University of Freiburg Dr.

Aderonke Osikominu Summer Term 2011

Economics of Education
Description
This course discusses the economic aspects of current issues in education, using both applied microeconomic theory and empirical analysis. Topics include basic human capital theory, econometric issues in determining the true rate of return to education, intergenerational mobility, the provision of employer nanced training, and the eectiveness of public sponsored training programs. research and public policy. We are especially interested in the link between

Target Group and Prerequisites

The course is open to advanced Diplom, Master and PhD students. A good knowledge of intermediate Microeconomics as well as basic Econometrics is essential.

Credit Points and Grading

The course comprises a lecture and optional exercise sessions in the PC-lab. Students attending only the lecture can earn 4 credit points, while those who also take the exercise sessions can earn 6 credit points. The credits count for the elds Empirische

Wirtschaftsforschung und konometrie, Arbeit und Personal, or Master of Economics and Politics. Grading is based on the nal exam (for all) and a homework (for those attending the exercise sessions). The homework contributes one third to the total grade.

Topics
1. Introduction

2. Investment in Education and the Earnings Function

3. The Causal Eect of Education on Earnings

4. Education and Family Background

5. Provision and Payment of Vocational Training

6. Public Training Programs for the Economically Disadvantaged

References and Readings

1. Introduction C. Dustmann, J. Ludsteck, and U. Schnberg (2009): Revisiting the German Wage Structure, Quarterly Journal of Economics, 124(2), 843-881. E.A. Hanushek and L. Wmann (2008): The Role of Cognitive Skills in Economic Development, Journal of Economic Literature, 46(3), 607-668. E.A. Hanushek and L. Wmann (2011): The Economics of International Differences in Educational Achievements, in: E.A. Hanushek, S. Machin and L. Woessmann(eds.), Handbook of the Economics of Education, Vol. 3, ch. 2, 89-200. T. Lemieux (2008): The Changing Nature of Wage Inequality, Journal of Population Economics, 21(1), 21-48.

OECD (2009): Education at a Glance, Paris. 2. Investment in Education and the Earnings Function G. Becker (1962): Investment in Human Capital: A Theoretical Analysis,

Journal of Political Economy, 70(5), 9-49; downloadable from

jstor.org/stable/1829103.

http://www.

G. Becker (1994): Human Capital: A Theoretical and Empirical Analysis with

Special Reference to Education, Chicago:

University of Chicago Press, 3rd

edition, ch.

beck94-1.

2 and 4; downloadable from:

http://www.nber.org/books/

Y. Ben-Porath (1967): The Production of Human Capital and the Life Cycle of Earnings, Journal of Political Economy, 75(4), 352-365; downloadable from:

http://www.jstor.org/stable/1828596.

T. Boeri and J. van Ours (2008): The Economics of Imperfect Labor Markets, Princeton: Princeton University Press, ch. 8.1-8.2.1. G. Borjas (2009): Labor Economics, Boston: McGraw-Hill, 5th edition, ch.6.16.3. P. Cahuc, A. Zylberberg (2007): Labor Economics, Cambridge: MIT Press, ch. 2.1-2.2, 2.4.1.

J.J. Heckman, L.J. Lochner, P.E. Todd (2006): Earnings Functions, Rates of Return and Treatment Eects: The Mincer Equation and Beyond, in E.A. Hanushek and F. Welch (eds.), Handbook of the Economics of Education, Vol. 1, Amsterdam: Elsevier Science, ch. 7, section 2. J. Mincer (1958): Investment in Human Capital and Personal Income. Journal
of Political Economy, 66(4), 281-302; downloadable from

org/stable/1827422.

http://www.jstor.

J. Mincer (1974):

Schooling, Experience and Earnings, New York:

minc74-1.

University Press, ch. 1; downloadable from:

http://www.nber.org/books/

Columbia

3. The Causal Eect of Education on Earnings O. Ashenfelter and C. Rouse (1998). Income, Schooling and Ability: Evidence from a New Sample of Identical Twins. 113(1), 253-284; downloadable from

http://www.jstor.org/stable/2586991.

Quarterly Journal of Economics,

G. Borjas (2009): Labor Economics, Boston: McGraw-Hill, 5th edition, ch. 6.4, 6.5 and 6.8. P. Cahuc and A. Zylberberg (2007): Labor Economics, Cambridge: MIT Press, ch. 2.4.2. D. Card (1995). Using Geographic Variation in College Proximity to Estimate the Return to Schooling, in L. Christodes, E.K. Grant, and R. Swindinsky (eds.), Aspects of Labour Economics: Essays in Honour of John Vanderkamp. Toronto: University of Toronto Press; working paper version downloadable from:

http://www.nber.org/papers/w4483.

