News and Research 252

The major future economic challenges, by Olivier Blanchard and Jean Tirole

Responding to the global challenges facing our societies requires new analytical frameworks and the emergence of new ideas, especially in the aftermath of the global health crisis. The President of the Republic asked Olivier Blanchard, Professor Emeritus at MIT, and Jean Tirole, Honorary President of the Toulouse School of Economics, to chair a commission of renowned international experts, supported by France Stratégie.

The Rise of High-Skilled Workers as ‘Human Capitalists’ | Labor’s share of corporate earnings has shrunk in recent decades, but when equity-based payments are included in compensation, the decline for high-skill workers is almost entirely eliminated. Standard estimates of the recent decline in labor’s share of national income are likely to overstate the drop by failing to account for a large fraction of compensation in the form of equity grants and stock options. A new class of high-skilled workers who, since the 1980s, have seen equity-based compensation increase to 40 percent of their earnings.

The IT Revolution and Labor Market Activity of Older Workers | Limited skill with workplace computing raised the retirement rate for older workers by more than 1 percentage point a year when computers were introduced to jobs after 1984; these differentials began to disappear after 2000. The revolution in the use of workplace computers that began in the 1980s took a toll on older workers who were not tech-savvy. They faced pay cuts, early retirement, and transfers to less intensive jobs. Between 1984 and 2017, the computer knowledge gap between older and younger US workers peaked in the 1980s and early 1990s, and then began to decline. It had disappeared by the mid-2010s.

Building Evidence for Pre-school Policy Change in Bulgaria | In September 2020, Bulgaria’s National Assembly (Parliament) passed legal amendments aimed at increasing kindergarten participation for children aged 4–6 in Bulgaria, with poor children standing to benefit the most. For the first time, state budget funds were set aside to relieve parents of the costs of monthly attendance fees currently collected by full-day kindergartens. It builds on evidence generated from a large-scale randomized control trial (RCT) (2014–2018) across 236 poor communities.

Uzbek youth to receive educational loans on preferential terms | Starting from the new academic year, educational loans will be provided on preferential terms for a period of 7 years at the base rate of the Central Bank. This was announced by the President of Uzbekistan Shavkat Mirziyoyev. The head of Uzbekistan noted that the rate on educational loans will be 14% per annum this year. Mirziyoyev said that also the funds allocated for the repayment of educational loans will be exempt from income tax.

Managing for Learning: Measuring and Strengthening Education Management in Latin America and the Caribbean | How can countries make sustainable gains in student learning at scale? This is a pressing question for Latin America and the Caribbean (LAC)—and the developing world more broadly—as countries seek to build human capital to drive sustainable growth.

Air pollution, educational achievements, and human capital formation | Exposure to elevated levels of air pollution adversely affects educational outcomes | The link between air pollution and human health is well-documented in the epidemiology and economic literature. Recently, an increasing body of research has shown that air pollution—even in relatively low doses—also affects educational outcomes across several distinct age groups and varying lengths of exposure. This implies that a narrow focus on traditional health outcomes, such as morbidity and mortality, may understate the true benefit of reducing pollution, as air pollution also affects scholastic achievement and human capital formation.

The Impacts of Remote Learning in Secondary Education: Evidence from Brazil during the Pandemic | Dropout risk increased by 365% under remote learning. While risk increased with local disease activity, most of it can be attributed directly to the absence of in-person classes: we estimate that dropout risk increased by no less than 247% across the State, even at the low end of the distribution of per capita Covid-19 cases. Average standardized test scores decreased by 0.32 standard deviation, as if students had only learned 27.5% of the in-person equivalent under remote learning.

Tutoring: An effective solution to help disadvantaged children | The TOP (Tutoring Online Program) was offered to middle schools all over Italy in Spring 2020, and it has been scaled up in the school year 2020–2021, reaching over 1,300 children. Performance in a standardized test administered at the end-line improved by 0.26 standard deviations.

Winners and losers after 25 years of transition: Decreasing wage inequality in Slovenia |Over the past twenty-five years, wage inequality has fallen in Slovenia, even as it has risen in most developed economies. The rates of return to education and work experience rose and remained high on average. However, rapid increases in the number of college graduates have outpaced the rising relative demand for skill among the youngest labor market entrants. As a result, the youngest cohorts of college graduates have experienced declining returns to education and a downward shift in their occupational distribution, which has not been experienced by older college graduates. These changes coincide with the implementation of the Bologna Reform, which reduced the length of time necessary to complete a bachelor’s degree and contributed to the incentives to attend college. Falling returns to tertiary education contributed to declining within-cohort wage inequality among the young, which was large enough to reduce overall wage inequality.

Is Investment in Preprimary Education Too Low? Lessons from (Quasi) Experimental Evidence across Countries | This study uses a novel dataset of impact estimates from 55 (quasi-) experimental studies conducted around the world and meta-regression methods to investigate whether this preprimary investment is suboptimal. It shows there are high returns and room for improvements in efficiency from reallocating the marginal dollar in existing budgets toward preprimary education.

What Makes a Program Good? Evidence from Short-Cycle Higher Education Programs in Latin America and the Caribbean | This paper explores the relationship between the practices, inputs, and other characteristics of short-cycle higher education programs (SCPs) and their students’ academic and labor market outcomes. Estimates from pooled survey data for five countries indicate that specific quality determinants are positively associated with academic and labor market outcomes.

The COVID-19 Cost of School Closures in Earnings and Income across the World – now in print in Comparative Education Review | Estimates of the economic loss associated with COVID-19-induced school closures by mapping lost learning to the lifetime reduction of the earnings of graduates from 205 high-, middle-, and low-income countries

HLO (Harmonized Learning Outcomes) |Now in print in Nature: Angrist, N., S. Djankov, P.K. Goldberg and H.A. Patrinos. 2021. Measuring Human Capital using Global Learning Data. Nature 592: 403-408 | Summary in VoxEU | Data