/AIDS |
| JEL: | I31 J19 C14 C23 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec10:33&r=lab |
| By: | Bharadwaj, Prashant; Eberhard, Juan; Neilson, Christopher |
| Abstract: | This paper investigates the causal relationship between birth weight and school achievement among children in grades 1 through 8. We find that birth weight significantly affects performance on both math and language test scores in school. Children with higher birth weight do better - a 10% increase in birth weight improves performance in math by nearly 0.05 standard deviations in 1st grade. Children who are born at a weight less than 1500 grams (very low birth weight) have scores in math that are 0.15 standard deviations less in 1st grade. We exploit repeated observations on children to show that birth weight has a persistent effect that does not deteriorate as children advance through grades (upto 8th grade). Children with greater birth weight are also less likely to have ever repeated a grade. The causal link is identified by using a twins estimator - we collected birth weight and basic demographic data on all twins born in Chile between 1992-2000 and match these twin pairs to administrative school records between 2002-2008. There are no differences in school attendance by birth weight, suggesting that missing school perhaps due to health problems is likely not a channel via which test score differentials arise. |
| Keywords: | school achievement, birth weight |
| Date: | 2010–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucsdec:1562347&r=lab |
| By: | Dimowa, Ralitza; Michaelowa, Katharina; Weber, Anke |
| Abstract: | In Malawi, informal off-farm labour (ganyu) has often been described as a survival strategy which eventually drives poor rural households into even further destitution. Based on data from the Second Integrated Household Survey for 2004, we estimate the determinants of the decision to supply labour in the ganyu market and the amount of labour supplied. Our results do not support the conjecture that ganyu is necessarily a low-return strategy that confines subsistence constrained households to a vicious circle of poverty. However, we do find evidence that ganyu is used as an ex-post coping strategy in the event of shocks, and as an ex-ante social insurance mechanism. Moreover, we generally find a positive reaction of ganyu supply to an increase in the ganyu wages, and no evidence of any backward bending segment of the supply curve for households close to the subsistence level. While ganyu does not appear to drive poor households into further destitution, these households do seem to suffer the most when they face demand side constraints in times of greatest needs. -- |
| Keywords: | rural labor supply,insurance strategies,poverty,Malawi |
| JEL: | O12 J22 J24 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec10:29&r=lab |
| By: | Jean-Olivier Hairault (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, IZA - Institute for the Study of Labor); François Langot (IZA - Institute for the Study of Labor, GAINS-TEPP - Université du Mans, CEPREMAP - Centre pour la recherche économique et ses applications); Sophie Osotimehin (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique) |
| Abstract: | We investigate the welfare cost of business cycles implied by matching frictions. First, using the reduced-form of the matching model, we show that job finding rate fluctuations generate intrinsically a non-linear effect on unemployment: positive shocks reduce unemployment less than negative shocks increase it. For the observed process of the job finding rate in the US economy, this intrinsic asymmetry increases average unemployment, which leads to substantial business cycles costs. Moreover, the structural matching model embeds other non-linearities, which alter the average job finding rate and consequently the welfare cost of business cycles. Our theory suggests to subsidizing employment in order to dampen the impact of the job finding rate fluctuations on welfare. |
| Keywords: | Business cycle costs; Unemployment dynamics; Matching |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00516832_v1&r=lab |
| By: | Marco Caliendo; Ricarda Schmidl; Arne Uhlendorff |
| Abstract: | In this paper we analyze the relationship between social networks and the job search behavior of unemployed individuals. It is believed that networks convey useful information in the job search process such that individuals with larger networks should experience a higher productivity of informal search. Hence, job search theory suggests that individuals with larger networks use informal search channels more often and substitute from formal to informal search. Due to the increase in search productivity, it is also likely that individuals set higher reservation wages. We analyze these relations using a novel data set of unemployed individuals in Germany containing extensive information on job search behavior and direct measures for the social network of individuals. Our findings confirm theoretical expectations. Individuals with larger networks use informal search channels more often and shift from formal to informal search. We find that informal search is mainly considered a substitute for passive, less cost intensive search channels. In addition to that, we find evidence for a positive relationship between the network size and reservation wages. |
