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  • Human Capital Accumulation in a Federation | Becker-Friedman Institute Research Respository
    by trying to view this page again after changing the URL in your browser s location bar to begin with https instead of http Please contact site admin for help if this error continues User login CNetID or Username Password Request new password Log in Human Capital Accumulation in a Federation More than half of the variation across U S school districts in real K 12 education expenditures per student is due to differences between rather than within states I study the welfare implications of redistribution of education expenditures by the Federal government using an analytically tractable model of human capital accumulation with heterogeneous agents and endogenous state policies The net welfare effect of Federal redistribution depends on a trade off between the positive effect of redistributing resources toward poorer states and the negative effect resulting from misallocation of population across states Federal redistribution increases welfare in a calibrated version of the model Authors Daniele Coen Pirani University of Pittsburgh Publication Date December 2014 BFI Initiative Human Capital and Economic Opportunity JEL Classification E24 Employment Unemployment Wages Intergenerational Income Distribution Aggregate Human Capital H70 State and Local Government Intergovernmental Relations General I20 Education and Research Institutions General J60 Mobility Unemployment

    Original URL path: http://econresearch.uchicago.edu/content/human-capital-accumulation-federation (2015-06-03)
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  • Misspecified Recovery | Becker-Friedman Institute Research Respository
    view this page again after changing the URL in your browser s location bar to begin with https instead of http Please contact site admin for help if this error continues User login CNetID or Username Password Request new password Log in Misspecified Recovery Asset prices contain information about the probability distribution of future states and the stochastic discounting of these states Without additional assumptions probabilities and stochastic discounting cannot be separately identified To understand this identification challenge we extract a positive martingale component from the stochastic discount factor process using Perron Frobenius theory When this martingale is degenerate probabilities that govern investor beliefs are recovered from the prices of Arrow securities When the martingale component is not trivial using this same approach recovers a probability measure but not the one that is used by investors We refer to this outcome as misspecified recovery We show that the resulting misspecified probability measure absorbs long term risk adjustments Many structural models of asset prices have stochastic discount factors with martingale components Also empirical evidence on asset prices suggests that the recovered measure differs from the actual probability distribution Even though this probability measure may fail to capture investor beliefs we conclude

    Original URL path: http://econresearch.uchicago.edu/content/misspecified-recovery (2015-06-03)
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  • Race-Specific Agglomeration Economies: Social Distance and the Black-White Wage Gap | Becker-Friedman Institute Research Respository
    between city size and the black white wage gap with the gap increasing by 2 5 for every million person increase in urban population We then look within cities and document that wages of blacks rise less with agglomeration in the workplace location measured as employment density per square kilometer than do white wages This pattern holds even though our method allows for non parametric controls for the effects of age education and other demographics on wages for unobserved worker skill as proxied by residential location and for the return to agglomeration to vary across those demographics industry occupation and metropolitan areas We find that an individual s wage return to employment density rises with the share of workers in their work location who are of their own race We observe similar patterns for human capital externalities as measured by share workers with a college education We also find parallel results for firm productivity by employment density and share college educated using firm racial composition in a sample of manufacturing firms These findings are consistent with the possibility that blacks and black majority firms receive lower returns to agglomeration because such returns operate within race and blacks have fewer same race peers and fewer highly educated same race peers at work from whom to enjoy spillovers than do whites Data on self reported social networks in the General Social Survey provide further evidence consistent with this mechanism showing that blacks feel less close to whites than do whites even when they work exclusively with whites We conclude that social distance between blacks and whites preventing shared benefits from agglomeration is a significant contributor to overall black white wage disparities Authors Elizabeth Ananat Duke University Shihe Fu Wang Yanan Institute for Studies in Economics WISE Xiamen University Stephen L Ross University

    Original URL path: http://econresearch.uchicago.edu/content/race-specific-agglomeration-economies-social-distance-and-black-white-wage-gap (2015-06-03)
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  • Terrorism and Human Capital at Birth: Bomb Casualties and Birth Outcomes in Spain | Becker-Friedman Institute Research Respository
    login CNetID or Username Password Request new password Log in Terrorism and Human Capital at Birth Bomb Casualties and Birth Outcomes in Spain We study the effects of terrorism in Spain on birth outcomes focusing on terrorism perpetrated by ETA combining information on the number of bomb casualties from The Victims of ETA Dataset with the individual birth records from the national registry of live births in Spain elaborated by the Spanish Statistical Institute INE We focus on live births conceived between January 1980 and February 2003 and find that in utero exposure to terrorism early in pregnancy as measured by the number of bomb casualties in the mother s province of residence in the first trimester of pregnancy has detrimental effects on birth outcomes in terms of average birth weight lower prevalence of low birth weight higher and fraction of normal babies lower Our results are robust to a battery of checks such as controlling for economic factors and accounting for spatial spillover effects In addition we investigate potential non linear effects and explore heterogeneous effects across groups of regions different time periods and family characteristics In support of our identification strategy the number of bomb casualties after birth does not predict birth outcomes We do not find evidence of migration effects in terms of population size responses to last year terrorist activity but the number of still births increases with bomb casualties in the first and third trimesters of pregnancy The estimated effect of 1 bomb casualty in the first trimester of pregnancy on average birth weight around half a gram is likely to be downward biased due to selective mortality Finally we provide a conceptual framework to understand what can be identified about the production of child health by exploiting shocks that affect unobserved maternal inputs Authors

