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Policies to Foster Human Capital
08 Feb 2000-Research Papers in Economics (Northwestern University/University of Chicago Joint Center for Poverty Research)-
TL;DR: Siegelman et al. as mentioned in this paper presented at the Aaron Wildavsky Forum, Richard and Rhoda Goldman School of Public Policy, University of California at Berkeley, on the long view about skill formation and sources of skill formation in a modern economy.
Abstract: This paper was given presented at the Aaron Wildavsky Forum, Richard and Rhoda Goldman School of Public Policy, University of California at Berkeley. The research reported here was supported by the National Science Foundation, the Russell Sage Foundation and the American Bar Foundation. Outline: Rising Wage Inequality - A Global Problem Linked To Trade and Technology Show Magnitudes of Problem 1.66 Trillion Cost To Restore U.S. to Previous Levels Tuition Subsidy Policy How to Combat This? Transfer Unpopular Skill enhancement is popular Another avenue is to subsidize work by the unskilled Think more broadly about tax/transfer policy Take the Long View Main Points of My Lecture Tonight About Skill Formation and Sources of Skill Formation in A Modern Economy Costly To Produce Skill Need to Recognize That Skill is Not Undimensional Recognize Diversity of Skill Motivation, IQ, Skill all matter but these are not the same thing. Need to Recognize the Life Cycle of Skill Production: Learning Begets Learning and Early Learning More Productive Than Later Learning: Not just because payoff is less for the late investor but also Because of synergies and Complementarity. Beyond A Certain Age and Stage in Life Cycle H.C. Investment Not Productive. Recognize Important Role of Families and Informal Sources of Skill "Social Planners" and professional educators equate skill with educational; what is produced in their institutions and what is measured by their tests; but in a broader definition of skill families play a much greater role (values; motivation) OJT is productive. Firms are highly productive sources of skill of Human Capital 25-50% of Human Capital Produce on the Job The Role of the Formal Overstated and Informal Context and Sources of Skills Understated. A Substantial Antimarket - Anti Choice Bias of Many Educational Planners Against Market and Competition - Yet The Evidence Strong Favors Competition in Provision of Education German Apprenticeship System // Data from U.S. Parental Preferences Peculiar World of High School and the Advantage of School to Work Programs Many Traditional Arguments Supporting Educational Interventions Greatly Overstated Evidence Against Short Term Liquidity Constraints Evidence that H.C. Should be Taxed More (At Least Within U.S. System) - Elimination of Progressive Taxes and Shift To A Consumption Tax and Making Tuition Deductible. Raises Physical Capital Accumulation and Raises Productivity and Wages Formal Schooling and Job Training both Private and Public Quality Effects Credit Constraints Wage Subsidies: Do They Work? Tax Policy Early Interventions and Donohue Siegelman Estimates Long View
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TL;DR: This paper found that computer capital substitutes for workers in performing cognitive and manual tasks that can be accomplished by following explicit rules, and complements workers in non-routine problem-solving and complex communications tasks.
Abstract: We apply an understanding of what computers do to study how computerization alters job skill demands. We argue that computer capital (1) substitutes for workers in performing cognitive and manual tasks that can be accomplished by following explicit rules; and (2) complements workers in performing nonroutine problem-solving and complex communications tasks. Provided these tasks are imperfect substitutes, our model implies measurable changes in the composition of job tasks, which we explore using representative data on task input for 1960 to 1998. We find that within industries, occupations and education groups, computerization is associated with reduced labor input of routine manual and routine cognitive tasks and increased labor input of nonroutine cognitive tasks. Translating task shifts into education demand, the model can explain sixty percent of the estimated relative demand shift favoring college labor during 1970 to 1998. Task changes within nominally identical occupations account for almost half of this impact.
2,843 citations
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TL;DR: This paper showed the importance of cognitive and non-cognitive skills that are formed early in the life cycle in accounting for racial, ethnic and family background gaps in schooling and other dimensions of socioeconomic success.
Abstract: This paper considers alternative policies for promoting skill formation that are targeted to different stages of the life cycle. We demonstrate the importance of both cognitive and noncognitive skills that are formed early in the life cycle in accounting for racial, ethnic and family background gaps in schooling and other dimensions of socioeconomic success. Most of the gaps in college attendance and delay are determined by early family factors. Children from better families and with high ability earn higher returns to schooling. We find only a limited role for tuition policy or family income supplements in eliminating schooling and college attendance gaps. At most 8% of American youth are credit constrained in the traditional usage of that term. The evidence points to a high return to early interventions and a low return to remedial or compensatory interventions later in the life cycle. Skill and ability beget future skill and ability. At current levels of funding, traditional policies like tuition subsidies, improvements in school quality, job training and tax rebates are unlikely to be effective in closing gaps.
