Developing Economy
Are Skills Becoming an Increasingly Important Determinant of Life Outcomes?
Douglas Downey, Benjamin Gibbs & Eric Grodsky
Socius: Sociological Research for a Dynamic World, December 2024
Abstract:
Several theoretical traditions posit that individual skills (or human capital) have become stronger predictors of life outcomes over time. To date, however, significant limitations have hindered a confident empirical assessment of this important idea. Using six nationally representative datasets, the authors find surprisingly little support for the notion that measurable skills are becoming more important over time. Instead, the results reveal a durable relationship between measurable skills and socioeconomic outcomes despite periods of significant societal change.
Entrepreneurial Reluctance: Talent and Firm Creation in China
Chong-En Bai et al.
Economic Journal, forthcoming
Abstract:
This paper examines the correlation between cognitive ability and firm creation. Drawing on administrative college admissions data and firm registration records in China, we investigate who had created firms by their mid-30s. We find a clear pattern of entrepreneurial reluctance: Given the same backgrounds, individuals with higher college entrance exam scores are less likely to create firms. Through an exploration of firm performance, alternative career trajectories, and variations across regions, we propose an explanation: The ability represented by exam scores is useful across occupations, yet higher-scoring individuals are attracted to waged jobs, particularly those of the state sector.
The causal effect of economic freedom on female employment & education
Robin Grier
Contemporary Economic Policy, forthcoming
Abstract:
While there are decades of evidence that economically free economies grow faster and are more productive than less free ones, there is less knowledge about the effect of economic freedom on groups that have traditionally been disadvantaged. I study the causal effects of large and sustained jumps in economic freedom on women's labor force participation and primary school enrollment. I find that these jumps have a positive and statistically significant effect in both cases–economic freedom is good for women's labor force opportunities and female education.
Forecasting Africa’s fertility decline by female education groups
Saroja Adhikari, Wolfgang Lutz & Endale Kebede
Proceedings of the National Academy of Sciences, 12 November 2024
Abstract:
While female education has long been recognized as a key driver of fertility decline during the process of demographic transition and most population projection models consider it implicitly or explicitly in their forecasts of overall fertility, there still is need for a method to forecast education-specific fertility trends directly. Here we propose a method for projecting education-specific fertility declines for cohorts of women in Sub-Saharan Africa based on all available demographic and health surveys data for African countries (including 1.03Mio cases). We study at different levels of aggregation (sample clusters, strata, and national) the associations between ideal family size and completed cohort fertility for education groups, on the one hand, and the average level of education in those units, on the other. The consistently very strong empirical associations suggest a plausible narrative by which a higher prevalence of educated women in a spatial unit influences the fertility levels of women in all specific education categories. Empirical associations between education-specific cohort fertility trends at the national level and newly available quality-adjusted human capital data for these cohorts are then operationalized to produce education-specific population projections as they are needed for -- among other uses -- the shared socioeconomic pathways scenarios that are widely used in the climate change research community. Sensitivity analyses including out-of-sample projections support the validity of the proposed method which is then applied to 37 African countries.
Estimating Aggregate Human Capital Externalities
Junjie Guo, Nicolas Roys & Ananth Seshadri
NBER Working Paper, November 2024
Abstract:
This paper estimates two measures of human capital externalities. By incorporating externalities into an overlapping-generations model of human capital accumulation with Compulsory Schooling Laws (CSL), we show that human capital externalities can be estimated from the effects of CSL for one generation on wages of other generations. Using an instrumental-variable strategy deduced from the model, we find one more year of average schooling at the U.S. state level raises individual wages by 6-8%. Taking this reduced-form estimate into account, we find the elasticity of a typical firm’s productivity with respect to the average human capital of an economy is 0.121.
Persistent Effect of Historical China's Permanent Forced Military Service System: The Emperor is Dead, Long Live the Emperor
Shuo Chen & Danli Wang
Journal of Historical Political Economy, July 2024, Pages 159-187
Abstract:
This study examines the long-term impact of the permanent forced military service system during China's Ming dynasty (between 1368 and 1644) on modern contracting institutions. The military service quota was apportioned by clan, which obligated the nonservice family members to compensate the selected member for life for his sacrifice. The system required the signing of a formal contract stipulating the rights and obligations of both parties and their accountability for breach of contract, because traditional clan rules, which emphasized only the obligations and punishment of the young generation, were ineffective. We argue that the formal contracts embody the modern contracting attitude. The baseline estimates show that the permanent forced military service system significantly affected modern contracting institutions. We conduct 2SLS estimation to test the robustness of the results. Our findings prompt us to reflect on the role of clans in China's modern economic growth.
Anatomy of a premodern state
Leonor Freire Costa, António Henriques & Nuno Palma
European Review of Economic History, November 2024, Pages 453–474
Abstract:
We provide a blueprint for constructing measures of state capacity in premodern states, offering several advantages over the current state of the art. We argue that assessing changing state capacity requires considering the composition of revenues, expenditure patterns, and local-level budgets. As an application, we examine the case of Portugal (1367–1844). Our findings demonstrate that throughout most of this extended period, Portugal maintained comparatively high fiscal and legal capacities. This challenges claims that Portugal’s economic decline from the second half of the eighteenth century was due to low state capacity.
Nepotism vs. intergenerational transmission of human capital in Academia (1088–1800)
David de la Croix & Marc Goñi
Journal of Economic Growth, December 2024, Pages 469–514
Abstract:
We have constructed a comprehensive database that traces the publications of father–son pairs in the premodern academic realm and examined the contribution of inherited human capital versus nepotism to occupational persistence. We find that human capital was strongly transmitted from parents to children and that nepotism declined when the misallocation of talent across professions incurred greater social costs. Specifically, nepotism was less common in fields experiencing rapid changes in the knowledge frontier, such as the sciences and within Protestant institutions. Most notably, nepotism sharply declined during the Scientific Revolution and the Enlightenment, when departures from meritocracy arguably became both increasingly inefficient and socially intolerable.