A.D. Roy (1951): Some Thoughts on the Distribution of Earnings, Oxford Economic Papers, 3(2), 135-146, downloadable from:

stable/2662082.

http://www.jstor.org/

R.J. Willis and S. Rosen (1979): Education and Self-Selection, Journal of Political Economy, 87(5), Part 2, S7-S36, downloadable from:

org/stable/1829907.

http://www.jstor.

J.M. Wooldridge (2009): Introductory Econometrics: A Modern Approach, Cincinnati, OH: Thomson South-Western, fourth edition, ch. 3, 9.3, and 15.1. 4. Education and Family Background Becker, G.S. and N. Tomes (1986): Human Capital and the Rise and Fall of

Families. from:

http://www.jstor.org/stable/2534952.

Journal of Labor Economics, 4(3), Part 2, S1-S39; downloadable

Bjrklund, A., M. Lindahl, and E. Plug (2006): The Origins of Intergenerational Associations: Lessons from Swedish Adoption Data.
Economics, 121(3), 999-1028; downloadable from:

org/doi/abs/10.1162/qjec.121.3.999.
A. Bjrklund and K.G. Salvanes (2011): Mechanisms and Policies, in:

http://www.mitpressjournals.

Quarterly Journal of

Education and Family Background:

E.A. Hanushek, S. Machin and L. Woess-

mann(eds.), Handbook of the Economics of Education, Vol. 3, ch. 3, 201-247. Black, S.E. and P.J. Devereux (2011): Recent Developments in Intergenera-

tional Mobility, in: O. Ashenfelter and D. Card (eds.), Handbook of Labor

Economics, Vol. 4b, ch. 16, 1487-1541.

Black, S.E. P.J. Devereux, and K.G. Salvanes (2007): From the Cradle to the Labor Market? The Eect of Birth Weight on Adult Outcomes.
terly Journal of Economics, 122(1), 409-439; downloadable from

www.econ.ucla.edu/people/papers/Black/Black491.pdf.

http://

Quar-

Borjas, G. (2009): Labor Economics, Boston: McGraw-Hill, 5th edition, ch. 7.6. Cunha, F. J.J. Heckman, L. Lochner and D.V. Masterov (2006): Interpreting The Evidence On Life Cycle Skill Formation, in E.A. Hanushek and F. Welch (eds.): Handbook of the Economics of Education, Vol. 1, Amsterdam: Elsevier Science, ch. 12, 697-812. Solon, G. (1999): Intergenerational Mobility in the Labor Market, in O. Ashenfelter and D. Card (eds.): Handbook of Labor Economics, Vol. 3A, Amsterdam: Elsevier Science, ch. 29, 1761-1800. Solon, G. (2002): Cross-Country Dierences in Intergenerational Earnings Mobility. Journal of Economic Perspectives, 16(3) 59-66 ; downloadable from:

http://www.jstor.org/stable/3216950.

Solon, G. (2008): Intergenerational Income Mobility, in S.N. Durlauf and L.E. Blume (eds.): The New Palgrave Dictionary of Economics Online. Palgrave Macmillan; downloadable from:

article?id=pde2008_I000252.

http://www.dictionaryofeconomics.com/

5. Provision and Payment of Vocational Training Acemoglu, D. and D. Autor (2009): Lectures in Labor Economics, book manuscript in preparation, ch. 8 and 9; downloadable from:

http://econ-www.mit.edu/

files/4689.
Acemoglu, D. and J.-S. Pischke (1998): Why Do Firms Train? Theory and Evidence. Quarterly Journal of Economics, 113, 79-119; downloadable from

http://www.jstor.org/stable/2586986.
Labour Markets. able from

Acemoglu, D. and J.-S. Pischke (1999a): Beyond Becker: Training in Imperfect

http://www.jstor.org/stable/2565588.

The Economic Journal, 109(453), F112-F142; download-

Acemoglu, D. and J.-S. Pischke (1999b): The Structure of Wages and Investment in General Training. downloadable from

http://www.jstor.org/stable/2990782.

Journal of Political Economy, 107(3), 539-572;

Autor, D.H. (2001): Why Do Temporary Help Firms Provide Free General Skills Training? from

http://www.jstor.org/stable/2696463.

Quarterly Journal of Economics, 116, 1409-1448; downloadable

Autorengruppe Bildungsberichterstattung (2008): Bildung in Deutschland 2008 ; downloadable from:

http://www.bildungsbericht.de.

Becker, G. (1994): Human Capital: A Theoretical and Empirical Analysis with

Special Reference to Education, Chicago:

edition, ch. 3; downloadable from:

http://www.nber.org/books/beck94-1.