| Keywords: | job search behavior, unemployment, social networks |
| JEL: | J64 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1055&r=lab |
| By: | Gagnon, Jason |
| Abstract: | While the econometric literature on the impact of immigration on labour markets is well developed, there is a striking gap in the migration literature concerning the impact of emigration on sending countries. This paper attempts to narrow that gap by investigating whether the large and intense emigration period from Honduras from 2001 to 2007 to the US increased wages in Honduras, by focusing on skill-groups (education + experience) as defined in Borjas (2003). The estimates show that between 2001 and 2007, a 10% increase in emigration increased wages in Honduras by 1% to 3%, an increase which is slightly lower than previous findings in other countries. -- |
| Keywords: | Wages,Emigration,Labour Markets,Development,Inequality |
| JEL: | J21 F22 E24 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec10:57&r=lab |
| By: | Rajashri Chakrabarti; Joydeep Roy |
| Abstract: | This paper examines the effects of constraints in a Tiebout framework applied to school finance reforms. We use data from Michigan, which enacted a comprehensive school finance reform in 1994 that, in effect, ended local discretion over school spending. This scenario affords us a unique opportunity to study the implications of imposing limits on local government’s control over the quality of local public goods. We find that the reform was successful in overturning existing trends toward increased disparities. However, the reform also constrained the highest spending districts and was associated with negative effects on their subsequent educational outcomes. These results survive several sensitivity checks. Going behind the “black box” to look at whether the reform affected incentives and responses, we find that loss of discretion appeared to act as a strong disincentive to high-spending districts and, more generally, across the board. The performance improvements of the lowest spending districts were likely related to relative increases in spending rather than higher effort. This same finding is corroborated by results from an alternative strategy, which exploits differences in the nature of incentives faced by districts in more competitive areas versus those in less competitive areas. |
| Keywords: | Education - Economic aspects ; Public schools ; Reward (Psychology) |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:471&r=lab |
| By: | Carsten Schröder |
| Abstract: | Micro-econometric intra-cohort profitability analyses of pay-as-you-go (PAYG) pension contributions are rare. We use representative employment histories of a birth cohort of German PAYG pension insurants retiring in year 2005 to econometrically examine the determinants of the profitability of such contributions using nominal internal rates of return (IRR) as profitability measure. When future nominal pension entitlements are frozen at today's level, average IRR is slightly above three percent. At the same time, IRR differs substantially across beneficiaries. IRR is increasing in beneficiaries' remaining life expectancies at retirement and in the length of non-contribution periods resulting, for example, from child care or care for an ill partner. Due to survivor pensions, married insurants benefit from higher IRR as compared to the non-married. Interestingly, IRR is decreasing in insurants' earnings capacity, indicating that the system entails an intra-cohort progressive element. |
| Keywords: | Pay-as-you-go, pensions, rate of return, redistribution, employment biography |
| JEL: | D02 D14 D39 D91 H55 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1057&r=lab |
| By: | Kim, Byung-Yeon |
| Abstract: | This paper uses the Russian Longitudinal Monitoring Survey (RLMS) from 1998 to 2004 to analyze the effect of previous informal economy activities on the creation of official entrepreneurship. We find that previous participation in the informal economy is positively associated with the probability to become registered entrepreneurs in the present. We also find that that self-employment is used as a transition mechanism to entrepreneurship and moonlighters in the past are more active in actual job changes. Furthermore, a survival function analysis suggests that previous experience as self-employed moonlighters enhances the probability of success as official entrepreneur. Workers who moonlighted as selfemployed in the past represent 16-22% of the new entrepreneurs. -- |
| Keywords: | Informal economy,entrepreneurs,Russia |
| JEL: | J22 J24 O17 P20 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec10:55&r=lab |
| By: | Phu Huynh; Steven Kapsos; Kee Beom Kim; Gyorgy Sziraczki (Asian Development Bank Institute) |
