The distinction between dictatorial and incentive policy interventions and its implication for IV estimation

We investigate if, and under which conditions, the distinction between dictatorial and incentive-based policy interventions, affects the capacity of Instrument Variable (IV) methods to estimate the relevant treatment effect parameter of an outcome equation. The analysis is set in a non-trivial framework, in which the right-hand side variable of interest is affected by selectivity, and the error term is driven by a sequence of unobserved life-cycle endogenous choices. We show that, for a wide class of outcome equations, incentive-based policies may be designed so to generate a sufficient degree of post-intervention randomization (a lesser degree of selection on individual endowments among the sub-population affected). This helps the instrument to fulfill the orthogonality condition. However, for a same class of outcome equation, dictatorial policies that enforce minimum consumption cannot meet this condition. We illustrate these concepts within a calibrated dynamic life cycle model of human capital accumulation, and focus on the estimation of the returns to schooling using instruments generated from mandatory schooling reforms and education subsidies. We show how the nature of the skill accumulation process (substitutability vs complementarity) may play a fundamental role in interpreting IV estimates of the returns to schooling.Returns to schooling, Instrumental Variable methods, Dynamic Discrete Choice, Dynamic Programming, Local Average Treatment Effects .

Estimating complementarity between education and training

In this paper, we formulate and estimate a structural model of post-schooling training that explicitly allows for possible complementarity between initial schooling levels and returns to training. Precisely, the wage outcome equation depends on accumulated schooling and on the incidence of training. The effect of training on wage growth depends on individual permanent endowments as well as on education. We find evidence of statistically significant complementarity, i.e. the higher educated receive the highest return to the MBA-type training considered here.Skill Complementarity ; Dynamic Treatment Effects ; Dynamic Programming ; Random Coefficients

The distinction between dictatorial and incentive policy interventions and its implication for IV estimation

We investigate if, and under which conditions, the distinction between dictatorial and incentive-based policy interventions, affects the capacity of Instrument Variable (IV) methods to estimate the relevant treatment effect parameter of an outcome equation. The analysis is set in a non-trivial framework, in which the right-hand side variable of interest is affected by selectivity, and the error term is driven by a sequence of unobserved life-cycle endogenous choices. We show that, for a wide class of outcome equations, incentive-based policies may be designed so to generate a sufficient degree of post-intervention randomization (a lesser degree of selection on individual endowments among the sub-population affected). This helps the instrument to fulfill the orthogonality condition. However, for a same class of outcome equation, dictatorial policies that enforce minimum consumption cannot meet this condition. We illustrate these concepts within a calibrated dynamic life cycle model of human capital accumulation, and focus on the estimation of the returns to schooling using instruments generated from mandatory schooling reforms and education subsidies. We show how the nature of the skill accumulation process (substitutability vs complementarity) may play a fundamental role in interpreting IV estimates of the returns to schooling

Estimating complementarity between education and training

In this paper, we formulate and estimate a structural model of post-schooling training that explicitly allows for possible complementarity between initial schooling levels and returns to training. Precisely, the wage outcome equation depends on accumulated schooling and on the incidence of training. The effect of training on wage growth depends on individual permanent endowments as well as on education. We find evidence of statistically significant complementarity, i.e. the higher educated receive the highest return to the MBA-type training considered here

Dynamic Skill Accumulation, Comparative Advantages, Compulsory Schooling, and Earnings

We show that a calibrated dynamic skill accumulation model allowing for comparative advantages, can explain the weak (or negative) effects of schooling on productivity that have been recently reported (i) in the micro literature on compulsory schooling, ii) in the micro literature on estimating the distribution of ex-post returns to schooling, and (iii) in the macro literature on education and growth. The fraction of the population more efficient at producing skills in the market than in school is a pivotal quantity that determines the sign (and magnitude) of different parameters of interest. Our model reveals an interesting paradox; as low-skill jobs become more skill-enhancing (ceteris paribus), IV estimates of compulsory schooling become increasingly negative, and ex-post returns to schooling (inferred from a Roy model specification of the earnings equation) become negative for an increasing fraction of the population. This arises even if each possible input to skill production has a strictly positive effect. Finally, our model provides a foundation for the weak (or negative) effect education on growth measured in the empirical literature

Linear Response for Confined Particles

The dynamics of fluctuations is considered for electrons near a positive ion or for charges in a confining trap. The stationary nonuniform equilibrium densities are discussed and contrasted. The linear response function for small perturbations of this nonuniform state is calculated from a linear Markov kinetic theory whose generator for the dynamics is exact in the short time limit. The kinetic equation is solved in terms of an effective mean field single particle dynamics determined by the local density and dynamical screening by a dielectric function for the non-uniform system. The autocorrelation function for the total force on the charges is discussed.Comment: 4 pages, 1 figure. Results presented at the "International Conference on Strongly Coupled Coulomb Systems", Camerino, Italy, July 2008. Submitted for publication in the conference proceedings (special issue of Journal of Physics A

Dynamic Skill Accumulation, Comparative Advantages, Compulsory Schooling, and Earnings

We show that a calibrated dynamic skill accumulation model allowing for comparative advantages, can explain the weak (or negative) effects of schooling on productivity that have been recently reported (i) in the micro literature on compulsory schooling, ii) in the micro literature on estimating the distribution of ex-post returns to schooling, and (iii) in the macro literature on education and growth. The fraction of the population more efficient at producing skills in the market than in school is a pivotal quantity that determines the sign (and magnitude) of different parameters of interest. Our model reveals an interesting paradox; as low-skill jobs become more skill-enhancing (ceteris paribus), IV estimates of compulsory schooling become increasingly negative, and ex-post returns to schooling (inferred from a Roy model specification of the earnings equation) become negative for an increasing fraction of the population. This arises even if each possible input to skill production has a strictly positive effect. Finally, our model provides a foundation for the weak (or negative) effect education on growth measured in the empirical literature.Compulsory Schooling Reforms, Dynamic Skill Accumula- tion, Comparative Advantages, Returns to schooling, Education and Growth, Dynamic Discrete Choice, Dynamic Programming.

Equilibrium properties of highly asymmetric star-polymer mixtures

We employ effective interaction potentials to study the equilibrium structure and phase behavior of highly asymmetric mixtures of star polymers. We consider in particular the influence of the addition of a component with a small number of arms and a small size on a concentrated solution of large stars with a high functionality. By employing liquid integral equation theories we examine the evolution of the correlation functions of the big stars upon addition of the small ones, finding a loss of structure that can be attributed to a weakening of the repulsions between the large stars due to the presence of the small ones. We analyze this phenomenon be means of a generalized depletion mechanism which is supported by computer simulations. By applying thermodynamic perturbation theory we draw the phase diagram of the asymmetric mixture, finding that the addition of small stars melts the crystal formed by the big ones. A systematic comparison between the two- and effective one-component descriptions of the mixture that corroborates the reliability of the generalized depletion picture is also carried out.Comment: 26 pages, 9 figures, submitted to Phys. Rev.