1,656 citations
TL;DR: In this paper, the authors formalize the concepts of self-productivity and complementarity of human capital investments and use them to explain the evidence on skill formation, and provide a theoretical framework for interpreting the evidence from a vast empirical literature, for guiding the next generation of empirical studies, and for formulating policy.
Abstract: This paper presents economic models of child development that capture the essence of recent findings
from the empirical literature on skill formation. The goal of this essay is to provide a theoretical framework
for interpreting the evidence from a vast empirical literature, for guiding the next generation of empirical
studies, and for formulating policy. Central to our analysis is the concept that childhood has more than one
stage. We formalize the concepts of self-productivity and complementarity of human capital investments
and use them to explain the evidence on skill formation. Together, they explain why skill begets skill
through a multiplier process. Skill formation is a life cycle process. It starts in the womb and goes on
throughout life. Families play a role in this process that is far more important than the role of schools.
There are multiple skills and multiple abilities that are important for adult success. Abilities are both
inherited and created, and the traditional debate about nature versus nurture is scientiÞcally obsolete.
Human capital investment exhibits both self-productivity and complementarity. Skill attainment at one
stage of the life cycle raises skill attainment at later stages of the life cycle (self-productivity). Early
investment facilitates the productivity of later investment (complementarity). Early investments are not
productive if they are not followed up by later investments (another aspect of complementarity). This
complementarity explains why there is no equity-efficiency trade-off for early investment. The returns to
investing early in the life cycle are high. Remediation of inadequate early investments is difficult and very
costly as a consequence of both self-productivity and complementarity.
1,585 citations
01 Jan 2001
TL;DR: The role of human capital in the economic and social development of nations is commonly acknowledged although its exact effects are still in dispute as mentioned in this paper, however, increasing attention has been focused on the role of social capital or the role in social relationships and individual abilities in economic activity and social well-being.
Abstract: This report argues that the role of human capital in the economic and social development of nations is commonly acknowledged although its exact effects are still in dispute. Recently, increasing attention has been focused on the role of social capital or the role of social relationships and individual abilities in economic activity and social well-being. The report has three main purposes: (1) to describe the current evidence on investment in human capital and its role in economic growth and social well-being; (2) to describe and clarify the new concept of social capital; and (3) to identify the roles of human and social capital in achieving sustainable economic and social development. The chapters are: Emerging social and economic concerns; The evidence on human capital; The evidence on social capital; Policy implications and further research needs. Appendices: Some measures of well-being; Some trends in the social and economic environments; Determinants of school attainment: the research evidence; The impact of human capital on economic growth: some major studies; Are trust and civic engagement declining in OECD countries?
1,223 citations
TL;DR: The authors used longitudinal data on cognitive and personality traits from an experimental evaluation of the influential Perry Preschool program to analyze the channels through which the program boosted both male and female participant outcomes.
Abstract: A growing literature establishes that high quality early childhood interventions targeted toward disadvantaged children have substantial impacts on later life outcomes. Little is known about the mechanisms producing these impacts. This paper uses longitudinal data on cognitive and personality traits from an experimental evaluation of the influential Perry Preschool program to analyze the channels through which the program boosted both male and female participant outcomes. Experimentally induced changes in personality traits explain a sizable portion of adult treatment effects.
1,174 citations
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TL;DR: In this paper, the authors examine the impacts of active labor market policies, such as job training, job search assistance, and job subsidies, and the methods used to evaluate their effectiveness.
Abstract: Policy makers view public sector-sponsored employment and training programs and other active labor market policies as tools for integrating the unemployed and economically disadvantaged into the work force. Few public sector programs have received such intensive scrutiny, and been subjected to so many different evaluation strategies. This chapter examines the impacts of active labor market policies, such as job training, job search assistance, and job subsidies, and the methods used to evaluate their effectiveness. Previous evaluations of policies in OECD countries indicate that these programs usually have at best a modest impact on participants’ labor market prospects. But at the same time, they also indicate that there is considerable heterogeneity in the impact of these programs. For some groups, a compelling case can be made that these policies generate high rates of return, while for other groups these policies have had no impact and may have been harmful. Our discussion of the methods used to evaluate these policies has more general interest. We believe that the same issues arise generally in the social sciences and are no easier to address elsewhere. As a result, a major focus of this chapter is on the methodological lessons learned from evaluating these programs. One of the most important of these lessons is that there is no inherent method of choice for conducting program evaluations. The choice between experimental and non-experimental methods or among alternative econometric estimators should be guided by the underlying economic models, the available data, and the questions being addressed. Too much emphasis has been placed on formulating alternative econometric methods for correcting for selection bias and too little given to the quality of the underlying data. Although it is expensive, obtaining better data is the only way to solve the evaluation problem in a convincing way. However, better data are not synonymous with social experiments. © 1999 Elsevier Science B.V. All rights reserved.