| Abstract: | The paper investigates the labor market and social impacts of the global financial and economic crisis in Asia and the Pacific as well as national policy responses to the crisis. It draws on recent macroeconomic, trade, production, investment, and remittances data to assess the employment and social consequences of the crisis, including falling demand for labor, rising vulnerable and informal employment, and falling incomes and their related pressures on the working poor. The paper provides some projections of the impact on unemployment, vulnerable employment, working poverty, and labor productivity in the region in 2009. It demonstrates that labor market recovery is likely to lag behind output growth, based on the experience of Asian labor markets following the 1997 Asian financial crisis. The paper underscores some policy options that are likely to have positive outcomes toward generating employment and boosting aggregate demand, improving social protection and welfare on the basis of decent work principles, and promoting a sound and sustainable economic and labor market recovery. |
| Keywords: | labor market, financial crisis, unemployment, working poverty, labour productivity |
| JEL: | E24 I30 J08 J20 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:eab:laborw:2289&r=lab |
| By: | Torben M. Andersen (School of Economics and Management, Aarhus University, Denmark); Michael Svarer (School of Economics and Management, Aarhus University, Denmark) |
| Abstract: | The consequences of business cycle contingencies in unemployment insurance systems are considered in a search-matching model allowing for shifts between "good" and "bad" states of nature. We show that not only is there an insurance argument for such contingencies, but there may also be an incentive argument. Since benefits may be less distortionary in a recession than a boom, it follows that counter-cyclical benefits reduce average distortions compared to state independent benefits. We show that optimal (utilitarian) benefits are counter-cyclical and may reduce the structural (average) unemployment rate, although the variability of unemployment may increase. |
| Keywords: | Unemployment benefits, business cycle, insurance, incentives |
| JEL: | J6 H3 |
| Date: | 2010–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2010-16&r=lab |
| By: | Herrala, Risto (Bank of Finland Research) |
| Abstract: | I find quantitative evidence of a significant effect for credit constraints on durable consumption during a post-deregulation consumer spending spree. The effect varied markedly across age and educational groups. Young households with low levels of education displayed high sensitivity to credit conditions. In contrast, older highly educated households were relatively immune to credit market developments. |
| Keywords: | durable consumption; credit constraints; stochastic frontier analysis |
| JEL: | D12 D91 E21 |
| Date: | 2010–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2010_015&r=lab |
| By: | Sanat Kaul |
| Abstract: | This paper reviews the prevailing policy environment to evaluate its efficacy in ensuring that India is successfully able to address these challenges in the education sector. Given the well established constraints on public funding of education, the role of the private sector specially in the provision of higher education and technical training has been highlighted. The paper suggests that India needs to have a proactive demand based policy towards private higher education including foreign institutions/universities desirous of setting up campus in India or entering into joint-ventures. This has to be combined with the establishment of a regulatory mechanism that ensures that students’ welfare is not compromised and quality standards are maintained. [ICRIER Working Paper 179] |
| Keywords: | policy, environment, education, technical training, foreign institutions, welfare |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2871&r=lab |
| By: | Luis García Núñez (Departamento de Economía- Pontificia Universidad Católica del Perú) |
| Abstract: | During the past decades, the Pontifical Catholic University of Peru (known as PUCP) has been giving student loans to some of its students with satisfactory academic performance but who face certain economic problems which might interrupt their studies. Although this program was created more than forty years ago, its results have not been rigorously evaluated. This document attempts to assess to what extent the program has benefited students. Because the collected data come from academic and social records, the completion of this task requires using modern techniques specifically designed to work with non experimental data. After estimating by propensity score matching with multiple treatments, I find a statistically significant impact of this program on the time a student employs to complete the course of study at PUCP (measured in semesters) only when a student was awarded with a loan for 6 semesters or more. That effect is not significantly different from zero when the loan lasts less than 6 semesters. Similar results were found when I analyzed the impact on the probability of degree completion of student loans, where students with loan were more likely to meet all graduation requirements by 6 years and a half after they start studying at PUCP. Again this effect was significant only when the student participates in the program for six semesters or more. However, the impact on that probability was small. |
