Diverging patterns of education premium and school attendance in France and the US : a Walrasian view

We evaluate the effect of technology, demographics and policy on the differential evolution of the skill premium and on the rise in education investment in France and the USA. We use a computable general equilibrium model with overlapping generations of individuals, and endogenous education decisions. Human capital is made of two substitutable components, experience and education, both of them evolve endogenously over time. We calibrate this model on the post-war period and run counterfactual experiments to assess the effect of the different exogenous variables. French expansionary education policy boosted the supply of skills and kept the skill premium low. On the contrary, increasing education costs in the US contributed to increase wage differentials by reducing the supply of skills. The skill biased technical shock is key to understand rising school attendance and appears delayed in France.Human capital;Education;Skill premium

An incentive mechanism to break the low-skill immigration deadlock

public good, inequality aversion, immigration policy

Do Brain Drain and Poverty Result from Coordination Failures?

We explore the complementarities between high-skill emigration and poverty in developing countries. We build a model endogenizing human-capital accumulation, high-skill migration and productivity. Two countries sharing the same characteristics may end up either in a “low poverty/low brain drain” path or in a “high poverty/high brain drain” path. After identifying country-specific parameters, we find that, for a majority of countries, the observed equilibrium has higher income than the other possible one. In 22 developing countries (including 20 small states with less than 2 million inhabitants), poverty and high brain drain are worsened by a coordination failure. For 25 other countries, a radical worsening of economic performances is feasible. These results are fairly robust to identification assumptions and the inclusion of a brain-gain mechanism.Brain drain, Development, Multiple equilibria, Coordination failure

An Incentive Mechanism to Break the Low-skill Immigration Deadlock

Although movements of capital, goods and services are growing in importance, workers movements are impeded by restrictive policies in rich countries. Such regulations carry substantial economic costs for developing countries, and prevent global inequality from declining. Even if rich countries are averse to global inequality, a single country lacks incentives to welcome additional migrants as it would bear the costs alone while the benefits accrue to all rich states. Aversion to global inequality confers a public good nature to the South-North migration of low-skill workers. We propose an alternative allocation of labor maximizing global welfare subject to the constraints that the rich countries are at least as well off as in the current "nationalist" (or "Nashionalist") situation. This "no regret" allocation can be decentralized by a tax-subsidy scheme which makes people internalize the fact that as soon as a rich country welcomes an additional migrant, global inequalities are reduced, and each citizen in the rich world is better off too. Our model is calibrated using statistics on immigration, working-age population and output. We simulate the proposed scheme on different sets of rich countries.Public Good, Inequality Aversion, Immigration policy

Do Brain Drain and Poverty Result from Coordination Failures?

We explore the complementarities between high-skill emigration and poverty in developing countries. We build a model endogenizing human-capital accumulation, high-skill migration and productivity. Two countries sharing the same characteristics may end up either in a "low poverty/low brain drain" path or in a "high poverty/high brain drain" path. After identifying country-specific parameters, we find that, for a majority of countries, the observed equilibrium has higher income than the other possible one. In 22 developing countries (including 20 small states with less than 2 million inhabitants), poverty and high brain drain are worsened by a coordination failure. For 25 other countries, a radical worsening of economic performances is feasible. These results are fairly robust to identification assumptions and the inclusion of a brain-gain mechanism.Public Good, Inequality Aversion, Immigration policy

Income growth in the 21st century: Forecasts with an overlapping generations model

We forecast income growth over the period 2000-2050 in the US, Canada, and France. To ground the forecasts on relationships that are as robust as possible to changes in the environment, we use a quantitative theoretical approach which consists in calibrating and simulating a general equilibrium model. Compared to existing studies, we allow for life uncertainty and migrations, use generational accounting studies to link taxes and public expenditures to demographic changes, and take into account the interaction between education and work experience. Forecasts show that growth will be weaker over the period 2010-2040. The gap between the US and the two other countries is increasing over time. France will catch-up and overtake Canada in 2020. Investigating alternative policy scenarios, we show that increasing the effective retirement age to 63 would be most profitable for France, reducing its gap with the US by one third. A decrease in social security benefits would slightly stimulate growth but would have no real impact on the gap between the countries.aging, forecast, computable general equilibrium, education, experience

