Sector Choice Research Articles

Returns to schooling, ability and cognitive skills in Pakistan

This study investigates the economic outcomes of education for wage earners in Pakistan. This is done by analysing the relationship between schooling, cognitive skills and ability, on the one hand, and economic activity, occupation, sectoral choice and earnings, on the other. In Pakistan, an important question remains largely unaddressed: what does the coefficient on ‘schooling’ in conventional earning function estimates measure? Whereas human capital theory holds that the economic return to an extra year of schooling measures productivity gains acquired through additional schooling, the credentialist view argues that it represents a return to acquired qualifications and credentials, and a third view, the signalling hypothesis, suggests that it captures a return to native ability. This paper seeks to adjudicate between these theories using data from a unique purpose-designed survey of more than 1000 households in Pakistan, collected in 2007. The paper also examines the shape of the education–earnings relationship in Pakistan as a way of testing the poverty-reducing potential of education in Pakistan.

Effectiveness of the Special Economic Zone policy over the Export Processing Zone structure in India: trade performance at the aggregate level

Empirical evidence on the effectiveness of recent India's Special Economic Zone (SEZ) policy over Export Processing Zone structure is analysed in this article by aggregating data of seven conventional SEZs from 1986–1987 to 2007–2008. The study reveals that introduction of SEZs in place of its predecessor, the Export Processing Zone, is having a significant and positive impact on its trade performance at the aggregate level. However, in terms of contribution to national trade, the Indian SEZs are lagging way behind the expectations of policymakers. Furthermore, the SEZ policy does not seem to be successful in diversifying the exports basket, which in turn has affected the direction of exports by the SEZs. Moreover, these zones were found to be highly susceptible to external shocks. Thus, we strongly argue in favour of a care in deciding the sectoral choice of SEZs and careful scrutiny of its approval across major Indian states.

Sharp Bounds in the Binary Roy Model

We derive the empirical content of an instrumental variables model of sectoral choice with discrete outcomes. The partial identification results extend existing work on sharp bounds in binary choice threshold crossing models in allowing sector specific unobserved heterogeneity. Assumptions on selection include the simple, extended and generalized Roy models. The derived bounds are nonparametric intersection bounds and are simple enough to lend themselves to existing inference methods. Identification implications of exclusion restrictions are also derived. The derived bounds are applied to the analysis of the effect of Swan-Ganz catheterization and the robustness of previous findings to the introduction of procedure-specific unobserved heterogeneity is examined.

More than ‘Mutual Information’: Educational and sectoral gender segregation and their interaction on the Flemish labor market

We build on the Information Theory foundations of the Mutual Information Index of Segregation [Mora and Ruiz-Castillo, 2003; Frankel and Volij, 2011] to analyze two horizontal dimensions of gender segregation on the labor market. We provide a novel, three-way additive decomposition of their effects on overall segregation. Using survey data from 41,712 Flemish employees, we find that choice of study field has a larger effect on overall segregation than sectoral choice. Their mutual interaction is negative, indicating that sectoral segregation, although low, is still partly explained by educational choices.

A Dynamic Structural Model of Contraceptive Use and Employment Sector Choice for Women in Indonesia

This research investigates the impact of the Indonesian family planning program on the labor force participation decisions and contraceptive choices of women. I develop a discrete choice dynamic structural model, where each married woman in every period makes joint choices regarding the method of contraceptive used and the sector of employment in which to work in order to maximize her expected discounted lifetime utility function. Each woman obtains utility from pecuniary sources, nonpecuniary sources, and choice-specific time shocks. In addition to the random shocks, there is uncertainty in the model as a woman can only imperfectly control her fertility. Dynamics in the model are captured by several forms of state and duration dependence. Women in this model make different choices due to different preferences, differences in observable characteristics, and realization of uncertainty. The choices made by a woman depend on the compatibility between raising children and the sector of employment (including wages). While making decisions regarding contraceptive use, a woman considers the trade-off between costs (monetary and nonmonetary) of having a child and the benefits from having one. The primary source of data for this study is the first wave of the Indonesia Family Life Survey (IFLS 1), a retrospective panel. In my research, I use the geographic expansion and the changing nature of the Indonesian family planning program as sources of exogenous variation to identify the parameters of the structural model. I estimate the model using maximum likelihood techniques with data from IFLS 1 for the periods 1979-1993. Structural model estimates indicate that informal sector jobs offer greater compatibility between work and childcare. Parameter estimates indicate that choices of contraception method and employment sector vary by exogenous characteristics.