| Keywords: | Student Loans, Matching, Treatment Effect |
| JEL: | C13 C14 C21 I22 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pcp:pucwps:wp00287&r=lab |
| By: | Francisco Gallego. |
| Abstract: | The evolution of the skill premium (i.e., the wage di erential between skilled and unskilled workers) has interest from at least two perspectives: it is a rough measure of inequality among workers of different quali cations and provides information on the characteristics of the development process of the economy. In this paper, I investigate empirically the evolution of the skill premium in Chile over the last 40 years. After some fuctuations in the 1960s and 1970s, the skill premium increased in the 1980s and has remained roughly constant since then. The data suggest that this evolution is an outcome of a signi cant increase in relative demand for skilled workers in the 1980s and 1990s and a sizeable increase in the relative supply in the 1990s. Sectoral evidence shows that, after controlling for sector and time e ects, (i) the relative demand increased faster in the same industries in Chile than in the US and (ii) the correlation is stronger for tradable industries and non-tradable industries that are intensive in imported capital, as expected. This result is consistent with a number of theories that link skill upgrading in developed and developing countries. To try to disentangle among these theories, I present time series evidence suggesting that, after controlling for other determinants of skill premium, not only there is a positive correlation between skill premium in Chile and in the US but also the size of the correlation is consistent with the Acemoglu (2003a) model of endogenous technological choice in which new technologies are produced in developed countries (like the US) and adopted in developing economies (like Chile). |
| Keywords: | Wage premium, Skill Change, Chile |
| JEL: | O3 J31 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:doctra:377&r=lab |
| By: | Alexey Kushnir |
| Abstract: | Some labor markets have recently developed formal signaling mechanisms, e.g. the signaling for interviews in the job market for new Ph.D. economists. We evaluate the effect of such mechanisms on two-sided matching markets by considering a game of incomplete information between firms and workers. Workers have almost aligned preferences over firms: each worker has 'typical' commonly known preferences with probability close to one and 'atypical' idiosyncratic preferences with the complementary probability close to zero. Firms have commonly known preferences over workers. We show that the introduction of a signaling mechanism is harmful for this environment. Though signals transmit previously unavailable information, they also facilitate information asymmetry that leads to coordination failures. As a result, the introduction of a signaling mechanism lessens the expected number of matches when signals are informative. |
| Keywords: | Signaling, cheaptalk, matching |
| JEL: | C72 C78 D80 J44 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:509&r=lab |
| By: | Neil Shephard (Nuffield College and Oxford-Mann Institute, Oxford University, Oxford.) |
| Abstract: | I will argue for a simpler, fairer, more fiscally responsible and flexible form of university funding and student support. This system is designed to encourage a diverse higher education sector where high quality provision can flourish. The main points of the new system are: 1. Make student financial support available to cover all tuition and a modest cost of living. 2. Allow graduates to repay according to earnings with protection for poorer graduates. 3. Call HEFCE teaching grants “scholarships” and make students aware of their value. 4. Cap the level of funded fees plus HEFCE grant at the current level. 5. Allow universities to charge deferred fees. a. When they are paid the money goes to the student’s university not to the state. These fees have no fiscal implications. b. Bring some of the cash flow from deferred fees forward by working with a bank. 6. In the long-run move to making the cost of living support simpler by a. Providing more realistic cost of living support for all students. b. Removing means-tested university bursaries for cost of living expenses. c. Removing means-tested grants to students provided by the state. This builds on England’s higher education structure. The changes are simple to implement. It would set up a stable funding structure for our universities & provide the financial support our students need. |
| Date: | 2010–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:econwp:1003&r=lab |
| By: | Basanta K. Pradhan; Shalabh Kumar Singh |
