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61. On the Identification of Gross Output Production Functions

Author:
Amit Gandhi, Salvador Navarro, and David Rivers
Publication Date:
05-2018
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
We study the nonparametric identification of gross output production functions under the environment of the commonly employed proxy variable methods. We show that applying these methods to gross output requires additional sources of variation in the demand for flexible inputs (e.g., prices). Using a transformation of the firm’s first-order condition, we develop a new nonparametric identification strategy for gross output that can be employed even when additional sources of variation are not available. Monte Carlo evidence and estimates from Colombian and Chilean plant-level data show that our strategy performs well and is robust to deviations from the baseline setting.
Topic:
Economics, Human Capital, Econometrics, and Productivity
Political Geography:
Colombia, Latin America, and Chile

62. Parental Support, Savings and Student Loan Repayment

Author:
Lance Lochner, Todd Stinebrickner, and Utku Suleymanoglu
Publication Date:
07-2018
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
Using unique survey and administrative data from the Canada Student Loans Program, we document that parental support and personal savings substantially lower student loan repayment problems. We develop a theoretical model for studying student borrowing and repayment in the presence of risky labor market outcomes, moral hazard, and costly earnings verification. This framework demonstrates that non-monetary costs of applying for income-based repayment assistance are critical to understanding why resources other than earnings lead to greater repayment. We further show that eliminating these non-monetary costs may be inefficient and lead to undesirable redistribution. Empirically, we demonstrate that expanding Canada’s income-based Repayment Assistance Plan to automatically cover all borrowers would likely reduce program revenue by nearly one-half over early years of repayment. Finally, we show how student loan programs can be more efficiently designed to address heterogeneity in parental transfers in the presence of non-monetary earnings verification costs and moral hazard.
Topic:
Debt, Economics, Human Capital, Higher Education, Productivity, and Student Loans
Political Geography:
United States and Canada

63. Job Tasks and the Gender Wage Gap among College Graduates

Author:
Todd Stinebrickner, Ralph Stinebrickner, and Paul Sullivan
Publication Date:
06-2018
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
Gender differences in current and past job tasks may be crucial for understanding the gender wage gap. We use novel task data to address well-known measurement concerns, including that standard task measures assume away within-occupation gender differences in tasks. We find that unique measures of task-specific experience, in particular high-skilled information experience, are of particular importance for understanding the substantial widening of the wage gap early in the career. Highlighting the importance of these measures, traditional work-related proxies for gender differences in human capital accumulation are not informative because general work experience is similar by gender for our recent graduates.
Topic:
Economics, Gender Issues, Labor Issues, Human Capital, Higher Education, and Productivity
Political Geography:
United States and Canada

64. Time-Use and Academic Peer Effects in College

Author:
Nirav Mehta, Ralph Stinebrickner, and Todd Stinebrickner
Publication Date:
06-2018
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
This paper examines academic peer effects in college. Unique new data from the Berea Panel Study allow us to focus on a mechanism wherein a student’s peers affect her achievement by changing her study effort. Although the potential relevance of this mechanism has been recognized, data limitations have made it difficult to provide direct evidence about its importance. We find that a student’s freshman grade point average is affected by the amount her peers studied in high school, suggesting the importance of this mechanism. Using time diary information, we confirm that college study time is actually being affected.
Topic:
Economics, Human Capital, Higher Education, Students, and Productivity
Political Geography:
Global Focus

65. Uncertainty about Future Income: Initial Beliefs and Resolution During College

Author:
Yifan Gong, Todd Stinebrickner, and Ralph Stinebrickner
Publication Date:
03-2018
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
Uncertainty about future income plays a conceptually important role in college decisions. Unfortunately, characterizing how much earnings uncertainty is present for students at college entrance and how quickly this uncertainty is resolved has proven to be difficult. This paper takes advantage of unique expectations data from the Berea Panel Study to provide new evidence about this issue. We characterize initial uncertainty using survey questions that elicit the entire distribution describing one’s beliefs about future earnings at an ideal time - immediately before students began their first year courses. We characterize the amount of uncertainty that is resolved during college by taking advantage of the longitudinal nature of the expectations data. Taking advantage of a variety of additional survey questions, we provide evidence about how the resolution of income uncertainty is influenced by factors such as college GPA and college major, and also examine why much income uncertainty remains unresolved at the end of college.
Topic:
Economics, Income Inequality, Human Capital, Higher Education, and Productivity
Political Geography:
United States and Canada

66. Dynamics of Deterrence: A Macroeconomic Perspective on Punitive Justice Policy

Author:
Bulent Guler and Amanda Michaud
Publication Date:
09-2018
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
We argue that transitional dynamics play a critical role in the evaluation of punitive incarceration reform on crime, inequality and the macroeconomy. Individuals’ past choices related to crime and employment under old policies have persistent consequences that limit their future responses to policy changes. Novel cohort evidence is provided in support of this mechanism. A quantitative model of this theory calibrated using restricted administrative data predicts nuanced, non-monotone dynamics of crime and incarceration similar to the U.S. experience following a single permanent increase in punitive incarceration in the 1980s. Increased inequality and declining employment accompany these changes and are borne unequally across generations.
Topic:
Economics, Law, Human Capital, Macroeconomics, Mass Incarceration, Productivity, and Legal Sector
Political Geography:
United States

