MATERNAL EDUCATION,HOME ENVIRONMENTS,AND THE DEVELOPMENT OF CHILDREN AND ADOLESCENTS

We study the intergenerational effects of maternal education on children’s cognitive achievement, behavioral problems, grade repetition, and obesity, using matched data from the female participants of the National Longitudinal Survey of Youth 1979 (NLSY79) and their children. We address the endogeneity of maternal schooling by instrumenting it with variation in schooling costs during the mother’s adolescence. Our results show substantial intergenerational returns to education. Our data set allows us to study a large array of channels which may transmit the effect of maternal education to the child, including family environment and parental investments at different ages of the child. We discuss policy implications and relate our findings to the literature on intergenerational mobility.     

Skill Acquisition in the Informal Economy and Schooling Decisions: Evidence from Emerging Economies

Informal jobs offer skill acquisition opportunities that may facilitate a future switch to formal employment for young workers. In this sense, informal training on the job may be a viable alternative to formal schooling in an economy with a large and diverse informal sector. In this paper, I investigate if these considerations are relevant for the schooling decisions of young individuals using panel data for 17 Latin American countries and micro‐level data for Turkey. Specifically, I ask if the prevalence of informal jobs distorts schooling attainment. I concentrate on three measures of schooling outcomes: (1) secondary education enrollment rate; (2) out‐of‐school rate for lower secondary school; and (3) tertiary education graduation rate. I find that the secondary education enrollment rate is negatively correlated with the size of the informal economy, whereas the out‐of‐school rate is positively correlated. Moreover, the tertiary education graduation rates tend to fall as the informal employment opportunities increase. This means that informal training on the job may be crowding out school education in developing countries. Policies that can potentially affect the size of the informal sector should take into consideration these second‐round effects on aggregate schooling outcomes.     

Diploma Effects by Gender in the Spanish Labour Market

Abstract. The aim of this paper is to contrast the nature of the schooling effect on earnings in the Spanish labour market in terms of gender. Hungerford and Solon's (Review of Economics and Statistics 69: 175–177, 1987) methodology is used to distinguish between the returns to schooling arising from mere years of schooling as a reflection of their productivity‐enhancing contribution (human capital) and the returns to schooling arising from certificates (diploma effects) as signals of the individual's productivity (sheepskin effects) or as credentialism. The results show evidence only of diploma effects in Upper Secondary Studies for men.     

Schooling and Labor Market Impacts of a Natural Policy Experiment

Abstract. We use a nationally representative household survey to estimate returns to schooling in Venezuela from instrumental variables based on a supply‐side intervention in the education market. These estimates apply to a subgroup of individuals, in the spirit of the local average treatment effect (LATE) literature. Returns to schooling estimates that apply to a subgroup of individuals affected by the policy intervention may be more interesting from a policy perspective than the return to the ‘average’ individual. We use an instrument based on the 1980 education reform (the Organic Law of Education), which provided for 9 years of compulsory basic education. Alternative estimates derived from interacting the education reform with father's education are also obtained. The estimates are consistent with recent findings suggesting that the effect of education, at least for certain subgroups affected by policy intervention, is as large as or larger than what is suggested by ordinary least squares estimates.     

THE PRIVATE AND FISCAL RETURNS TO SCHOOLING IN THE EUROPEAN UNION

We present estimates of the private and fiscal returns to schooling in 14 European Union countries. Estimates of the private returns to post‐compulsory formal education take into account the effects of schooling on wages and employment probabilities and allow for academic failure rates, the direct and opportunity costs of education, and the impact of personal taxes, social security contributions, and unemployment and pension benefits on lifetime earnings. Estimates of fiscal returns capture the long‐term effects of a marginal increase in average educational attainment on public finances under conditions that approximate general equilibrium. (JEL: I20, J31, H60).     

The Effect of Early Cognitive Ability on Earnings Over the Life‐Cycle

This paper utilizes information on cognitive ability at age 10 and earnings information from age 20 to 65 to estimate the return to ability over the life‐cycle. Cognitive ability measured at an early age is not influenced by the individual's choices of schooling. We find that most of the unconditional return to early cognitive ability goes through educational choice. The conditional return is increasing for low levels of experience and non‐increasing for experience above about 15–25 years. The return is similar for men and women, and highest for individuals with academic education. Only a small part of the return can be explained by higher probability of having a supervisory position.     

Earning While Learning: When and How Student Employment is Beneficial

Although studies of student employment (‘earning while learning’) mostly find positive wage effects, they do not adequately consider the relation of the employment to the field of study. We investigate how different types of student employment during tertiary education affect short‐ and long‐term labour market returns. Beyond examining differences between non‐working and part‐time working students, we distinguish between student employment related and unrelated to the field of study. Our results show significant positive labour market returns of ‘earning while learning’ only for student employment related to the field of study. These returns consist of a lower unemployment risk, shorter job‐search duration, higher wage effects, and greater job responsibility.     

