Essays on Human Capital Accumulation and Inequality.

This thesis is composed by four independent chapters. Their common denominator is the process of human capital accumulation analyzed under different perspectives and using different techniques. In the following I will shortly describe each chapter in more detail. Chapter 1 addresses an important aspect of the effects of trade liberalization that has gained much attention in recent years: raising skill premia. It is motivated by recent evidence showing that trade liberalization in developing countries is often associated with a large increase in wage inequality. I investigate the mechanism through which a trade related increase in the demand for skilled labor affects human capital investment and the wealth distribution of a developing country economy. In particular I focus on a scenario where the liberalizing economy is in a poverty trap. This is because developing economies are often plagued by credit market imperfections. Imperfect financial markets raise the probability that individuals are constrained in their human capital investment decisions and that the economy is a poverty trap. I use a standard overlapping generation model to show how a trade related increase in the demand for skilled labor can release a developing country from a poverty trap, leading to increased human capital accumulation and technology progress. The skill biased technological shock benefits the whole economy and "trickles down" - through the interest rate - to unskilled workers a la Aghion & Bolton (1997). Chapter 2, which is joint work with Lidia Farre, analyzes the educational choices of Argentinean teenagers during different phases of the economic cycle. We use data for Argentinean households over the period 1995-2002 to examine households' response to negative idiosyncratic income shocks in different macroeconomic scenarios. We study how teenagers' school progress responds to household head unemployment during periods of high economic growth and compare it to the response during recession years, when families are more likely to be financially constrained. After accounting for the potential endogeneity of household head unemployment we find that school failure in response to unemployment shocks increases during periods of economic instability. Further we find that for first born boys this results from a greater involvement in labor market activities. Our results add to the existing literature on the long term cost of macroeconomic crises. In Chapter 3 I analyze a different aspect of the Argentinean macroeconomic crisis and the related social costs. Argentina experienced an important increase of informal employment and wage dispersion in the last 20 years. This chapter extends a search model with exogenous human capital accumulation to include an informal sector. The model is parametrized such to fit Argentinean data in order to investigate the effect of employment protection measures on informality, employment and wage dispersion under two different macroeconomic conditions. I find that for low educated workers both severance pay and minimum wages increase informality. In the presence of vii a wage floor severance payments do not affect employment but only shift marginal workers from the covered sector to the unregulated one. I find that a decrease in the return to human capital skills increases the incentives to seek informal employment. Labor market protection measures and declining human capital return are able to explain most of the increase in informality and much of the increase in wage dispersion. Last chapter is coauthored with Christian Dustmann and focuses on the very early phases of human capital investment: pre school years. In this chapter we investigate test score gaps and their evolution for white and ethnic minority children aged 3 and 5 in the UK. We also analyse the effect of early school exposure on test score gaps, and differences in the effect of entry age on early school performance. Ethnic test score gaps at age 3 - when most children are not enrolled in Kindergarten yet - are large. Background characteristics (in particular exposure to the English language) explain part, but not all of this differential. Between the age of 3 and 5, the ethnic test score gap narrows. Exposure to preschool measured at age 5 - even if limited to only a few months - has a larger positive effects on test scores for those minority groups who started from a more disadvantaged position. Further, keeping exposure to pre-school constant, ethnic minority children loose less from entering pre-school at a younger age than majority individuals; for some groups, there is an overall gain from entering school early. Our findings point at a reduction in achievement gaps between minority and majority children in the UK between age 3 and age 5, which is partly due to a larger positive effect of pre-school on achievements of minorities.Human capital; Economic development;

Ethnic patterns of returns to education in Bulgaria: Do minorities have an incentive to invest in education?

It is widely accepted that disparities in education contribute to the poor labor market outcomes experienced by ethnic minority groups and consequently to their poverty. However, incentives to invest in education are significantly diminished if individuals are discriminated in the labor market and precluded from access to employment. In this paper we analyze differential educational benefits in Bulgaria and compare Roma returns to education with the majority population and the Turkish minority. We show that both ethnic minority groups have lower educational levels and employment rates than the majority population and that they also have lower returns to education. However, the gap in returns to education is much wider for the Roma with respect to both employment and labour-market earnings. The evidence suggests that this group is more vulnerable to discrimination, with a high percentage of the employment gap unexplained by differences in observable skills or characteristics.minorities, Roma, discrimination, returns to education, transition

The educational attainment, labour market participation and living conditions of young Roma in Bulgaria, Hungary and Romania

This paper investigates the educational attainment, labour market participation and living conditions of young Roma adults in Bulgaria, Hungary and Romania based on data from the generations and gender surveys and other sources of information. It shows that in spite of a small improvement in the educational attainment of young Roma in comparison to the generation of their parents, the educational achievement and employment gaps have increased considerably during the post-communist period. The paper also compares living conditions of the Roma with other population groups. It concludes with a discussion of policy challenges.minorities, Roma, discrimination, employment, education, transition

