The singular focus of public debate on the “top 1 percent” of households overlooks the component of earnings inequality that is arguably most consequential for the “other 99 percent” of citizens: the dramatic growth in the wage premium associated with higher education and cognitive ability. This Review documents the central role of both the supply and demand for skills in shaping inequality, discusses why skill demands have persistently risen in industrialized countries, and considers the economic value of inequality alongside its potential social costs. I conclude by highlighting the constructive role for public policy in fostering skills formation and preserving economic mobility.

/pdf/skills-education-and-the-rise-of-earnings-inequality-among-2nf25zypnq.pdf

Skills, education, and the rise of earnings inequality among the “other 99 percent”

Numerous studies regress log earnings on schooling and report estimated coefficients as "Mincer rates of return" A more recent literature uses instrumental variables This chapter considers the economic interpretation of these analyses and how the availability of repeated cross section and panel data improves the ability of analysts to estimate the rate of return We consider under what conditions the Mincer model estimates an ex post rate of return We test and reject the model on six cross sections of US Census data We present a general nonparametric approach for estimating marginal internal rates of return that takes into account tuition, income taxes and forms of uncertainty We also contrast estimates based on a single cross-section of data, using the synthetic cohort approach, with estimates based on repeated cross-sections following actual cohorts Cohort-based models fitted on repeated cross section data provide more reliable estimates of ex post returns Accounting for uncertainty affects estimates of rates of return Accounting for sequential revelation of information calls into question the validity of the internal rate of return as a tool for policy analysis An alternative approach to computing economic rates of return that accounts for sequential revelation of information is proposed and the evidence is summarized We distinguish ex ante from ex post returns New panel data methods for estimating the uncertainty and psychic costs facing agents are reviewed We report recent evidence that demonstrates that there are large psychic costs of schooling This helps to explain why persons do not attend school even though the financial rewards for doing so are high We present methods for computing distributions of returns ex ante and ex post We review the literature on instrumental variable estimation The link of the estimates to the economics is not strong The traditional instruments are weak, and this literature has not produced decisive empirical estimates We exposit new methods that interpret the economic content of different instruments within a unified framework

/pdf/earnings-functions-rates-of-return-and-treatment-effects-the-2gqwnmb6pv.pdf

Earnings functions, rates of return and treatment effects: the Mincer equation and beyond

No part of this report may be reproduced in any form—except for brief quotation (not to exceed 1,000 words) in a review or professional work—without permission in writing from the author. 3 TABLE of CONTENTS 4 T his report, the second in a series of policy reports on the results of a four-year study of America's education schools, focuses on the education of classroom teachers, the people who have the greatest impact on our children's learning in school. Teacher education has taken on a special urgency because the United States needs to raise both the quantity and quality of our teacher force. The country is experiencing an acute shortage of teachers. At the same time, we are asking teachers to increase student achievement to the highest levels in history in a new standards-based, accountability-driven system of education. To address both demands simultaneously is an enormous challenge, made even more difficult because the nation is deeply divided about how to prepare large numbers of high-quality teachers. We don't agree about what skills and knowledge teachers need or how and when teachers should learn them. This is the context for the second report. The first report focused on the education of school administrators. The third report will examine the quality of education research and the preparation of the scholars and researchers who conduct it. The final report will be an overview of America's schools of education , where the overwhelming majority of our school leaders, teachers, and scholars are educated. The nation's 1,206 schools, colleges, and departments of education constitute a sprawling enterprise that is located at 78 percent of all four-year colleges and universities. 1 They award one out of every 12 bachelor's diplomas; a quarter of all master's degrees; and 15 percent of all doctorates, more than any other branch of the academy. 2 They have been the subject of mounting criticism over the past decade from 5 PREFACE The nation is deeply divided about how to prepare large numbers of high-quality teachers. academics, foundations, think tanks, professional and scholarly associations , and government. This four-part study is intended to go beyond the usual, untested assertions of education school critics and the too-often defensive posture of the schools themselves. The simple fact is that education schools have strengths that go unrecognized by their detractors and they have weaknesses that they are unwilling to acknowledge. This study began with the belief …

/pdf/educating-school-teachers-1ukgmayydj.pdf

Educating School Teachers.

Cultural Evolution argues that people's values and behavior are shaped by the degree to which survival is secure; it was precarious for most of history, which encouraged heavy emphasis on group solidarity, rejection of outsiders, and obedience to strong leaders. For under extreme scarcity, xenophobia is realistic: if there is just enough land to support one tribe and another tribe tries to claim it, survival may literally be a choice between Us and Them. Conversely, high levels of existential security encourage openness to change, diversity, and new ideas. The unprecedented prosperity and security of the postwar era brought cultural change, the environmentalist movement, and the spread of democracy. But in recent decades, diminishing job security and rising inequality have led to an authoritarian reaction. Evidence from more than 100 countries demonstrates that people's motivations and behavior reflect the extent to which they take survival for granted - and that modernization changes them in roughly predictable ways. This book explains the rise of environmentalist parties, gender equality, and same-sex marriage through a new, empirically-tested version of modernization theory.

Cultural Evolution: People's Motivations are Changing, and Reshaping the World

The internal rate of return to schooling is a fundamental economic parameter that is often used to assess whether expenditure on education should be increased or decreased. This article considers alternative approaches to estimating marginal internal rates of return for different schooling levels. We implement a general nonparametric approach to estimate marginal internal rates of return that take into account tuition costs, income taxes, and nonlinearities in the earnings‐schooling‐experience relationship. The returns obtained by the more general method differ substantially from Mincer returns in levels and in their evolution over time. They indicate relatively larger returns to graduating from high school than to graduating from college, although both have been increasing over time.

https://www.nber.org/system/files/working_papers/w13780/w13780.pdf

Earnings Functions and Rates of Return

/pdf/120-years-of-american-education-a-statistical-portrait-1atcsyrpur.pdf

120 Years of American Education: A Statistical Portrait.

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120 Years of American Education: A Statistical Portrait.