A New Look at the Public Wage Premium in Italy: The Role of Schooling Endogeneity

This paper uses a sample of male workers to estimate public and private wage structures and the public wage premium for Italy. Results from a model with endogenous sector and schooling suggest that public employees have on average lower unobserved wage potentials in both sectors than private employees, but work in the sector where they benefit from a comparative wage advantage. Schooling is positively correlated with wages in both sectors, and controlling for that is crucial to get more reliable estimates and predictions. The associated average unconditional public wage premium is 12 per cent. The net premium is 9 per cent, but not statistically significant.     

Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems

This paper reviews a set of recent studies that have attempted to measure the causal effect of education on labor market earnings by using institutional features of the supply side of the education system as exogenous determinants of schooling outcomes. A simple theoretical model that highlights the role of comparative advantage in the optimal schooling decision is presented and used to motivate an extended discussion of econometric issues, including the properties of ordinary least squares and instrumental variables estimators. A review of studies that have used compulsory schooling laws, differences in the accessibility of schools, and similar features as instrumental variables for completed education, reveals that the resulting estimates of the return to schooling are typically as big or bigger than the corresponding ordinary least squares estimates. One interpretation of this finding is that marginal returns to education among the low‐education subgroups typically affected by supply‐side innovations tend to be relatively high, reflecting their high marginal costs of schooling, rather than low ability that limits their return to education.     

Returns to Education during the Reform of State‐owned Enterprises in Hunan,People’s Republic of China

The objective of this paper is to analyse the impact of education on personal earnings during the reform of state‐owned enterprises, comparing 1995 with 1998 in Hunan, China, using the Mincerian earnings equation method. The results show that the rates of return to education increased, indicating that human capital has been better rewarded as the reforms of the Chinese economic structure have progressed. Moreover, the findings show that primary education receives the highest returns, followed by tertiary education. Middle school education obtains the lowest rewards, reflecting the effects of the reform of state‐owned enterprises on middle school graduates on whom the unemployment impact of this change has been the greatest.     

WHO IS ‘BEHAVIORAL’? COGNITIVE ABILITY AND ANOMALOUS PREFERENCES

In this paper, we ask whether variation in preference anomalies is related to variation in cognitive ability. Evidence from a new laboratory study of Chilean high‐school students with similar schooling backgrounds shows that small‐stakes risk aversion and short‐run discounting are less common among those with higher standardized test scores. The relationship with test scores survives controls for parental education and wealth. We find some evidence that elementary‐school GPA is predictive of preferences measured at the end of high school. Two laboratory interventions provide suggestive evidence of a possible causal impact of cognitive resources on expressed preferences.     

Managing flexible work arrangements: Teleworking and output controls

Flexible work arrangements present managers with challenges regarding how to manage employees using these arrangements. To date, little research has investigated how managers address these challenges. We investigate the relationship between the use of a specific implementation of flexible work (teleworking) and control system design, specifically the emphasis on output controls. Teleworking reduces the feasibility of monitoring employee behaviour as a control mechanism. Control theory suggests that this might be compensated by placing more emphasis on output controls. We conduct a survey (N?=?897) among employees of a financial services institution, of whom 69% is allowed to telework. We find that among teleworking employees, the share of teleworking hours is positively related to the emphasis on output controls. However, employees who are allowed to telework report less emphasis on output controls by their manager relative to those not allowed to telework. We pose various directions for future research, which may help in explaining these findings.     

How Responsive Is Investment in Schooling to Changes in Redistributive Policies and in Returns?

This paper uses an unusual pay reform to test the responsiveness of investment in schooling to changes in redistribution schemes that increase the rate of return to education. We exploit an episode where different Israeli kibbutzim shifted from equal sharing to productivity‐based wages in different years and find that students in kibbutzim that reformed earlier invested more in high school education and, in the long run, also in post‐secondary schooling. We further show that the effect is mainly driven by students in kibbutzim that reformed to a larger degree. Our findings support the prediction that education is highly responsive to changes in the redistribution policy.     

Returns to Schooling in Spain: How Reliable are Instrumental Variable Estimates?

This paper studies the ordinary least–squares (OLS) and instrumental variable (IV) estimates of the returns to schooling for male workers in Spain. OLS estimates are often biased due to the endogeneity of schooling, measurement errors or omitted variables. Proper IV estimates correct this bias. The reliability of family background, natural experiments (based on changes in the education system and season of birth) and the availability of a college in the province is checked using Spanish data. The results suggest that background and college availability are valid instruments and that the IV estimates of the returns to schooling are higher than OLS estimates. These results are in line with the majority of previous results in the literature.     

