Michalis Haliassos, Vimal Balasubramaniam, 01 June 2018

The Third CEPR European Workshop on Household Finance took place on 11 and 12 May in London. This column describes the papers that were presented at the workshop.

Jared Ashworth, V Joseph Hotz, Arnaud Maurel, Tyler Ransom, 14 April 2018

An important determinant of wages is how much human capital one possesses. This column considers the effect of schooling and early career work experience on later life wages, and whether these effects have changed across recent cohorts of men in the US. It finds that the returns to an additional year of schooling are significantly overstated when early career work experience is not accounted for, as are the returns to a high school diploma or bachelor’s degree. In addition, the returns to an additional year of working while in high school or college are larger than to the returns to an additional year of schooling.

Arnaud Chevalier, Peter Dolton, Melanie Lührmann, 15 July 2017

Feedback has been found to improve exam performance in the context of higher education, but demand for feedback is low among students when obtaining it requires unrewarded effort. This column evaluates how the provision of extrinsic incentives affects students’ effort and performance. Having online learning assessments count towards final grades is found to trigger large participation increases, and better subsequent exam performance. Given the low cost of these interventions, they offer particular promise in higher education.

Anna Valero, John Van Reenen, 10 November 2016

Growth in higher education has been driven by the view that human capital is essential for economic and social progress. This column uses a comprehensive international dataset covering 78 countries to show that on average, a 10% increase in the number of universities (roughly adding one more university to the average region in the data) increases a region’s income by 0.4%, with additional effects spilling over to other regions within the same country. In the UK context, the benefits of university expansion are likely to far outweigh the costs.

Giorgio Brunello, Guglielmo Weber, Christoph Weiss, 15 June 2016

Early life conditions can have long-lasting effects on individual development and labour market success. Using a sequence of reforms that raised the minimum school-leaving age in Europe, this column investigates how access to books at home influences educational and labour market outcomes. The returns to an additional year of education for individuals brought up in households with few books are much lower than for the luckier ones who had more than a shelf of books at home.

Jeffrey Brown, Chichun Fang, Francisco Gomes, 23 March 2015

College-educated workers are less likely to experience unemployment, but their lifetime earnings are also much more uncertain. This column estimates the risk-adjusted value of college education to be between $225,000 and almost $600,000, corresponding to risk-adjusted increases in total present-value lifetime wealth of 35% to 48%. Increased earnings volatility actually decreased the risk-adjusted value of college between 1968–1980 and 1991–2011 by almost $50,000, even though expected lifetime income increased by about $150,000. Nevertheless, even the most conservative estimates of the value of college education are still positive.

Victor Lavy, Avraham Ebenstein, Sefi Roth, 20 November 2014

Admission to higher education often depends on the results of high-stakes tests, but assessing the consequences of having a ‘bad day’ on such tests is challenging. This column provides evidence from a dataset on Israeli high-school students. Random variations in pollution have measurable effects on exam performance, and these in turn have significant effects on students’ future educational and labour-market outcomes. The authors argue that placing too much weight on high-stakes exams may not be consistent with meritocratic principles.

Manudeep Bhuller, Magne Mogstad, Kjell G. Salvanes, 22 September 2014

The impact of education on earnings over the life cycle is a critical factor for policy decisions ranging from education to taxation and pensions. This column exploits a unique Norwegian population panel data set to estimate an internal rate of return to additional schooling of about 10%. The standard Mincer-regression approach is also shown to substantially underestimate schooling’s rate of return.

Nishith Prakash, Aimee Chin, Mehtabul Azam, 26 May 2010

Does it pay to speak English? This column presents evidence from India that being fluent in English increases the hourly wages of men by 34% and of women by 22%. But the effects vary. Returns are higher for older and more educated workers and lower for less educated, younger workers, suggesting that English is becoming a complement to education.

Bruce Sacerdote, 05 June 2009

Bruce Sacerdote of Dartmouth College talks to Romesh Vaitilingam about his work with Scott Carrell, identifying children in New England high schools who have the qualifications to go to college and encouraging them to apply with information or cash incentives. They discuss the returns to college education, and the role of guidance counselling. The interview was recorded at the Centre for Market and Public Organisation in Bristol (UK) in February 2009.

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