| Abstract: | Even as a case can be made out for public spending on elementary education, its link with enrolment rates does not appear strong. However, once efficiency and demand-side factors are accounted for, public spending is seen to make an impact on the rate of enrolment and quality of education as measured by teacher-pupil ratio. Teacher-pupil ratio and the number of schools, in turn, are seen to have a stronger impact on the rate of enrolment in efficient states. Literacy rates as well as state domestic product were seen to have a positive influence on education. The share of public expenditure on elementary education in GDP peaked in 1990-91 but never achieved the targeted level of 6 per cent of GDP. The reforms brought a break in the growth rate of public expenditure on elementary education, from which not all the states could recover even over an extended period of time. [Working Paper No. 93] |
| Keywords: | public spending, elementary education, enrolment rates, education, elementary education, extended period |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2849&r=lab |
| By: | Shiferaw, Admasu; Bedi, Arjun |
| Abstract: | Agricultural production is an important source of income and employment for developing countries, yet it is the cause of serious environmental problems. Though ECO-labels appear as a promising alternative to control the negative effects of agriculture on the environment and to increase the income of rural poor, the proportion of agricultural land and exports certified as is quite small. We investigate the factors that affect the adoption of certified organic coffee in Colombia and in particular study the effect of economic incentives on adoption. We find that those who have lower cost of adoption are more likely to be certified as organic. Correcting for sample selection, we find that certified organic production is 40% less productive and 31% less costly than non-certified production. Given the price premium in 2007, certified organic production is 15% less profitable than non-organic production. We find that in order to make organic production attractive, the price premium of certified organic coffee should be about 5 times higher than in 2007. -- |
| Keywords: | Job Creation,Job Destruction,Job Reallocation,Firm Dynamics,Africa,Ethiopia |
| JEL: | J20 J23 J49 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec10:59&r=lab |
| By: | Branosa, Boris; Klasen, Stephan; Ziegler, Maria |
| Abstract: | Institutions are a major factor explaining development outcomes. This study focuses on social institutions related to gender inequality understood as long-lasting norms, values and codes of conduct that shape gender roles, and presents evidence on why they matter for development. We derive hypotheses from existing theories and empirically test them at the cross-country level with linear regressions using the newly created Social Institutions and Gender Index (SIGI) and its subindices as measures for social institutions. We find that apart from geography, political system, religion, and the level of economic development, one has to consider social institutions related to gender inequality to better account for differences in development. Our results show that social institutions that deprive women of their autonomy and bargaining power in the household, or that increase the private costs and reduce the private returns to investments into girls, are associated with lower female education, higher fertility rates and higher child mortality. Moreover, social institutions related to gender inequality are negatively associated with governance measured as rule of law and voice and accountability. -- |
| Keywords: | Social institutions,SIGI,Gender inequality,Fertility,Child mortality,Female education,Governance |
| JEL: | D63 I10 I20 H1 J16 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec10:50&r=lab |
| By: | Chung, Ji-Woong (The Chinese University of Hong Kong); Sensoy, Berk A. (Ohio State University); Stern, Lea H. (Ohio State University); Weisbach, Michael S. (Ohio State University) |
| Abstract: | Lifetime incomes of private equity general partners are affected by their current funds’ performance through both carried interest profit sharing provisions, and also by the effect of the current fund’s performance on general partners’ abilities to raise capital for future funds. We present a learning-based framework for estimating the market-based pay for performance arising from future fundraising. For the typical first-time private equity fund, we estimate that implicit pay for performance from expected future fundraising is approximately the same order of magnitude as the explicit pay for performance general partners receive from carried interest in their current fund, implying that the performance-sensitive component of general partner revenue is about twice as large as commonly discussed. Consistent with the learning framework, we find that implicit pay for performance is stronger when managerial abilities are more scalable and weaker when current performance contains less new information about ability. Specifically, implicit pay for performance is stronger for buyout funds compared to venture capital funds, and declines in the sequence of a partnership’s funds. Our framework can be adapted to estimate implicit pay for performance in other asset management settings in which future fund flows and compensation depend on current performance. |
| Keywords: | Private equity; Venture capital; Fundraising; Compensation; Incentives |
| JEL: | G23 G24 |
| Date: | 2010–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sifrwp:0077&r=lab |