Merit‐based Rewards,Job Satisfaction and Voluntary Turnover: Moderating Effects of Employee Demographic Characteristics

This paper draws on the reflection theory of compensation (Thierry, H. (1998). ‘Compensating work’. in P. J. D. Drenth, H. Thierry and C. J. de Wolff (eds), Handbook of Work and Organizational Psychology, 2nd edn, pp. 291–315, Psychology Press: Hove; Thierry, H. F. (2001). ‘Job evaluation systems and pay grade structures: do they match’, International Journal of Human Resource Management, 8, pp. 1313–1324) to examine the influence of individual merit‐based rewards on voluntary turnover via job satisfaction. It also tests the moderating effects of employees’ gender, age and education level between merit‐based rewards and job satisfaction. Data were collected from 636 employees in Japan at three points in time over a 12‐month period. The findings show that merit‐based rewards have a direct, positive effect on job satisfaction and an indirect effect on voluntary turnover. The effect of merit‐based rewards on job satisfaction was moderated by gender and education, providing evidence that merit‐based rewards are more important for male and highly educated employees. Practical and theoretical implications are discussed.     

Returns to Foreign Language Skills of Immigrants in Spain

This study examines the returns to foreign language skills of immigrants in the Spanish labor market. Measurement error and endogeneity issues are addressed by deriving a set of novel instruments for foreign language proficiency through a measure of linguistic dissimilarity. Using cross‐sectional data from the 2007 National Immigrant Survey of Spain (NISS), returns to language skills are estimated separately for English, German, and French proficiency. Foreign language proficiency produces high returns, which appear to be mediated through the channel of occupational choice. The results are discussed against the background of a severe foreign language skills shortage in the Spanish economy. Immigrants may deal as a supplier of foreign language proficiency in the short run.     

The Interplay Between Employee and Firm Customer Orientation: Substitution Effect and the Contingency Role of Performance‐Related Rewards

This paper identifies and explains a potential tension between a firm's emphasis on customer orientation (CO) and the extent to which employees value CO as a success factor for individual performance. Based on self‐determination theory and CO implementation research, the authors propose that firm CO may represent both autonomous and controlled motivations for CO, but that employees’ CO is more strongly linked to individual performance when employees experience solely autonomous motivation. Hence, the authors expect a substitution effect whereby the link between employees’ CO and their performance is weaker when firm CO is high. Furthermore, the authors examine a boundary condition for the previous hypothesis and propose that performance‐contingent rewards have a positive effect on the internalization of the extrinsic motivation stemming from firm CO. Two multilevel studies with 979 employees and 201 top management team members from 132 firms support these hypotheses. Against previous research, these findings offer a new perspective on the effectiveness of CO initiatives, propose employees’ motivational states as the theoretical explanation for the heterogeneity in the link between employee CO and performance, and reappraise the role of performance‐contingent rewards in CO research. Managerial implications for the effective implementation of customer‐oriented initiatives within firms are provided.     

HOW DESTRUCTIVE IS CREATIVE DESTRUCTION? EFFECTS OF JOB LOSS ON JOB MOBILITY,WITHDRAWAL AND INCOME

We analyze short and long‐term effects of worker displacement. Our sample consists of male workers displaced from Norwegian manufacturing plants. We find that displacement increases the probability of leaving the labor force by 31%. The drop‐out rate from the labor force is particularly high in the first years following displacement. The average earnings effects for those who remain in the labor force are moderate, a 3% loss relative to non‐displaced workers after seven years. Splitting displaced workers on within‐ and between‐firm movers, we find that the estimated earnings loss is entirely driven by between‐firm movers who experience a 3.6% loss. Transfers to other plants within multi‐plant firms upon displacement are quite common. Our results support the view that human capital is partly firm specific and partly industry specific. We find no evidence suggesting that human capital is plant specific.     

THE QUANTITATIVE ROLE OF CHILD CARE FOR FEMALE LABOR FORCE PARTICIPATION AND FERTILITY

I document that the labor force participation rate of West German mothers with children aged zero to two exceeds the corresponding child‐care enrollment rate, while the opposite is true for mothers whose children are older than two but below the mandatory schooling age. These facts also hold for a cross‐section of E.U. countries. I develop a life‐cycle model that explicitly accounts for this age‐dependent relationship by including various types of nonpaid and paid child care. I calibrate this model to data for West Germany and use the calibrated model for policy analysis. Increasing the supply of subsidized child care for children aged zero to two generates an increase in the maternal labor force participation rate consistent with empirical evidence from other settings; however, this increase is too small to conclude that the lack of subsidized child care accounts for the low labor force participation rate of mothers with children aged zero to two. The response along the intensive margin suggests that a large fraction of part‐time working mothers would work full‐time if they had greater access to subsidized child care. Finally, making subsidized child care available to more women does not achieve one of the commonly stated goals of such reforms, namely to increase the fertility rate.