After the Financial Crisis: Achieving the Millennium Development Goals in Europe, the Caucasus and Central Asia

The Pan-European Region made significant progress from 1995 to 2007 in improving the economic, social, environmental and health indicators incorporated into the Millennium Development Goals (MDGs). However, given the huge set-backs associated with the transition recession in the early 1990s and the more recent economic declines from the global financial crisis, achievement of some of the MDGs in a significant number of countries by 2015 is now problematic. The degree to which the actual targets can be achieved by 2015 will depend critically on: (i) the speed of recovery from the current crisis and the policy responses to it; (ii) the commitment by national governments to focus resources on the MDG objectives and their willingness to implement new policy initiatives, and (iii) the level of foreign assistance and regional cooperation that can be obtained. The EU new Member States (NMS) are most likely to meet the MDGs, while the prospects for the other European emerging economies are more mixed, especially for MDGs related to poverty and health. All of the Pan-European economies are falling short in terms of achieving environmental sustainability and gender equality.millennium development goals, economic development, Europe, financial crisis, transition economies, CIS, Russia, caucasus, central Asia, health, education, environmental sustainability, gender, HIV, AIDS, Tuberculosis, trade,

Factors affecting the schooling performance of secondary school pupils - the cost of high unemployment and imperfect financial markets

This paper investigates the implications of major ¯nancial markets crises for the human capital accumulation decisions of households. We use data for Argentinean households over the period 1995-2002 to examine households' response to negative idiosyncratic income shocks in di®erent macroeconomic scenarios. In particular we study how teenagers' school progress responds to household head unemployment during periods of high economic growth and compare it to the response during recession years, when families are more likely to be ¯nancially constrained. After accounting for the potential endogeneity of household head unemployment we ¯nd that school failure in response to unemployment shocks increases during periods of economic instability and that, at least for boys, this results from a greater involvement in labor market activities. Our results add to the existing literature on the long term cost of macroeconomic crises.imperfect credit markets, human capital, parental unemployment

Gender-sensitive Economic Policies in the UNECE Region in the Context of the Economic and Financial Crisis

Gender equality is a basic human right and is as such a part of the social policy framework. At the same time, it is a multi-faceted concept with its cultural, social, legal, political and economic dimensions and interrelations. The prevalent practice in most countries illustrates that traditionally, macroeconomics and gender equality have been considered as two distinct policy areas that are independently shaped and carried out by different authorities. However, this approach fails to acknowledge the numerous interlinkages between both areas. Indeed, it is in the interest of both gender equality advocates and economic policymakers to closely cooperate. On the one hand, economic policies have an effect on gender equality through their potential to rebalance economic opportunities for both men and women and by influencing the incentive structure of economic agents; on the other hand, gender equality has an impact on the economy, for example through changes in labour force participation and the full use of human capital. This paper presents the interplay between these two policy areas highlighting mechanisms through which they influence each other, both under a structural - or long-term - perspective and in the context of the current economic crisis. The concluding recommendations are primarily directed to national decision-makers but also to international organizations, particularly financial institutions which influence national decision-making in the economic field.gender, economic crisis, transition economies, CIS, Russia

Neural basis of attachment-caregiving systems interaction. insights from neuroimaging studies

The attachment and the caregiving system are complementary systems which are active simultaneously in infant and mother interactions. This ensures the infant survival and optimal social, emotional, and cognitive development. In this brief review we first define the characteristics of these two behavioral systems and the theory that links them, according to what Bowlby called the "attachment-caregiving social bond" (Bowlby, 1969). We then follow with those neuroimaging studies that have focused on this particular issue, i.e., those which have studied the activation of the careging system in women (using infant stimuli) and have explored how the individual attachment model (through the Adult Attachment Interview) modulates its activity. Studies report altered activation in limbic and prefrontal areas and in basal ganglia and hypothalamus/pituitary regions. These altered activations are thought to be the neural substrate of the attachment-caregiving systems interaction

Brazilian WHOQOL-OLD module version: a Rasch analysis of a new instrument

OBJECTIVE: To evaluate the Brazilian version of WHOQOL-OLD Module and to test potential changes to the instrument to increase its psychometric adequacy. METHODS: A total of 424 older adults living in a city in Southern Brazil completed the WHOQOL-OLD instrument, in 2005. Rasch analysis was used to explore the psychometric performance of the scale, as implemented by the RUMM2020 software. Item-trait interaction, threshold disorders, presence of differential item functioning and item fit, were analyzed. RESULTS: Two ("death and dying" and "sensory abilities") out of six domains showed inadequate item-trait interactions. Rescoring the response scale and deleting the most misperforming items led to scale improvement. The evaluation of domains and items individually showed that the "intimacy" domain does perform well in contrast to the findings using the classical approach. In addition, the "sensory abilities" domain does not derive an interval measure in its current format. CONCLUSIONS: Unidimensionality and local independence were seen in all domains. Changes in the response scale and deletion of problematic items improved the scale's performance