Public Service Motivation: A Test of the Job Attraction–Selection–Attrition Model

ABSTRACT Public service motivation (PSM) research suggests that PSM influences employee sector choice, yet relatively little research examines how time moderates this relationship. In this research we examine public service motivation among private and public sector lawyers. Using survey data that measure sector of employment at multiple time periods, we investigate the stability of the relationship between individual reward orientations and sector employment choice over time. Our findings suggest that while PSM may not clearly predict the employment sector of a respondent's first job, it does increase the likelihood that a respondent's subsequent job is in the public sector.

Does Cross-Sectoral Partnership Deliver? An Empirical Exploration of Public Service Effectiveness, Efficiency, and Equity

Cross-sectoral partnerships are increasingly seen as a solution to the most pressing social problems facing contemporary societies. Sectoral rationales for partnership suggest that public, private, and nonprofit organizations each possess distinctive advantages that can enhance the effectiveness, efficiency, and equity of public agencies’ efforts to address social issues. We present an exploratory quantitative examination of this argument, using primary and secondary data from 46 UK local government service departments. The results indicate that public-public partnership is positively associated with effectiveness, efficiency, and equity, but that public-private partnership is negatively associated with effectiveness and equity. Public-nonprofit partnership is unrelated to performance. Our study therefore suggests that cross-sectoral partnership does deliver, but that the prospects of public service improvement may depend on the sectoral choice that organizations make.

Knowledge of Catalan, Public/Private Sector Choice and Earnings: Evidence from a Double Sample Selection Model

This paper explores the earnings return to Catalan knowledge for public and private workers in Catalonia. In doing so, we allow for a double simultaneous selection process. We consider, on the one hand, the non-random allocation of workers into one sector or another, and on the other, the potential self-selection into Catalan proficiency. In addition, when correcting the earnings equations, we take into account the correlation between the two selectivity rules. Our findings suggest that the apparent higher language return for public sector workers is entirely accounted for by selection effects, whereas knowledge of Catalan has a significant positive return in the private sector, which is somewhat higher when the selection processes are taken into account.

More than 'Mutual Information': Educational and Sectoral Gender Segregation and Their Interaction on the Flemish Labour Market

We build on the Information Theory foundations of the Mutual Information Index of Segregation (Mora and Ruiz-Castillo, 2003; Frankel and Volij, 2007) to analyze two horizontal dimensions of gender segregation on the labour market. We provide a novel, three-way additive decomposition of their effects on overall segregation. Using survey data from 41,712 Flemish employees, we .find that choice of study field has a larger effect on overall segregation than sectoral choice. Their mutual interaction is negative, indicating that sectoral segregation, although low, is still partly explained by educational choices.

Rank Dependent Utility, Tax Evasion and Labor Supply

In the simple Allingham-Sandmo portfolio model of tax evasion an expected utility maximizer will cheat more than what is estimated in empirical studies. Two main types of explanation have been suggested as solutions to this puzzle: (1) Tax payers act according to some non-expected utility theory, and (2) Individual ethical norms and social stigma induce people not to cheat. In the present study we test two hypotheses within these broad explanations: (1) Tax payers are weighting subjective probabilities of being penalised according to the rank dependent utility theory, and (2) Tax payers’ beliefs about social norms have an effect on their decision to evade taxes. Our model is characterized by a simultaneous determination of tax evasion and labour supply, including the effect on tax payers of a social norm of not cheating. Using Norwegian survey data our hypotheses are corroborated. Our estimates imply that if the objective probability of being penalized is, say 3 %, the weighted probability is about 23 %. Our study provides an independent confirmation of the rank dependent expected utility theory. The model explains data 53% better than pure random choices and predicts hours worked in the regular economy, among tax evaders as well non tax evaders, rather precisely. The model is an example of a two sector choice model and the results indicate that an overall wage increase may shift labor supply away from the irregular part of the economy towards the regular.

