Economic freedom, human rights, and the returns to human capital : an evaluation of the Schultz hypothesis

According to T.W. Schultz, the returns to human capital are highest in economic environments experiencing unexpected price, productivity, and technology shocks that create"disequilibria."In such environments, the ability of firms and individuals to adapt their resource allocations to shocksbecomes most valuable. In the case of negative shocks, government policies that mitigate the impact of the shock will also limit the returns to the skills of managing risk or adapting resources to changing market forces. In the case of positive shocks, government policies may restrict access to credit, labor, or financial markets in ways that limit reallocation of resources toward newly emerging profitable sectors. This paper tests the hypothesis that the returns to skills are highest in countries that allow individuals to respond to shocks. Using estimated returns to schooling and work experience from 122 household surveys in 86 developing countries, this paper demonstrates a strong positive correlation between the returns to human capital and economic freedom, an effect that is observed throughout the wage distribution. Economic freedom benefits those workers who have attained the most schooling as well as those who have accumulated the most work experience.Debt Markets,Political Economy,Economic Theory&Research,Labor Policies,Population Policies

Economic Freedom, Human Rights, and the Returns to Human Capital: An Evaluation of the Schultz Hypothesis

T.W. Schultz (1975) proposed that returns to human capital were highest in economic environments where technology, price or production shocks were common and managerial skills to adapt resource allocations to those shocks were most in need.� We hypothesize that variation in returns to human capital across developing countries can be explained in part by government institutions that blunt the magnitude of those shocks or that limit individual abilities to respond to those shocks.� Using estimated returns to schooling and experience from 122 household surveys from 86 developing countries, we demonstrate a strong positive correlation between economic freedom and returns to human capital. The positive effect is observed at all quantiles of the wage distribution.� Economic freedom benefits the most skilled who get higher returns to schooling; but it also benefits the least skilled who get higher returns from experience.Returns to education; Returns to experience; Economic freedom; inequality; quantiles

The transition of people’s preferences for the intervention of the government in the economy of re-unified Germany

Covering the first fifteen years immediately after German re- unification, this paper analyzes the people’s support to the transition. The focus is on individuals’ preferences for the intervention of the government in the economy and on the opinion about competition per se. Eastern German data are compared with Western German data. Using suitable data that allow for interpersonal comparisons, the paper shows that Eastern Germans have always preferred an intervention of the public hand in the economy deeper than Western Germans; these different positions have hardly converged during the examined period of time. However there are no significant differences with respect to how Germans perceive competition per se: it is considered as a good by the people living in both parts of the country.info:eu-repo/semantics/publishedVersio