An empirical analysis of the interplay between households consumption and children's schooling decisions (original) (raw)
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We study the impact of one more year of child’s education on household (non-durable) consumption. We exploit an exogenous shock generated by a university reform in Italy in the early 2000s. We find that families responded in a way that is consistent with education as a production good. The higher child’s education produced household positive, permanent income innovations. Hence, family non-durable consumption increased. Our findings suggest that education can be an insurance device against adverse permanent income shocks. The 2001 reform not only positively affected offspring’s years of schooling, but it also had a positive effect to boost household consumption.
The returns to education in Italy: a new look at the evidence
2000
The Returns to Education in Italy: A New Look at the Evidence * The purpose of this paper is to provide an update of the empirical evidence on the private returns to education in Italy. First, we show that, whilst returns to education in Italy (based on gross wages) are in line with the European average, educational attainment is generally much lower (particularly at secondary and tertiary levels). How can we reconcile these findings? Based on a simple human capital model-where the optimal level of schooling is given by equating the marginal return to the marginal cost of education-we speculate that either marginal costs are steeper in Italy or that a larger share of the population involved in human capital investment faces high marginal costs in Italy compared to the European average. Second, we examine whether the estimated returns to education have varied significantly over time. The evidence is that returns have not changed much over the period 1977 to 1995, with the exception of 1993 and 1995, when they have increased significantly, especially among female employees. Quite interestingly, the observed increase in the returns to education has been almost completely driven by higher returns to education in the public sector. Assuming that skill biased technical change has been an important factor in shifting out the marginal returns to education, an important question for future research is why these shifts have only affected returns in the public sector of the economy. Third and last, we confirm the usual finding in the international literature that accounting for measurement error in years of schooling and/or for the endogeneity of educational choices by using instrumental variables significantly increases the returns to education with respect to estimates based on OLS methods. We also show that adding family background variables to the set of instruments significantly increases returns, which suggests that these variables affect mainly the subgroup of individuals with higher marginal returns to schooling.
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We study the relationship between (log) current earnings and educational levels in Italy. In line with other international evidence, we find that OLS under-estimate the marginal return to additional education. When the endogeneity of educational choice is taken into account, the marginal return from one additional year in junior high school increases from 3.2 to 5 percent. Similarly, the marginal return from one additional year in secondary school or in college increases respectively from 3.4 to 4.2 percent and from 6.4 to 7.2 percent. Using longitudinal data, we also find that individuals of the same age with higher education experience faster earnings growth. Hence, there is evidence that wage differentials by education widen as individuals grow older.
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SSRN Electronic Journal, 2000
We estimate the private (individual) and social return to schooling in Italy and four macro regions. Our estimates take into account the effects of schooling on employment and wages as well as the key features of the Italian tax and social insurance system. We find that the individual return to schooling compares favorably to the return to financial assets (especially in the South). At the social level, the available infrastructure-capital data indicates that the return to schooling exceeds that to infrastructures in the South.
2015
In this paper we show that there is a reduction in the correlation co-efficient between father and children schooling levels over time in Italy. However, focussing on equality of circumstances, we show that there is still a persistent difference in the odds of attaining a college degree between children of college educated parents and children of parents with lower secondary education attainment. The explanation of these trends lies in differential impact of liquidity constraints and risk aver-sion. Some tentative evidence on the persistent differential in returns to college educations depending on father’s education is also provided.
Intergenerational persistence of educational attainment in Italy
Economics Letters, 2013
In this paper we show that there is a reduction in the correlation coefficient between father and children schooling levels over time in Italy. However, focusing on equality of circumstances, we show that there is still a persistent difference in the odds of attaining a college degree between children of college educated parents and children of parents with lower secondary education attainment. The explanation of these trends lies in differential impact of liquidity constraints and risk aversion. Some descriptive evidence on the persistent differential in returns to college education depending on father's education is also provided.
Disse Working Paper Series, 2020
The main aim of this paper is to analyse the effect of social and territorial inequalities on educational outcomes in the Italian upper secondary school. For this purpose, the paper means to respond to 4 general questions: first, to what extent family background affects upper secondary school-choice and whether it has been changing during the last decade. Second, how strong is the school-track effect on learning outcomes net of other main independent variables. Third, to what extent the average family background at school level has an added role in the general explanatory model of inequalities in learning outcomes. Finally, throughout OLS models based on macro-area as a split dependent variable, we aim at accounting for structural explanatory differences between Northern and Southern regions. Findings shows a clear explanatory pattern: rather than the individual factors, it’s a chains of family background, school-choice as well as average school social status to play a determinant role in explaining learning outcomes. This explanatory pattern keeps being valid when splitting up for Italian macro areas (North-West, North-East, Centre, South and South-Islands). Two important exceptions stand out: 1) the effect of school-choice is stronger in South and South-Islands and 2) the effect of the average social status of schools is stronger in Centre and North-East.
Differences in Equivalent Income Across Cohorts of Households: Evidence From Italy
Review of Income and Wealth, 2010
Using Italian SHIW data, this paper explores how the evolution of household equivalent income over the 1989-2004 period has modified the relative position of different cohorts of households, at the same head's age. The descriptive analysis reveals the economic difficulties faced by young generations: while households whose heads were born in the 1930s and 1940s gain about 8 percent over the preceding cohorts, the younger ones record an average loss of about 5 percent. These differences result from the joint occurrence of various events, like the poor performance of the economy and its adverse effects on younger workers, institutional changes to the labor market, the new rules introduced for the pensions system, and an exceptional increase in house prices and rents. Changes in the economic conditions faced by youngsters (increasing difficulties in entering standard employment contracts, lower entry wages, higher costs for housing services) combine with changes in social norms and values, all affecting their demographic behavior (home-leaving pattern, union formation, and transition to parenthood).
RETURNS TO EDUCATION AND WAGE STRUCTURE IN ITALY: IS THERE AN UNSKILLED BIAS
2006
In this paper we analyse the role of education on the dynamics of wage structure in Italy. We derive two main results in a quintile regression framework, using SHIW data over the period 1993-2004. First, returns to education decline over time almost uniformly across the wage distribution. Second, using a quintile decomposition method we point out that the composition effect associated with the increased share of educated workers is positive, while the price effect of education is negative for the whole wage distribution. Assuming a standard demand and supply paradigm, this leads us to the conclusion that a sort of "unskilled" bias change could have been prevailing in the Italian labour market during last decade.