Economics 970: Economics of Education Spring Economics 970 Economics of Education Spring 2008

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1 Teaching Fellow: Tristan Zajonc Section Times and Location: Tuesday/Thursday: 11:00am - 12:30pm Kirkland House, K Seminar Room Economics 970 Economics of Education Spring 2008 Course website: Course Description: By the time students graduate from college most will have spent 16 years in school. Given the many years we devote to it, this course begins by asking what is education for? Does Harvard impart human capital that can be sold on the labor market later in life? Does it provide a signal of ability to potential employers but otherwise add little? Or does it simply socialize students to fit into modern society? In the end, what are the pecuniary and non-pecuniary returns to individuals and society? After covering these basic issues, this course explores the meaning and empirics of educational equity; the black-white achievement gap; the importance and danger of early education; and the role of peer effects, class size, and school expenditures. The course concludes by studying the contentious issues surrounding school choice and vouchers, and teacher quality and merit pay. Students should finish the course with a strong grasp of the major debates in the economics of education. Readings: This course will focus primarily on articles from academic journals. Many of these articles are intended for an advanced audience and will be challenging at first. Students will not be expected to understand all the mathematics or econometrics. Instead, our focus will be on grappling with the author s key insights. We will read for enlightenment and entertainment rather than regurgitation and recitation. Since there are many paths towards enlightenment, there are many possible articles to read. Rather than limiting ourselves to one particular path, the assigned readings include many contrasting perspectives. Unfortunately, this means there are more articles than is sensible to read in one course. We will therefore discuss expectations about reading vs. skimming before each set of articles is due. All but a few readings will be available on-line. Course Requirements: Class Participation: 20% of the grade. Attendance is mandatory. Class discussions are an essential component of the sophomore tutorial. Your full participation is expected in the discussion of assigned readings and general course themes. Students will also be assigned to lead

2 some class discussions. participation grade. There may also be (very) small assignments that are part class Short Papers: 2 papers (each ranging from 4-6 pages); each worth 15% of the grade. Empirical Paper: 15% of the grade (3-5 pages). You will construct an econometric model, report your findings and analyze the results. Draft of final paper: 10%. A draft of the final paper will be graded to ensure that you are making satisfactory problem. You will also present your idea in the last two class meetings. Final Paper: 25% of the grade (12-18 pages). You can choose any relevant topic in education, subject to my approval. The chief selection criteria should be your own interest. Many final papers become senior theses after further work. Another possibility is to write a paper that can be submitted to Brookings s Hamilton Project Policy Innovation Prize for Undergraduates ( Innovation_Prize_2008.pdf) Course Policies: Attendance: Attendance is mandatory at all regular class meetings. If you have an unavoidable conflict, please let me know by before class. Late papers policy: Assignments must be turned in by 5pm on the day on which they are due (via ). During the course of the semester, you may have three late days on which no reason is necessary for lateness. Weekends and holidays count as days for the purposes of the late days policy. Beyond the late days (i.e. beginning on the fourth late day and thereafter), papers will be downgraded one third of a letter grade (e.g. from B+ to B) each late day (regardless of the reason for lateness) and will not be accepted more than 7 days after the due date (thus earning F). Since each student has three late days, exceptions to this policy will only be given under extremely extenuating circumstances. Office hours: I will be available by appointment. I would like to meet with everyone individually at least once during the semester. Contact: The best way to contact me is via . I will try to respond as quickly as possible. Topics: 1) Introduction and discussion of course goals H. Levin. Mapping the Economics of Education. An Introductory Essay. Educational Researcher, 18(4):13 73, ) Some topics in the philosophy of education, abridged for economists N. Noddings. Philosophy of Education. Westview Press, ) Empirical strategies and the search for identification

