The process of accumulating human capital formally begins when individuals enter the education system. It is widely accepted that tracking students plays an important role in human capital production. This dissertation focuses on the practice and consequences of tracking students at the high school level. I use a variety of methods to analyze how students are assigned to tracks, the effects of tracks on the human capital stock, the flow of services from that stock, and to explore whether tracking affects the decision to drop out of high school. The analysis provides new perspectives in the economics of human capital and has important implications for education policy. Although tracking students by perceived ability is a long-standing practice, its merits have been hotly debated over the years. Chapter 3 explores one of the four tenants of tracking, whether or not it is a fair and accurate process. I analyze the possibility of racial or gender discrimination in track assignment and find that there is evidence of some racial discrimination in the case of African Americans and Latinos. The evidence of discrimination leads me to question whether tracking is indeed an accurate process. This has direct implications for education policy, as accuracy in track assignment is critical for the pedagogical goals of tracking. Chapter 4 considers whether or not tracking students in high school affects their productivity, as measured by their wages, once they enter the labor force. I present the school and work profiles of individuals in the different tracks, develop several stylized facts, and analyze the effect of tracking on the wage rate. I conclude that the value of an additional year of schooling is different across tracks. The decision to drop out of high school is both a private decision and a social decision. In chapter 5, I examine how peer effects can influence the decision to drop out for both high ability and low ability students. The model and evidence suggest that students already at risk for dropping out might be more likely to do so if they are placed in a track with similarly at-risk students.

The labor market matches agents with work, but uncertainty over the type and location of available work reduces the efficiency with which skill can be allocated to its best use. The essays in this dissertation examine the impact of uncertainty on the optimal division of work into jobs and allocation of agents to those jobs using applied economic theory.

This dissertation consists of three essays in applied microeconomics. The first essay investigates the effects of generic entry on post-patent price competition in the prescription drug market using NDC Health data on 18 oral solids that lost their patent sometime between February 1998 and 2002. I am able to characterize the impact of endogenous generic entry on branded and generic prices, conditional on payment type (i.e., cash, Medicaid, third party). Based on the findings in this paper, the overall, long-term impacts of the 1984 Drug Price Competition and Patent Term Restoration Act (Waxman-Hatch Act) are yet to be determined. The second essay develops a theoretical model of earnings where human capital is the central explanatory variable. The analysis and estimation strategy stems from the Mincerian simple schooling model. Human capital investments (i.e., schooling) are incorporated into a model based on individual wealth maximization. We utilize the conventional economic models of supply and demand to derive an optimal level of schooling function. Using the NLSY79, we stratify our sample into one-year work experience intervals for 1985-1989 to identify the "overtaking" cohort (i.e., the years of work experience at which an individual's observed earnings approximately equal what they would have been based on schooling and ability alone). We employ the AFQT score as an ability proxy and consider its possible endogeneity for several estimation strategies. The third essay attempts to address the bias inherent in the use of potential, as opposed to actual, work experience measures in human capital models. While such a proxy is often deemed reasonable for males, problems still exist---specifically, unemployment spells manifesting themselves as active job searches or withdrawal from the labor market. Presumably, such activities have different effects on one's work experience. Potential work experience measures also abstract away from employment status, over-time work, moonlighting, and multiple-job holding. We employ actual work experience data from the NLSY79 and the PSID and extend our findings to a data set in which actual measures of work experience are not available---specifically, the IPUMS, with the creation of predicted work experience measures.

Previous research has generally shown a very small although statistically significant economic benefit from attending high-quality colleges. This small effect was at odds with what students' college choices and various social theories would seem to suggest. This study sought to reconcile the empirical evidence and theories. The effort was in two directions. First, the economic effect of college quality was reexamined--not only for an "average" student, but also for different students. Second, the effect of college quality was expanded from examining only the economic benefit to considering other student outcomes, including job satisfaction and graduate degree accomplishment. A new perspective regarding the social role of college quality was offered in conclusion.