67. The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks

Author:
Amanda Michaud and David Wiczer
Publication Date:
12-2018
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
We evaluate the contribution of changing macroeconomic conditions and demographics to the increase in Social Security Disability Insurance (SSDI) over recent decades. Within our quantitative framework, multiple sectors differentially expose workers to health and economic risks, both of which affect individuals’ decisions to apply for SSDI. Over the transition, falling wages at the bottom of the distribution increased awards by 27% in the 1980s and 90s and aging demographics rose in importance thereafter. The model also implies two-thirds of the decline in working-age male employment from 1985 to 2013, three-fourths of which eventually goes on SSDI.
Topic:
Economics, Government, Health, Disability, Human Capital, Social Security, Insurance, Productivity, and Health Insurance
Political Geography:
United States

68. Race to the Bottom: Low Productivity, Market Power, and Lagging Wages

Author:
Lance Taylor and Özlem Ömer
Publication Date:
08-2018
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
“Dualism” in the structure of production across sectors of the US economy, employment by sector, productivity levels and growth, real wages, and intersectoral terms-of trade increased markedly between1990 and 2016. The discussion focuses on 16 sectors. Seven were “stagnant” - - construction, education and health, other services, entertainment, accommodation and food, business services, and transportation and warehousing. They had low productivity levels, productivity growth rates hovering around zero, and low real wages. Their share of total employment rose from 47% in 1990 to 61% in 2016. The other “dynamic” sectors had higher and positively growing productivity while the terms-of- trade shifted against them. This bifurcation between industries is discussed in terms of a simple model. Increasing duality and secular stagnation are distinct possibilities.
Topic:
Economics, Employment, Economic structure, Industry, Productivity, and Wage Growth
Political Geography:
North America and United States of America

69. Financial Development and Economic Growth in Botswana

Author:
Kedibonye Sekakela
Publication Date:
03-2018
Content Type:
Working Paper
Institution:
Botswana Institute for Development Policy Analysis
Abstract:
The study examines the interrelationships between financial development, economic growth, capital accumulation and productivity growth in Botswana over the period 1980-2014. Using the Autoregressive Distributed Lag (ARDL) bound test technique, we find that financial development, measured by private credit, has a negative and significant impact on economic growth both in the long and short run. In contrast, we observe that financial development, measured by liquid liabilities, has a positive and significant impact on economic growth in the short run. Furthermore, the empirical results show that the interrelationship between FD (private credit) and economic growth support the supply leading hypothesis while the interrelationships between FD (liquid liabilities) and economic growth support the demand-following hypothesis. On a positive note, the empirical evidence also suggests that financial development (private credit) leads to higher output level in Botswana through promoting the accumulation of assets. Thus, for financial development to promote economic growth through both the accumulation of capital and productivity growth, it is useful to further develop Botswana’s financial market. Efficient financial institutions may encourage innovation by mobilising resources to finance promising investment projects, evaluating prospective entrepreneurs and allowing investors to diversify the risks related to uncertain innovative activities. It is also crucial to improve the investment environment in Botswana which will encourage lending activities by the financial sector, especially towards the business sector. Furthermore, if diversification of the Botswana economy continues, we can expect the financial development to play a more prominent role in the country’s overall economic performance in the future.
Topic:
Development, Finance, Economic Growth, Productivity, and Capital Accumulation
Political Geography:
Africa and Botswana

70. Immigration and Innovation

Author:
Michael Landesmann and Sandra Leitner
Publication Date:
12-2018
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Do High-Skilled Third-Country (i.e. Non-EU) Migrants Contribute to Productivity Growth? In order to foster innovation and enhance economic development and growth, attracting skilled professionals from abroad has become an important policy goal in many economies, initiating a global race for talent. This paper looks at the private company sector in a group of 13 old EU Member States and examines the role of high-skilled third-country (HS-TC) migrants for innovation – as captured by real labour productivity and total factor productivity (TFP) growth – between 2004 and 2015. It utilises four different indicators of HS-TC migration and defines high skills in terms of either educational attainment (ISCED classification) or the skills required in an occupation (ISCO classification) which helps identify the presence of a jobs-skills mismatch for HS-TC migrants. Taking into account the endogenous nature of HS-TC migration, we find some selective evidence of a negative causal link between the share of HS‑TC migrants, on the one hand, and labour productivity and TFP growth, on the other. Furthermore, differences in the results for the ISCED- and ISCO-based skills measures point to a non-negligible jobs‑skills mismatch in terms of an over-representation of HS-TC migrants in lower productivity occupations. We also find that HS-TC migrants are relatively less productive than HS EU migrants. Results for selected individual industries are more mixed, with some industries even benefiting in productivity terms from a higher share of HS-TC migrant workers.
Topic:
Immigration, European Union, Economic Growth, Innovation, Labor Market, Productivity, and Skilled Labor
Political Geography:
Europe