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Essays in applied macroeconomics

Rossi, Federico (2017) Essays in applied macroeconomics. PhD thesis, London School of Economics and Political Science.

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Identification Number: 10.21953/lse.ctr30i8m5kmu


This thesis consists of three chapters, examining the interrelation between human capital and country-level outcomes from different perspectives. Chapter 1, co-authored with Marta De Philippis, studies the contribution of parental influence to cross-country gaps in human capital performance. We compare the school performance of second-generation immigrants from different nationalities but educated in the same school, and find that those whose parents come from high-scoring countries in international standardized tests do better than their peers. The gap is larger when parents have little education and have recently emigrated, suggesting the importance of country-specific cultural traits that parents progressively lose as they integrate in the new host countries. Parental influence accounts for between 14% and 20% of the cross-country variance in test scores. Chapter 2 studies the macroeconomic consequences of the inequality of educational opportunities. I discuss how family income shapes college opportunities for US students, even when its correlation with academic ability is taken into account. I propose a general equilibrium model to estimate the productivity losses deriving from the fact that human capital investment is not always allocated where its marginal product would be highest. Using the equilibrium conditions of the model, I back out the value of barriers to college investment for disadvantaged students from data on family income, ability, schooling and wages. Counterfactual experiments suggest that a more meritocratic access to college education could boost output by approximately 11%, and wages by between 9% and 12%. I conclude that returns from policies aimed to expand college opportunities are potentially very large. Chapter 3 studies how the relative productivity of skilled and unskilled labor varies across countries. I use both micro-data for countries at different stages of development and other sources to document that the skill premium varies little between rich and poor countries, in spite of large differences in the relative skill supply. This pattern is consistent with the view that the relative productivity of skilled workers is higher in rich countries. I propose a methodology based on the comparison of labor market outcomes of immigrants with different levels of educational attainment to discriminate between technology and unobserved human capital as drivers of these patterns. I find that human capital quality plays a minor role in explaining cross-country differences in relative skill efficiency.

Item Type: Thesis (PhD)
Additional Information: © 2017 Federico Rossi
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Sets: Departments > Economics
Supervisor: Caselli, Francesco

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