We develop a theory of capital-market imperfections to study how the ability to enforce contracts affects resource allocation across entrepreneurs of different productivities, and across industries with different needs for external financing. The theory implies that countries with a poor ability to enforce contracts are characterized by the use of inefficient technologies, low aggregate TFP, large differences in labor productivity across industries, and large employment shares in industries with low productivity. These implications are supported by the empirical evidence. The theory also suggests that entrepreneurs have a vested interest in maintaining a status quo with low enforcement. Copyright �2008 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.
We develop a theory of human capital investment to study the channels through which students react to school quality when deciding on investments in secondary education and above, and to study how educational quality affects economic growth. In a dynamic general equilibrium closed economy, primary education is mandatory but there is an opportunity to continue on in education, which is a private choice. High-quality education increases the returns to schooling, and hence the incentives to accumulate human capital. This is caused by two main effects: higher quality makes higher education accessible to more people (extensive channel), and once individuals decide to participate in higher education, higher quality increases the volume of investment made per individual (intensive channel). Furthermore, educational quality plays a central role in explaining the composition of human capital and the long-run level of income. Crosscountry data evidence shows that the proposed channels are quantitatively important and that the effect of the quality and quantity of education on growth depends on the stage of development.
Using data from a Spanish assessment program of fourth-grade pupils, we analyze to what extent using certain teaching practices and materials in class is related to achievement in maths and reading. We distinguish using traditional and modern teaching styles. As a novelty, we measure in-class work using two different sources of information -teacher and students. Our identification strategy relies on between-class within-school variation of teaching styles. We find that modern practices are related to better achievement, specially in reading, while traditional practices, if anything, are detrimental. There are differences depending on the source of information: the magnitude of coefficients is larger when practices are reported by students. These findings are robust to considering alternative definitions of teaching practices. We obtain heterogeneous effects of teaching styles by gender and type of school but only when using students' answers. Our findings highlight the importance of the source of information, teacher or students, to draw adequate conclusions about the effect of teaching style on achievement.
Using data from a Spanish assessment program of fourth-grade pupils, we analyze to what extent using traditional and modern teaching styles in class is related to achievement in maths and reading. As a novelty, we measure in-class work using two dierent sources of information-teacher and students. Our identication strategy relies on between-class within-school variation of teaching styles. We nd that modern practices are related to better achievement, especially in reading, while traditional practices, if anything, are detrimental. There are differences depending on the source of information: the magnitude of coecients is larger when practices are reported by students. These ndings are robust to considering alternative denitions of teaching practices. We obtain heterogeneous eects of teaching styles by gender and type of school but only when using students' answers. Our ndings highlight the importance of the source of information, teacher or students, to draw adequate conclusions about the eect of teaching style on achievement.
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