3 C. F. Manski. Identification problems in the social sciences and life. J. Angrist and A. Krueger. Empirical strategies in labor economics. In O. Ashenfelter and D. Card, editors, Handbook of Labor Economics, volume 3, pages Elsevier Science, ) Estimating the returns to education A. Smith. The Wealth of Nations. Bantam Classics, March Chapter 10, Part 1 Inequalities arising from the Nature of the Employments themselves J. Angrist and A. Krueger. Does Compulsory School Attendance Affect Schooling and Earnings? The Quarterly Journal of Economics, 106(4): , E. Duflo. Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment. The American Economic Review, 91(4): , ) Human capital and signalling theories of education G. Borjas. Labor Economics, chapter 7. McGraw-Hill, Boston, MA, G. Becker. Investment in human capital: A theoretical analysis. The Journal of Political Economy, 70(5):9 49, M. Spence. Job Market Signaling. The Quarterly Journal of Economics, 87(3): , ) Are returns due to signalling or human capital? A. Weiss. Human Capital vs. Signalling Explanations of Wages. The Journal of Economic Perspectives, 9(4): , R. Murnane, J. Willett, and F. Levy. The Growing Importance of Cognitive Skills in Wage Determination. Review of Economics and Statistics, 77(2):251 66, J. Tyler, R. Murnane, and J. Willett. Estimating the Labor Market Signaling Value of the GED. The Quarterly Journal of Economics, 115(2): , ) Some critiques of the standard view M. Blaug. Where Are We Now in the Economics of Education?. Economics of Education Review, 4(1):17 28, S. Bowles, H. Gintis, and M. Osborne. The determinants of earnings: A behavioral approach. Journal of Economic Literature, 39(4): , S. Bowles and H. Gintis. Schooling in Capitalist America Revisited. Sociology of Education, 75(1):1 18, 2002.

4 8) Non-pecuniary benefits of education D. Cutler and A. Lleras-Muney. Education and Health: Evaluating Theories and Evidence. NBER Working Paper, R. Haveman and B. Wolfe. Schooling and Economic Well-Being: The Role of Nonmarket Effects. The Journal of Human Resources, 19(3): , ) Are there social returns to education? D. Acemoglu and J. Angrist. How Large Are Human-Capital Externalities? Evidence from Compulsory Schooling Laws. NBER Macroeconomics Annual 2000, E. Moretti. Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data. Journal of Econometrics, 121(1-2): , ) Education and economic growth A. Krueger and M. Lindahl. Education for Growth: Why and For Whom? Journal of Economic Literature, 39(4): , L. Pritchett. Where Has All the Education Gone? The World Bank Economic Review, 15(3): , D. Cohen and M. Soto. Growth and human capital: good data, good results. Journal of Economic Growth, 12(1):51 76, ) Equity: What is it really? A. Sen. Equality of What? Contemporary Political Philosophy: An Anthology, C. Jencks. Whom Must We Treat Equally for Educational Opportunity to be Equal? Ethics, 98(3): , ) Equity: Can education help? A. B. Krueger. Inequality, too much of a good thing. Paper to the Princeton University Industrial Relations Section. Princeton, NJ: Princeton University Press, April L. Thurow. Education and Economic Equality. Public Interest, ) The black-white achievement gap R. Fryer and S. Levitt. Understanding the Black-White Test Score Gap in the First Two Years of School. Review of Economics and Statistics, 86(2):447 64, R. Fryer Jr and S. Levitt. The Black-White Test Score Gap Through Third Grade. American Law and Economics Review, 8(2):249, 2006.

5 P. Todd and K. Wolpin. The Production of Cognitive Achievement in Children: Home, School and Racial Test Score Gaps. Philadelphia, PA: University of Pennsylvania, PIER Working Paper, pages , E. Hanushek and S. Rivkin. School Quality and the Black-White Achievement Gap. NBER Working Paper, ) The case for early childhood education J. Currie. Early Childhood Education Programs. The Journal of Economic Perspectives, 15(2): , J. J. Heckman and D. V. Masterov. The productivity argument for investing in young children. NBER Working Paper 13016, April ) Is early always better? P. McEwan and J. Shapiro. The Benefits of Delayed Primary School Enrollment: Discontinuity Estimates Using Exact Birth Dates. Journal of Human Resources, forthcoming. A. Datar. Does delaying kindergarten entrance give children a head start? Economics of Education Review, 25(1):43 62, K. Bedard and E. Dhuey. The Persistence of Early Childhood Maturity: International Evidence of Long-Run Age Effects. Quarterly Journal of Economics, 1437, P. Fredriksson and B. Öckert. Is Early Learning Really More Productive? the Effect of School Starting Age on School and Labor Market Performance. IZA Working Paper, T. E. Elder and D. H. Lubotsky. Kindergarten entrance age and children s achievement: Impacts of state policies, family background, and peers. Working Paper, June ) Peer effects G. Akerlof and R. Kranton. Identity and Schooling: Some Lessons for the Economics of Education. Journal of Economic Literature, 40(4): , B. Sacerdote. Peer Effects with Random Assignment: Results for Dartmouth Roommates. Quarterly Journal of Economics, 681, C. Hoxby. Peer Effects in the Classroom: Learning from Gender and Race Variation. NBER Working Paper, J. Kling, J. Liebman, and L. Katz. Experimental analysis of neighborhood effects. Econometrica, 75(1):83 119, ) Class size