University of Chicago Press, 3rd

Boeri, T. and J. van Ours (2008): The Economics of Imperfect Labor Markets, Princeton: Princeton University Press, ch. 8.2.2 and 8.8.2. Borjas, G. (2009): Labor Economics, Boston: McGraw-Hill, 5th edition, ch. 6.11. Dustmann, C. and U. Schnberg (2008): Apprenticeship Training and Commitment to Training Provision. downloadable from:

Commitment.pdf.

http://www.homepages.ucl.ac.uk/~uctpusc/workingpapers/

Discussion Paper, University College London;

Dustmann, C. and U. Schnberg (2009): Training and Union Wages. Review of

Economics and Statistics, 91(2), 363-376; downloadable from:

mitpressjournals.org/doi/abs/10.1162/rest.91.2.363.
Journal of Economic Literature, 39(1), 34-92.

http://www.

Ryan (2001): The School-to-Work Transition: A Cross-National Perspective.

Wolter, S.C. and P. Ryan (2011): Vol. 3, ch. 11, 521-576.

Apprenticeship,

in:

E.A. Hanushek, S.

Machin, and L. Woessmann (eds.), Handbook of the Economics of Education,

6. Public Training Programs for the Economically Disadvantaged Ashenfelter, O. (1978): Estimating the Eect of Training Programs on Earnings,
Review of Economics and Statistics, 60(1), 47-57; downloadable from:

//www.jstor.org/stable/1924332.

http:

Biewen, M., B. Fitzenberger, A. Osikominu and M. Paul (2010): The Comparative Eectiveness of Public Sponsored Training Revisited: downloadable from: The Merits of Using Rich Administrative Data, Discussion Paper, University of Freiburg;

fbwmeval.

http://www.empedu.uni-freiburg.de/udocs/aopub/

Boeri, T. and J. van Ours (2008): The Economics of Imperfect Labor Markets, Princeton:

//press.princeton.edu/chapters/s12_8771.pdf.

Princeton University Press, ch. 12; downloadable from:

http:

Borjas, G. (2009): Labor Economics, Boston: McGraw-Hill, 5th edition, ch. 12.5. Cahuc, P. and A. Zylberberg (2007): Labor Economics, Cambridge: MIT Press, ch. 11.3. Calmfors, L. (1994): Active Labour Market Policy and Unemployment  A

Framework for the Analysis of Crucial Design Features, OECD Economic

50/4/33936463.pdf.

Studies, 22 (Spring), 7-47; downloadable from:

http://www.oecd.org/dataoecd/

Fitzenberger, B. A. Osikominu, and R. Vlter (2008): Get Training or Wait? Long Run Employment Eects of Training Programs for the Unemployed in Germany, Annales d'Economie et de Statistique, 91-92, 321-355. Heckman, J.J. R.J. LaLonde, J.A. Smith (1999): The Economics and Econometrics of Active Labor Market Programs, in O. Ashenfelter and D. Card (eds.): Handbook of Labor Economics, Vol. 3, Amsterdam: Elsevier Science, ch. 31, 1865-2097. Heckman, J.J. and J.A. Smith (2004): a Social Program: The Determinants of Participation in

Evidence from a Prototypical Job Training Program,

Journal of Labor Economics, 22(2), 243-298; downloadable from:

www.jstor.org/stable/3653624.

http://

O'Leary, C.J., R.A. Straits, and S.A. Wandner (2004): U.S. Job Training: Types, Participants, and History, in C.J. O'Leary, R.A. Straits, and S.A. Wandner (eds.): Job Training Policy in the US, Kalamazoo: W.E. Upjohn Institute for Employment Research, ch. 1, 1-20; downloadable from:

upjohninst.org/publications/titles/jtp.html.

http://www.

Osikominu, A. (2008): Evaluating Dynamically Assigned Training Programs for the Unemployed: Evidence from German Register Data, Doctoral Thesis, ch. 1; downloadable from:

aopub/diss.

http://www.empedu.uni-freiburg.de/udocs/

Plesca, M. and J. Smith (2007): Evaluating Multi-Treatment Programs: Theory and Evidence from the U.S. Job Training Partnership Act Experiment,
Empirical Economics, 32(2-3), 491-528; downloadable from:

springerlink.com/content/f214264m117m06l2.

http://www.

Rosenbaum, P.R. and D.B. Rubin (1983): The Central Role of the Propensity Score in Observational Studies for Causal Eects, Biometrika, 70(1), 41-55; downloadable from: Roy, A.D. (1951):

http://www.jstor.org/stable/2335942.

Some Thoughts on the Distribution of Earnings, Oxford

Economic Papers, 3 (2), 135-146; downloadable from:

org/stable/2662082.

http://www.jstor.

Rubin, D.B. (1974): Estimating Causal Eects of Treatments in Randomized and Nonrandomized Studies, Journal of Educational Psychology, 66(5), 688-701. Schochet, P.Z., J. Burghardt, and S. McConnell (2008): Does Job Corps Work? Impact Findings from the National Job Corps Study, American Economic
Review, 98(5), 1864-1886.