    Original URL path: http://econresearch.uchicago.edu/content/terrorism-and-human-capital-birth-bomb-casualties-and-birth-outcomes-spain (2015-06-03)
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  • Taxing Top Earners: A Human Capital Perspective | Becker-Friedman Institute Research Respository
    to HTTPS by trying to view this page again after changing the URL in your browser s location bar to begin with https instead of http Please contact site admin for help if this error continues User login CNetID or Username Password Request new password Log in Taxing Top Earners A Human Capital Perspective We assess the consequences of substantially increasing the marginal tax rate on U S top earners using a human capital model We find that 1 the peak of the model Laffer curve occurs at a 52 percent top tax rate 2 if human capital were exogenous then the top of the Laffer curve would occur at a 66 percent top tax rate and 3 applying the theory and methods that Diamond and Saez 2011 use to provide quantitative guidance for setting the top tax rate to model data produces a tax rate that substantially exceeds 52 percent Authors Alejandro Badel Federal Reserve Bank of St Louis Mark Huggett Georgetown University Publication Date November 2014 BFI Initiative Human Capital and Economic Opportunity JEL Classification D91 Intertemporal Consumer Choice Life Cycle Models and Saving E21 Macroeconomics Consumption Saving Wealth H20 Taxation Subsidies and Revenue General J24 Human Capital

    Original URL path: http://econresearch.uchicago.edu/content/taxing-top-earners-human-capital-perspective (2015-06-03)
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  • The Openness-Equality Trade-Off in Global Redistribution | Becker-Friedman Institute Research Respository
    https instead of http Please contact site admin for help if this error continues User login CNetID or Username Password Request new password Log in The Openness Equality Trade Off in Global Redistribution Vickrey 1945 s veil of ignorance argument for redistributive taxation makes no mention of national borders yet his model of optimal taxation has been almost exclusively applied within sovereign states Because the majority of welfare relevant inequality is across rather than within such states a global perspective on optimal redistribution yields radically different conclusions Taxes should be significantly higher than typical estimates and most transfers should flow across national borders If such transfers are infeasible migration becomes a natural substitute Yet much migration by the global middle class to well off countries actually exacerbates inequality Countries very open to inequality reducing migration are staggeringly unequal internally a leading case is the Gulf Cooperation Council monarchies Such examples suggest a philosophically disturbing trade off between openness to global inequality reducing migration and internal equality For example social prejudices based on national origin or authoritarian regimes that support a caste system could be Pareto improving Authors E Glen Weyl Microsoft Research New England and University of Chicago Publication Date

    Original URL path: http://econresearch.uchicago.edu/content/openness-equality-trade-global-redistribution (2015-06-03)
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  • The Determinants and Consequences of Friendship Composition | Becker-Friedman Institute Research Respository
    if this error continues User login CNetID or Username Password Request new password Log in The Determinants and Consequences of Friendship Composition This paper examines the demographic pattern of friendship links among youth and the impact of those patterns on own educational outcomes using the friendship network data in the Add Health We develop and estimate a reduced form matching model to predict friendship link formation and identify the parameters based on across cohort within school variation in the supply of potential friends We find novel evidence showing that small increases in the share of students with college educated mothers raises the likelihood of friendship links among students with high maternal education and that small increases in the share of minority students increases the level of racial homophily in friendship patterns We then use the predicted friendship links from the matching model in an instrumental variable analysis and find positive effects of friends high socioeconomic status as measured by parental education on own GPA outcomes among girls The GPA effects are likely driven by science and English grades and through non cognitive factors Authors Jason M Fletcher Yale University Stephen L Ross University of Connecticut Yuxiu Zhang Yale University Publication

    Original URL path: http://econresearch.uchicago.edu/content/determinants-and-consequences-friendship-composition (2015-06-03)
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  • The Housing and Educational Consequences of the School Choice Provisions of NCLB: Evidence from Charlotte, NC | Becker-Friedman Institute Research Respository
    school fails to achieve Adequate Yearly Progress AYP for the second time in the Charlotte NC school district Charlotte is a school district with substantial opportunities for school choice and a number of oversubscribed high quality schools To comply with the 2002 No Child Left Behind NCLB Act students within the attendance zone of Title 1 schools that fail to meet AYP are given an advantage in the lotteries for oversubscribed schools That advantage may create an incentive for households with strong preferences for school choice and or school quality to move into the attendance zones of failing schools in order to improve their likelihood of being admitted into high performing oversubscribed schools Consistent with that notion we find that housing prices and the incomes of new homebuyers rise in the highest quality neighborhoods within attendance zones of failing schools in comparison to trends in nearby neighborhoods just outside of the attendance zone We also find that residential mobility decreases while the probability of attending a non assigned traditional school or magnet school increases in these high quality neighborhoods Further analysis reveals that the effect of failing designation on non assigned school attendance is driven largely by the school choice

    Original URL path: http://econresearch.uchicago.edu/content/housing-and-educational-consequences-school-choice-provisions-nclb-evidence-charlotte-nc (2015-06-03)
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