Impact of Sector versus Security Choice on Equity Portfolios

We measure the contribution of industry sector choice and individual stock selection to the performance of 3350 United States’ equity funds from 1980 to 2005. First, we demonstrate that sector choice makes a relatively greater contribution to portfolio variance, holding constant manager skill in identifying mispriced securities, and correcting for a bias in research methods previously applied to this issue. Second, using managers’ reported stock holdings, we estimate the actual contribution of industry sector versus security choice to portfolio returns. Active managers of funds with a preference for small stocks with a style preference – value or growth – generate abnormal returns above those achieved by less active managers, consistent with managers having style-specific investment skills. This relative performance is attributed to the incremental returns generated from security selection over sector choice. Security selection also explains significantly more variation in returns across funds. These results imply that active managers make relatively greater use of security selection in forming portfolios which differ from benchmark.

New orientations in ethnic entrepreneurship: motivation, goals and strategies of new generation ethnic entrepreneurs

The literature on ethnic entrepreneurship has identified a blend of structural and cultural factors that influence the step towards ethnic entrepreneurship. An important issue is whether ethnic entrepreneurs produce for their own ethnic niches or whether they try to cover a wider market of customers. This difference between 'internal' and 'external' orientation has been the subject of many recent empirical investigations. However, the concentration of the ethnic entrepreneurs in traditional sectors has led many studies to focus mainly on this internal orientation, while there is a limited number of studies that address non-traditional sectors and external orientations of ethnic entrepreneurs. The current study aims to deal with new departures for ethnic entrepreneurship in terms of motivation, sectoral choice, business goals and strategies of new generation ethnic entrepreneurs. The study focuses on external orientations of new generation ethnic entrepreneurs, while it addresses in particular the way - and the extent to which - the choice for entrepreneurship is made by higher-educated ethnic young generations. © 2009, Inderscience Publishers.

A NEW FRAMEWORK FOR THE ANALYSIS OF INEQUALITY

This paper presents a new framework for analyzing inequality that moves beyond the anonymity postulate. We estimate the determinants of sectoral choice and the joint distributions of outcomes across sectors. We determine which components of realized earnings variability are due to uncertainty and which components are due to components of human diversity that are forcastable by agents. Using our tools, we can determine how policies shift persons across sectors and outcome distributions across sectors.

Risk, Wealth, and Sectoral Choice in Rural Credit Markets

AbstractWe model the role of the informal credit sector in developing countries. The informational advantage of informal lenders is portrayed as the ability to monitor borrowers. Monitoring reduces the incentive problem and allows for contracts with lower collateral. This enables informal lenders to serve both individuals who cannot post the collateral required by the formal sector and those who are able but do not want to post collateral. The model is consistent with the conventional view of the informal sector as recipient of spillover demand from the formal sector. It also shows that the informal sector may provide partial insurance as the lower collateral requirement implies greater consumption smoothing for borrowers.

Contracting and Sector Choice across Municipal Services

contract out for goods and ser vices or produce them inter nally (i.e., the or buy decision) has intrigued scholars of public agencies and pri vate firms for decades (see Coase 1937). Most explanations of vertical integration in private firms emphasize transaction costs incurred in negotiating, monitoring, and enforcing a contract or agreement. Expanding upon this framework, New Institutionalist scholars claim that the organization of transactions within rather than between firms is contin gent upon the relative costs of internal and external transactions (Williamson 1975). If the cost of negotiating and enforcing con tracts between firms is high, firms will have an incentive to organize production on their own rather than seek out external suppliers. Governments, like firms, desire efficient production, but production efficiencies in governments can be lost when transaction costs are high, just as they can in private firms. Service contracts and the sector to which they are assigned are dependent upon the type of policy and the stability of the administrative environment within which the contracting process is managed. Certain classes of polices entail considerable monitoring and measure ment costs that make contracting with private agents problematic. In addition, uncertainty resulting from an unstable administrative en vironment reduces the ability of a local gov ernment to negotiate contracts, make cred ible commitments to suppliers, and enforce contracts.

