Explaining the Negative Coefficient Associated with Human Capital in Augmented Solow Growth Regressions

In this paper we consider different explanations for why the coefficient associated with human capital is often negative in growth regressions once country-specific effects are controlled for, whereas the coefficient in question is strongly positive in cross-sectional or panel results based on the pooling estimator. In turn, we explore: (i) additional sources of unobserved heterogeneity stemming from country- specific rates of labor-augmenting technological change, (ii) measurement error in the human capital series being used, and (iii) the lack of variability in the human capital series once the usual covariance transformations are implemented. Remaining unobserved country-specific heterogeneity and measurement error alone are shown to be inadequate explanations. The lack of variability in the human capital series is tackled using a modified version of the Hausman-Taylor (1981) approach whose identifying assumptions are found to be reasonable in the context of the Solow model.Economic growth, human capital, measurement error, panel estimation

Social Costs of Mass Privatization

According to leading economic theorists, creating capitalism out of communism requires rapid privatization. In this article we empirically test the welfare implications of privatization policies in Post-Soviet countries by using cross-national panel mortality data as an indicator of social costs. We find that rapid privatization ñ whether measured by a novel measure of mass privatization program implementation or Enterprise Bank for Reconstruction and Development privatization outcome scores ñ is a critical determinant of life expectancy losses, and that when privatization policies are reversed, life expectancy improves. Using selection models, we show that endogeneity understates the social costs of rapid privatization.http://deepblue.lib.umich.edu/bitstream/2027.42/64393/1/wp890.pd

Measurement Error in Performance Studies of Health Information Technology: Lessons from the Management Literature

Just as researchers and clinicians struggle to pin down the benefits attendant to health information technology (IT), management scholars have long labored to identify the performance effects arising from new technologies and from other organizational innovations, namely the reorganization of work and the devolution of decision-making authority. This paper applies lessons from that literature to theorize the likely sources of measurement error that yield the weak statistical relationship between measures of health IT and various performance outcomes. In so doing, it complements the evaluation literature’s more conceptual examination of health IT’s limited performance impact. The paper focuses on seven issues, in particular, that likely bias downward the estimated performance effects of health IT. They are 1.) negative self-selection, 2.) omitted or unobserved variables, 3.) mis-measured contextual variables, 4.) mismeasured health IT variables, 5.) lack of attention to the specific stage of the adoption-to-use continuum being examined, 6.) too short of a time horizon, and 7.) inappropriate units-of-analysis. The authors offer ways to counter these challenges. Looking forward more broadly, they suggest that researchers take an organizationally-grounded approach that privileges internal validity over generalizability. This focus on statistical and empirical issues in health IT-performance studies should be complemented by a focus on theoretical issues, in particular, the ways that health IT creates value and apportions it to various stakeholders

Urbanization and productivity : evidence from Turkish provinces over the period 1980-2000

Since the early 1980s, Turkey has been going through a rapid urbanization process at a pace beyond the World average. This paper aims at assessing the impact of this rapid urbanization process on the country's sector productivity. The authors built a database combining two-digit manufacturing data and some geographical, infrastructural, and socio-economic data collected at the provincial level by the Turkish State Institute of Statistics. The paper develops a parsimonious econometric relation linking sector productivity to accessibility, localization, and urbanization economies, proxying variables in the tradition of the New Economic Geography literature. The estimation results suggest that both localization and urbanization economies, as well as market accessibility, are productivity-enhancing factors in Turkey, although the causation link between productivity and these agglomeration measures is not clearly established. The sector-by-sector estimation confirms this result, although the localization economies effect is negative for the non-oil mineral sector, and the urbanization economies effect is weak for natural-resource-based sectors such as the wood and metal industry. Although the data cover the period up to 2000 and thus ignore the financial crisis that hit Turkey in 2001, the current structural transformation of the country away from the agricultural sector gives room to use the insights of these results as a preliminary step to understand the new challenges faced by the Turkish manufacturing sector. The results provide a discussion base to revisit the policy agenda on the improvement of the accessibility to markets, the improvement of the business environment to ease the creation and development of new firms, and a well-managed urbanization process to tap in the economic potential of cities.E-Business,Population Policies,Municipal Financial Management,Economic Theory&Research,

Labor supply models: unobserved heterogeneity, nonparticipation and dynamics

This chapter is concerned with the identification and estimation of models of labor supply. The focus is on the key issues that arise from unobserved heterogeneity, nonparticipation and dynamics. We examine the simple ‘static’ labor supply model with proportional taxes and highlight the problems surrounding nonparticipation and missing wages. The difference in differences approach to estimation and identification is developed within the context of the labour supply model. We also consider the impact of incorporating nonlinear taxation and welfare programme participation. Family labor supply is looked at from botht e unitary and collective persepctives. Finally we consider intertemporal models focusing on the difficulties that arise with participation and heterogeneity

Moral Hazard in Health Insurance: How Important Is Forward Looking Behavior?

We investigate whether individuals exhibit forward looking behavior in their response to the non-linear pricing common in health insurance contracts. Our empirical strategy exploits the fact that employees who join an employer-provided health insurance plan later in the calendar year face the same initial ("spot") price of medical care but a higher expected end-of-year ("future") price than employees who join the same plan earlier in the year. Our results reject the null of completely myopic behavior; medical utilization appears to respond to the future price, with a statistically significant elasticity of medical utilization with respect to the future price of -0.4 to -0.6. To try to quantify the extent of forward looking behavior, we develop a stylized dynamic model of individual behavior and calibrate it using our estimated behavioral response and additional data from the RAND Health Insurance Experiment. Our calibration suggests that the elasticity estimate may be substantially smaller than the one implied by fully forward-looking behavior, yet it is sufficiently high to have an economically significant effect on the response of annual medical utilization to a non-linear health insurance contract. Overall, our results point to the empirical importance of accounting for dynamic incentives in analyses of the impact of health insurance on medical utilization.

How Experts Decide : Identifying Preferences versus Signals from Policy Decisions

A large theoretical literature assumes that experts differ in terms of preferences and the distribution of their private signals, but the empirical literature to date has not separately identified them. This paper proposes a novel way of doing so by relating the probability a member chooses a particular policy decision to the prior belief that it is correct. We then apply this methodology to study differences between internal and external members on the Bank of England's Monetary Policy Committee. Using a variety of proxies for the prior, we provide evidence that they differ significantly on both dimensions. Key words: Bayesian decision making ; Committees ; Monetary policy JEL classification: D81 ; D82 ; E52