Income Growth in the 21st century : forecasts with an overlapping generations model

We forecast income growth over the periode 2000-2050 in the US, Canada, and France. To ground the forecasts on relationships that are as robust as possible t changes in the environment, we use a quantitative theoretical approach which consists in calibrating and simulating a general equilibrium model. Compared to existing studies to link taxes and public expenditures to demographic changes, and take into account the interaction between education and work experience. Forecasts show that growth will be weaker over the period 2010-2040. The gap between the US and the two other countries is increasing over time. France will catch-up and overtake Canada in 2020. Investigating alternative policy scenarios, we show that increasing the effective retirement age to 63 would be most profitable for France, reducing its gap with US by one third. A decrease in social security benefits would slightly stimulate growth but would have no real impact on the gap between the countries.Aging, Forecast, Computable General Equilibrium, Education, Experience

A general theory to estimate Information transfer in nonlinear systems

A general theory for computing information transfers in nonlinear systems driven by deterministic forcings and additive and/or multiplicative noises, is presented. It extends the Liang-Kleeman framework of causality inference based on information transfer across system variables (Liang, 2016). An effective method of computing formulas of the rates of entropy transfers (RETs) is presented, the Causal Sensitivity Method (CSM), relying on the estimation from data of conditional expectations. Those expectations are approximated by nonlinear regressions, leading to a much easier and more robust way of computing RETs than the brute-force approach calling for numerical integrals over the phase space and the knowledge of the multivariate probability density function of the system. The CSM is furthermore fully adapted to the case where no model equations are available, starting with a nonlinear model fitting from data with the subsequent application of CSM to the fitted model. Moreover, the RETs are decomposed into sums of single one-to-one RETs plus synergetic terms, accounting for the joint causal effect of groups of variables. State-dependent RET formulas are also proposed, allowing for determining the dependencies of variables and synergies locally in phase space. A comparison of the RETs estimations is performed between the brute-force probability-density-based approach (AN), the CSM-based approach with and/or without model fitting, and the multivariate linear approach, in the context of two models: (i) a model derived from a potential and (ii) the classical chaotic Lorenz system, both forced by additive and/or multiplicative noises. The analysis demonstrates that the CSM estimations are robust and close to the AN-reference values in the different experiments, providing evidence of the possibilities offered by the method and opening new perspectives on real-world applications.Comment: 41 pages, 6 figures. Submitted to Physica

The Academic Market and the Rise of Universities in Medieval and Early Modern Europe (1000-1800)

We argue that market forces shaped the geographic distribution of upper-tail human capital across Europe during the Middle Ages, and contributed to bolstering universities at the dawn of the Humanistic and Scientific Revolutions. We build a unique database of thousands of scholars from university sources covering all of Europe, construct an index of their ability, and map the academic market in the medieval and early modern periods. We show that scholars tended to concentrate in the best universities (agglomeration), that better scholars were more sensitive to the quality of the university (positive sorting) and migrated over greater distances (positive selection). Agglomeration, selection and sorting patterns testify to an integrated academic market, made possible by the use of a common language (Latin)

Are Scholars’ Wages Correlated with their Human Capital?

Throughout our project on premodern academia, we use a heuristic human capital index to measure each scholar’s quality. This index is built by combining several statistics from individual Wikipedia and Worldcat pages. The question we address here is whether this measure is correlated with the actual wages professors received. This note is a technical appendix to our paper on the academic market (De la Croix et al. 2020) but also has an interest as a stand-alone publication. There is considerable evidence that compensations for academic contractswentwell beyond paid salaries.1 They included payments from students, prebends,2 and many forms of in-kind benefits. Yet, it is interesting to examine the relationship between scholars’ human capital and existing data on monetary remunerations. Such remunerations have been used by Dittmar (2019) to show that professor salaries increased significantly relative to skilled wages after printing spread, with science professors benefiting from the largest salary increases. In the two sections below, we first review the available data on salaries, and argue that such data are imperfect proxies for the overall remuneration for academic services (i.e. a scholar’s market value). Keeping in mind such limitations, we thendocument a positive correlation between monetary income and scholars’ human capital.&nbsp