Workers' compensation insurance in the United States began in the early twentieth century when states rapidly enacted their own versions to protect workers and limit the liability of employers. Premiums account for two percent of payrolls, and substantially more in dangerous industries, and therefore represent an important portion of the modern employment compensation package. The introductory section provides an overview of worker's compensation insurance. The second chapter outlines the crucial issues relevant to workers' compensation programs between 1930 and 2000. It also explains how the program has evolved over the past seventy years. The third chapter delves into the political economy of workers' compensation benefits. States passed workers' compensation laws in the early twentieth century and continue to frequently update important aspects of these statutes. The trend has been for state legislatures to mandate more generous benefits; however, these changes seldom occur simultaneously in all states. A panel dataset is used to explain why states mandate unequal benefits. These benefits differ in several ways, including wage replacement rates, maximum weekly benefits, and the duration of payments. To take into account the important variation, state-level information is used to construct an index that describes the expected net present value of benefits an average worker might expect to receive in each state for each year. The results suggest that federal and state governments, employment characteristics, and unionization each influence overall benefits. Then, the interaction between the wages that workers earn and their state-mandated workers' compensation benefits is explored. Economic theory implies that, all else equal, higher expected benefits will be offset by lower wages. A new strategy is developed to reduce the biases inherent in the earlier estimation techniques. I apply a two-step procedure that divides the sample and uses separate measures of benefits to understand the impact on workers' wages. The results suggest that wage offsets are largely avoided by high-wage workers and offsets for workers in hazardous occupations vary over time.

The study finds evidence of a cohort effect in female to male wage differentials caused by a greater earnings growth across generations. This imply a steeper female wage profile than is commonly accepted in the literature. The results presented in this paper also support the findings of Gold and Vella (1991) and Vella (1991). There is a significant impact from correcting for endogeneity of experience and education in the estimation of the wage equation. This finding is important since it implies that ignoring the correction for endogeneity will lead to problems of inconsistency in the estimation of the parameters. Our results show that this inconsistency leads to underestimation of the impact of experience in the wage equation.

<p> This dissertation introduces a panel data method to estimate country-specific steady state levels of output in an augmented Solow growth model. The use of panel data permits the estimation of a country-specific effect which can explain the surprising result that many developing economies are above their steady states. These empirical results also confirm that the augmented Solow model can explain the present cross-country income <i> divergence</i> of developed and developing economies. Another application finds evidence that the post-Soviet economies began their transition toward markets with initial conditions of overcapitalization. Finally, when the results are sufficient, there is also the possibility of describing an entire period of growth and gaining insights into future periods. This is shown with the OECD economies. </p><p> In Islam (1995), panel data is first used to estimate the parameters of the Solow growth model. The following year, Cho and Graham (1996) published a small paper which illustrates a simple way to compute steady state levels of per capita income by using the results of cross-sectional convergence tests. This dissertation simply combines these two methods with the result that the interpretations are more satisfying. In sum, we find that countries can begin a period of development above or below their steady states and that countries converging from above should be considered to be overcapitalized. This implies that development through investment can only succeed when there is convergence from below the steady state. Above the steady state, total factor productivity is too low to sustain the relatively high levels of capital. </p><p> The organization of the dissertation is linear with an introduction preceding the second chapter's literature review and the development of a theoretical and empirical model in the third chapter. The applications of the method then follow. Chapter 4 uses a worldwide sample to compare the result to other work and to show that this fundamental model of growth theory can explain the observed increasing levels of international inequality. Chapter 5 takes a look at the transition economies. In addition to finding evidence of overcapitalization, this dissertation finds a positive correlation between growth and the privatization of small business under transition. Additionally, there is a negative impact of price liberalization under the conditions of repressed inflation experienced by many Soviet-era planned economies. Chapter 6 uses a sample of OECD economies to obtain a significant deterministic, technological growth rate. This is possible because the countries are similar enough to make the assumption that they have the same growth rate more realistic. This enables an understanding of steady states after the initial period and leading into the most contemporaneous period of the sample.</p><p> <b>Keywords:</b> macroeconomic analyses of economic development; institutions and growth; measurement of economic growth; cross-country output convergence; models with panel data; government policy; socialist systems and transitional economies: political economy, property rights; socialist institutions and their transitions</p>