3,352 citations
Book•
01 Jan 19611,618 citations
"Policies to Foster Human Capital" refers background in this paper
...In addition, since the publication of the Coleman Report (1966), we have known that families and environments—not just, or even, schools—play the crucial role in motivating and producing educational success as measured by test scores....
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...students, demonstrated by Coleman, Kilgore and Hoffer (1982) and Coleman and Hoffer (1987), is largely a consequence of gains registered by inner-city students who choose Catholic schools over inferior inner-city public schools....
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...Within it, an artificial adolescent culture is left to flourish which often discourages academic achievement and the pursuit of knowledge even in the best schools in the best neighbourhoods (Coleman, 1961)....
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Book•
14 May 1987
TL;DR: Coleman and Hoffer as mentioned in this paper conducted a four-year study of 1,015 private and public high schools and concluded that successful high schools result from strong communities reinforcing teachers' efforts.
Abstract: What makes a high school successful? Coleman, a sociologist a t the University of Chicago, and Hoffer, a research associate at Northern Illinois University's Public Opinion Laboratory, conducted a fouryear study of 1,015 private and public high schools. They conclude that successful high schools result from strong communities reinforcing teachers' efforts. The authors distinguish between two types of school communities. "Functional communities" are those where the school's goals mesh with the values of the surrounding neighborhood. During the first half of the century, because parents and teachers both taught values "which place [dl importance upon learning" (hard work, respect for teachers), even children from lower-class families mastered the skills needed to better themselves. Many "functional communities" died during the 1960s, as school consolidation and busing created huge high schools that had little to do with their surrounding neighborhoods. Faced with public schools that were increasingly disorderly and bureaucratic, a growing number of parents placed their children in schools tied to "value communities," whose common bond is a set of values endorsed by the parents of the children enrolled in them. These schools range from fundamentalist Christian academies to such selective public schools as New York's Stuyvesant High and Walnut Hills High in Cincinnati. Unlike most private and public schools in the 1980s, Catholic high schools are still part of functional communities; values learned in school are shared by both home and church. Parents are more involved in Catholic high schools than in public schools; 17 percent more parents of Catholic high school students attended a parent-teacher conference and 19 percent more parents did volunteer work for their school than did public school parents. Fifty-three percent of public high school principals said that parents "lack in te res t in s tudents ' progress," compared to only seven percent of Catholic high school principals. Because parents support teachers who make students work hard, Catholic high schools outperform public high schools and match other private schools in learning, even though Catholic schools pay their teachers less. Students in Catholic high schools learn three grades' worth of reading and mathematics in two years; public high school students learn two grades' worth in two years. In part, the authors attribute Catholic high schools' success to "relative inflexibility" which "has been able to withstand the curriculum watering-down . . . that occurred in American [public] high schools in the 1970s." Students in Catholic high schools are also more dutiful than those in comparable institutions; 49 percent of Catholic high school sophomores had perfect attendance records compared to 34 percent of other high school students. While 15 percent of public school sophomores and 12 percent of other private school sophomores later dropped out, only three percent of Catholic high school sophomores dropped out by their senior year. The authors are not optimistic about transforming public schools. They conclude that using tax credits to create private schools affiliated with a factory or other workplace probably would be the best way to restore "functional communities." These schools, similar to laboratory schools linked to universities, would be "the next step in a social evolution" that has replaced the neighborhood with "formal organizations" as the center of most American lives.
1,114 citations
TL;DR: In the context of the economist's concern with education as a process of investment in manpower, it is important to be reminded that formal school instruction is neither an exclusive nor a sufficient method of training the labor force as discussed by the authors.
Abstract: IN TIHE context of the economist's concern with education as a process of investment in manpower, it is important to be reminded that formal school instruction is neither an exclusive nor a sufficient method of training the labor force. Graduation from some level of schooling does not signify the completion of a training process. It is usually the end of a more general and preparatory stage, and the beginning of a more specialized and often prolonged process of acquisition of occupational skill, after entry into the labor force. This second stage, training on the job, ranges from formally organized activities such as apprenticeships and other training programs2 to the in-
1,102 citations
TL;DR: This article examined the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it, and showed that the implicit economic model assumes myopia and that the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data.
Abstract: This paper examines an empirical regularity found in many societies: that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education. We examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it. We show that the implicit economic model assumes myopia. The intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data. We produce an alternative choice‐theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions.
1,079 citations