6 E. Lazear. Educational Production. The Quarterly Journal of Economics, 116(3): , A. Krueger. Experimental Estimates of Education Production Functions. Quarterly Journal of Economics, 497, A. Krueger. Economic Considerations and Class Size. Economic Journal, ) How much does money matter? E. Hanushek. The Economics of Schooling: Production and Efficiency in Public Schools. Journal of Economic Literature, 24(3): , E. Hanushek. The failure of input-based schooling policies. Economic Journal, 113(485):64 98, D. Card and A. Payne. School finance reform, the distribution of school spending, and the distribution of student test scores. Journal of Public Economics, 83(1):49 82, J. Guryan. Does Money Matter? Regression-Discontinuity Estimates from Education Finance Reform in Massachusetts. NBER Working Paper, J. Roy. Impact of School Finance Reform on Resource Equalization and Academic Performance: Evidence from Michigan. Princeton University, Education Research Section Working Paper, ) Residential mobility and school choice C. Tiebout. A Pure Theory of Local Public Expenditures. Journal of Political Economy, 64(5): , S. Black. Do Better Schools Matter? Parental Valuation of Elementary Education. The Quarterly Journal of Economics, 114(2): , ) The big debate: Do vouchers and school choice improve outcomes? D. Neal. How Vouchers Could Change the Market for Education. The Journal of Economic Perspectives, 16(4):25 44, H. Ladd. School Vouchers: A Critical View. The Journal of Economic Perspectives, 16(4):3 24, C. Rouse. Schools and Student Achievement: More Evidence from the Milwaukee Parental Choice Program. Industrial Relations Section, Princeton University, J. B. Cullen, B. A. Jacob, and S. D. Levitt. The effect of school choice on participants: Evidence from randomized lotteries. Econometrica, 74(5): , 2006.

7 C. Hsieh and M. Urquiola. When Schools Compete, How Do They Compete? An Assessment of Chile s Nationwide School Voucher Program. NBER Working Paper, ) Identifying effective teachers D. Goldhaber. The mystery of good teaching. Education Next, 2(1):50 55, S. Rivkin. Teachers, schools, and academic achievement. Econometrica, 73(2): , R. Gordon, T. J. Kane, and D. O. Staiger. Identifying effective teachers using performance on the job. Hamilton Project Discussion Paper, B. Jacob and L. Lefgren. Principals as agents: Subjective performance assessment in education.. Working Paper, ) The market for teachers S. Loeb and M. Page. Examining the Link between Teacher Wages and Student Outcomes: The Importance of Alternative Labor Market Opportunities and Non-Pecuniary Variation. The Review of Economics and Statistics, 82(3): , S. Corcoran, W. Evans, and R. Schwab. Changing Labor-Market Opportunities for Women and the Quality of Teachers, The American Economic Review, 94(2): , H. Lankford, S. Loeb, and J. Wyckoff. Teacher Sorting and the Plight of Urban Schools: A Descriptive Analysis. Educational Evaluation and Policy Analysis, 24(1):37, V. Lavy. Performance Pay and Teachers Effort, Productivity and Grading Ethics. NBER Working Paper, D. Ballou. Pay for performance in public and private schools. Economics of Education Review, 20(1):51 61, R. Murnane and D. Cohen. Merit Pay and the Evaluation Problem: Why Most Merit Pay Plans Fail and a Few Survive. Harvard Educational Review, 56(1):1 17, ) Student presentations