<p>This dissertation consists of three separate essays on the economics of education. In the first chapter, co-authored with Esteban Aucejo, studies the relative effectiveness of reducing absences to extending the school calendar on test score performance. Using administrative data for North Carolina public schools, we exploit a state policy that provides variation in the number of days prior to standardized testing and find substantially larger effects for absences relative to additional days of class.</p><p>The second chapter, co-authored with Esteban Aucejo, analyzes whether different institutional settings could affect how school administrators and teachers respond to possible extensions of the school calendar. We present a theoretical model in which principals set the date of the test and teachers decide how much effort to exert in the classroom with and without monetary performance bonuses for teachers. Leveraging the removal of monetary bonuses during the sample period, we utilize a difference-in- difference estimation strategy and find that, consistent with the theoretical model, low performing schools are more likely to make extensive use of the testing window when monetary bonuses are in place; this behavior disappears after changes to the scheme of incentives.</p><p>In the third chapter, I present joint work with Peter Arcidiacono, V. Joseph Hotz and Arnaud Maurel, utilizing data on subjective expectations of outcomes from counterfactual choices to recover <italic>ex ante<\italic> treatment effects as well as the non-pecuniary benefits associated with different treatments. The particular treatments we consider are the choice of occupation. By asking individuals about potential earnings associated with counterfactual choices of college majors and occupations, we can recover the full distribution of <italic>ex ante<\italic> monetary returns to particular occupations, and how they vary across majors. We then link subjective expectations to a model of occupational choice, enabling the examination of how individuals tradeoff their preferences for particular occupations with the corresponding monetary rewards. While sorting across occupations is partly driven by the <italic>ex ante<\italic> monetary returns, sizable differences in expected earnings across occupations remain after controlling for selection on monetary returns, which points to the existence of substantial compensating differentials.</p> / Dissertation

<p> Over the last 100 years, there has been an ever-tightening correlation between education and employment. In the early 1900s, it was the attainment of a high school diploma that yielded lower unemployment. In the middle of the century, it was the bachelor's degree, and in the 21st century, it is advanced degrees, such as MBAs. While there is a preponderance of data supporting the relationship between higher levels of education and a diminishing likelihood of unemployment, the value of continuing education potentially assisting an educated (degree-holding) worker back into the workforce is an un-researched area. </p><p> This study examined the relationship between the pursuit of continuing education (either advanced academic degree or industry certification) and re-employment for experienced professionals. When the educational effort was introduced in interviewing, hiring or sourcing activities, did recruiters or hiring managers give preference to that job candidate? Moreover, since the worker already had an academic degree, would pursuit of an advanced degree be more beneficial than the pursuit of a professional certification? </p><p> Early discussions with several potential subjects indicated that they could not, due to privacy and legal issues, divulge hiring decisions for specific staff members. Therefore, two anonymous surveys were devised to solicit insights from both job seekers and recruiters/hiring managers. The recruiter/hiring manager responses supplied the most direct answers to the research questions while the job seeker responses provided insights on the current approach to education when a person is unemployed. </p><p> The findings identified that recruiters/hiring managers embraced continuing education. Depending on the situation, between 35% and 67% of the respondents valued the educational efforts in the hiring process. In most cases, since the worker already held a bachelor's degree, pursuit of an industry certification was deemed more valuable than the pursuit of an advanced degree, but neither pursuit could compete with job candidates who already held advanced degrees. </p><p> While further research is needed to refine the differences based on age, degree type, and industries, the general guidance for an out-of-work professional with a bachelor's degree is to pursue industry certification or pursue an advanced degree to improve the prospects of quicker re-employment. </p>

Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 2007. / Source: Dissertation Abstracts International, Volume: 68-06, Section: A, page: 2560. Adviser: Elizabeth T. Powers. Includes bibliographical references (leaves 159-163) Available on microfilm from Pro Quest Information and Learning.