The paper reviews the literature on the impact of school resources on earnings and educational attainment. Three strong patterns characterize the existing research. First, papers which find no significant effect of school inputs on outcomes tend to examine resources at the school actually attended, while papers which do find an effect typically use average school inputs by state. The other two patterns have to do with time/age effects: papers which find no link also typically examine workers who were educated between 1960 and the early 1980's, and who were 32 or younger at the time of the wage observation. Papers which do find a link most frequently study older workers who were educated in the first half of the century. Similar patterns emerge in the literature on educational attainment and school resources, although the literature is surprisingly small. Five sets of hypotheses to explain these patterns are examined: 1) structural change, 2) age-dependence of the relation between schoo...

Abstract not found

The paper extends the school quality literature by examining the impact of homework on educational achievement. Theory predicts a positive effect of homework, up to a point. The theory is tested using the Longitudinal Study of American Youth. The amount of math homework assigned positively affects math achievement for virtually all students. An extra half hour of nightly homework between Grades 7 and 11 is predicted to boost math achievement by almost two grade equivalents. Additional homework is potentially cost-effective, since it is the homework assigned, rather than the amount graded, which is more has the larger influence on achievement. 1 The Role of Homework in Improving School Quality 1. Introduction The positive link between earnings and years of education has become established as one of the most robust findings in the labor economics literature. Over the last three decades, spurred by the Coleman Report (1966), researchers have extended the simple earnings:education mode...

Does democracy affect national economic performance? Previous analyses of democracy's effect on economic performance generally begin with an unsound assumption--voters demand the highest rate of economic growth. From an analysis of the likely risk/return preferences of voters, this paper develops the hypothesis that democracies differ from dictatorships in that democracies reflect the risk preferences of citizens. The results, based on a sample of 108 countries, 1974-1989, are consistent with this hypothesis. Democracies, compared to autocracies, are unquestionably characterized by stable growth rates. The results are robust both to changes in modeling assumptions and to trimming the upper and lower extremes of the sample. Three studies from the comparative economic voting literature are re-examined: those by Powell and Whitten 1993, Pacek and Radcliff 1995, and Wilkin et al 1997. Risk, measured as volatility, is shown in each model to be a negative and statistically significant influe...

Abstract. A large literature has documented a significant increase in the difference between the wage of college graduates and high school graduates over the past 30 years. I show that from 1980 to 2000, college graduates have experienced relatively larger increases in cost of living, because they have increasingly concentrated in metropolitan areas that are characterized by a high cost of housing. When I deflate nominal wages using a location-specific CPI, I find that the difference between the wage of college graduates and high school graduates is lower in real terms than in nominal terms and has grown less. At least 22 % of the documented increase in college premium is accounted for by spatial differences in the cost of living. The implications of this finding for changes in well-being inequality depend on why college graduates sort into expensive cities. Using a simple general equilibrium model of the labor and housing markets, I consider two alternative explanations. First, it is possible that the relative supply of college graduates increases in expensive cities because college graduates are increasingly attracted by amenities located in those cities. In this case, the higher cost of housing reflects consumption of desirable local amenities, and there may still be a significant increase in well-being inequality even if the increase in real wage inequality is limited. Alternatively, it is possible that the relative demand for college graduates increases in

The paper provides a fairly comprehensive examination of recent empirical work on discrimination within economics. The three major analytical approaches considered are traditional regression analysis of outcomes, paired testing or audits, and finally analysis of performance where higher group performance suggests that a group has been treated disfavorably. The review covers research in the labor, credit, and consumption markets, as well as recent studies of discrimination within the legal system. The review suggests that the validity of interpreting observed racial differences as discrimination depends heavily on whether the analysis is based on a sample that is representative of a population of individuals or households or based on a sample of market transactions, as well as the analyst?s ability to control for heterogeneity within that sample. Heterogeneous firm behavior and differentiated products, such as those found in labor and housing markets, also can confound empirical analyses of discrimination by confusing the allocation of individuals across firms or products with disparate treatment or by ignoring disparate impacts that might arise based on that allocation. An earlier version of this paper was sponsored by the National Resource Council of the National Academy and presented to the Panel on Methods for Assessing

Using data from the National Longitudinal Survey of Youth (NLSY) we introduce and estimate various Bayesian hierarchical models that investigate the nature of unobserved hetero-geneity in returns to schooling. We consider a variety of possible forms for the heterogeneity, some motivated by previous theoretical and empirical work and some new ones, and let the data decide among the competing specifications. Empirical results indicate that heterogeneity is present in re-turns to education. Furthermore, we find strong evidence that the heterogeneity follows a continuous rather than discrete distribution, and that bivariate Normality provides a very reasonable description of individual-level heterogeneity in intercepts and returns to schooling.

This paper studies the determinants of college major choice using an experimentally generated panel of beliefs, obtained by providing students with information on the true population distribution of various major-specific characteristics. Students logically revise their beliefs in response to the information, and their subjective beliefs about future major choice are associated with beliefs about (self and spouse’s) earnings and ability. We estimate a rich model of college major choice. While earnings are a significant determinant of major choice, tastes –w hich are heterogeneous – are the dominant factor in the choice of major. We also investigate gender differences in major choice.

This research was supported by NSF 97-09-873, NSF-SES-0099195 and NICHD-40-4043-000-85-261. Carneiro benefited from support from Fundaçao Ciência e Tecnologia and Fundaçao Calouste Gulbenkian. We have benefitted from comments received at the Applied Price Theory Workshop, from comments received from Jaap Abbring, Flavio

expressed herein are those of the authors and not necessarily those of the National Bureau of Economic