| By: | Eric French; Christopher Taber |
| Abstract: | This chapter discusses identification of common selection models of the labor market. We start with the classic Roy model and show how it can be identified with exclusion restrictions. We then extend the argument to the generalized Roy model, treatment effect models, duration models, search models, and dynamic discrete choice models. In all cases, key ingredients for identification are exclusion restrictions and support conditions. |
| Keywords: | Labor market |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2010-08&r=lab |
| By: | Edison Roy César; François Vaillancourt |
| Abstract: | This study uses an original data set, combining information for all collective agreements covering more than 500 employees signed in Quebec or Ontario from 1985 to 2007 and information on payroll taxes and other variables, to measure the incidence of an increase in payroll tax. The results of this model show that that after one year, a one percentage point increase in the general payroll tax reduces wages growth by 1/2 of a percentage point in Quebec and 3/10 of a point in Ontario. <P>Cette étude utilise une base de données originale regroupant les conventions collectives couvrant plus de 500 employés signées au Québec ou en Ontario de 1985 `à 2007 et des informations sur les taxes sur la masse salariale et d’autres variables, afin de mesurer l’effet d’une augmentation de taxe sur la masse salariale. Les résultats de ce modèle indiquent qu’après un an, une augmentation d’un point de pourcentage des taxes générales sur la masse salariale fait diminuer la croissance des salaires de 1/2 point de pourcentage au Québec et 3/10 de point de pourcentage en Ontario. |
| Keywords: | Payroll taxes, incidence, collective agreements, wages, Taxe sur la masse salariale, incidence, conventions collectives, salaires |
| JEL: | H22 H24 H32 J32 J38 |
| Date: | 2010–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2010s-36&r=lab |
| By: | Doan, Tinh; John, Gibson |
| Abstract: | A common phenomenon about transition economies is that the return to schooling improves as economic reform progresses. Existing research suggests that Vietnam is not an exception to the pattern. However, the rate of return in period from 1992 to 1998 is still relatively low, below 5 percent, relative to that of the world and other transitional economies. And it is hard to see a clear trend in the current literature due to different methods applied and sets of variables controlled in the earnings equations (see Appendix B). The low returns may result from the gradual economic reforms applied in Vietnam, whilst in Eastern European countries the “Big Bang” transformation was conducted. Therefore, to test whether the return to schooling in Vietnam is rising and reaches other transitional economies’ rate of returns, we re-examine the trend in the rate of return to schooling in Vietnam over the 1998-2008 period, when the reforms have had a longer time to have an effect. We apply the OLS and Heckman selection estimator (Maximum Likelihood approach) and find that the return has increased quickly during the later economic reform but its pace has slowed down when the return reached the global average rate of returns at somewhere between 9 and 10 percent. |
| Keywords: | economic transition; returns to schooling; Vietnam |
| JEL: | J31 O15 |
| Date: | 2010–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24986&r=lab |
| By: | Francisco Gallego (Instituto de Economía. Pontificia Universidad Católica de Chile.); Carlos Rodríguez (Instituto de Economía. Pontificia Universidad Católica de Chile.); Enzo Sauma (Instituto de Economía. Pontificia Universidad Católica de Chile.) |
| Abstract: | Public schools in Chile receive a per-student subsidy depending on enrollment, and are managed by local governments that operate under soft budget constraints. In this paper, we study the effects of this system on per-student expenditures. Per-student expenditures on rural areas are 30% higher than in urban areas. We find that about 75% of this difference is due to the fact that rural public schools are significantly smaller and thus do not benefit from economies of scale. Besides, we also show that in our preferred estimates about 50% of the students in rural areas could be moved to schools that could exploit economies of scale – i.e., these students could attend bigger schools traveling at most an hour day a day in total. We show that even if we use conservative average speed rates or control for transportation, utility and infrastructure costs, there is a sizeable share of students that could be consolidated. We argue that local governments that have soft budget constraints do not consolidate these schools giving the existing potential because of political factors: closing schools is harmful for mayors in electoral terms. Consistent with this claim, we find that a decrease in the degree of political competition in areas with better access to non-voucher transfers from the central government (i.e. with softer budget constraints) decreases the extent of the inefficiency. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:clabwp:8&r=lab |