Private or public? An empirical analysis of the importance of work values for work sector choice among Norwegian medical specialists

In the aftermath of the Norwegian hospital reform of 2002, the private supply of specialized healthcare has increased substantially. This article analyses the likelihood of medical specialists working in the private sector. Sector choice is operationalized in two ways: first, as the likelihood of medical specialists working in the private sector at all (at least 1% of the total work hours), and second, as the likelihood of working full-time (90–100%) privately. The theoretical framework is embedded in work values theory and the results suggest that work values are important predictors of sector choice. All analyses are based on a postal questionnaire survey of medical specialists working in private contract practices and for-profit hospitals and a control group of specialists selected from the Norwegian Medical Association's member register. The analyses revealed that while autonomy values impact positively on the propensity for allocating any time at all to the private sector, professional values have a negative effect. Given that the medical specialist already works in the private sector, a high valuation of professional values and payment and benefit values increases the likelihood of having a dual sector job rather than a full-time private position. However, due to the cross-sectional structure of the data and limitations in the dataset, causality questions cannot be fully settled on the basis of the analyses. The relationship between work values and sector choice should, therefore, be regarded as associations rather than causality links. Finally, the likelihood of working in the private sector varies significantly at the municipality level, suggesting that medical specialist's location is important for sector choice.

Public-Private Sector Pay Differentials in a Devolved Scotland

The public-private sector wage gap in Scotland in 2000 is analysed using the extension sample of the British Household Panel Study (BHPS). Employing a switching regression model, and testing for double sample selection from the participation decision and sector choice, the wage gap is shown to be 10 % for males and 24 % for females. For males this is mainly due to differences in productive characteristics and selectivity, while for females the picture is more ambiguous. Findings also suggest that there exists a male private sector wage premium. While there is no evidence of a sample selection bias for females, the sector choice of males is systematically correlated with unobservables. Furthermore, the structural switching regression indicates that expected wage differentials between sectors are an important driving force for sectoral assignment.

Factors Associated with Physicians??? Choice of Working Sector

To analyse factors affecting physicians' choice to work in either the public or the private sector. We undertook a longitudinal data analysis in the years 1988, 1993, 1998 and 2003 (n = 12 909) using a multilevel modelling technique. Factors related to economic factors, physician identity, appreciation as well as demographic factors were hypothesised to influence sector choice. Physicians seem to make their career choices prior to graduation, at least to some extent. Wage levels, the physician's personal characteristics and whether or not the physician knew his or her place of work before graduation were the key factors affecting the decision-making process in the years 1988, 1993, 1998 and 2003. Physicians for whom wages were important were less likely to choose the public sector. Also, physicians who regarded themselves as entrepreneurial preferred to work in the private sector. If a physician had worked in the public sector during his or her medical training before graduation, the probability of applying for a vacancy in the public sector was higher. It is not only economic factors, such as salary, that are involved in the physician's decision to choose the working sector.

Immigrants in the British Labour Market*

AbstractThe main objective of this paper is to provide a comprehensive description of the economic outcomes and performance of Britain's immigrant communities today and over the last two decades. We distinguish between males and females and, where possible and meaningful, between immigrants of different origins. Our comparison group is white British‐born individuals. Our data source is the British Labour Force Survey. We first provide descriptive information on the composition of immigrants in Britain, and how this has changed over time, their socio‐economic characteristics, their industry allocation and their labour market outcomes. We then investigate various labour market performance indicators (labour force participation, employment, wages and self‐employment) for immigrants of different origins, and compare them with British‐born whites of the same age, region and other background characteristics. We find that over the last 20 years, Britain's immigrant population has changed in origin composition and has dramatically improved in skill composition — not dissimilar from the trend in the British‐born population. We find substantial differences in economic outcomes between white and ethnic minority immigrants. Within these groups, immigrants of different origins differ considerably with respect to their education and age structure, their regional distribution and their sector choice. In general, white immigrants are more successful in Britain, although there are differences between groups of different origins. The investigation shows that immigrants from some ethnic minority groups, and in particular females, are particularly disadvantaged, with Pakistanis and Bangladeshis at the lower end of this scale.

Public Funding for “Private” Education: The Equity Challenge of Enhanced Choice

The past two decades have generated numerous and varied experiments with the use of public resources to support “private” schools, which, in any case, become and behave more like public schools in proportion to their dependence on the public purse. From an equity point of view, however, no compelling moral necessity exists to use public funds to support private schools. In fact, the best available evidence suggests that, in general and on average, private schools are no more efficient or effective in fostering valued and measurable student outcomes than public schools. The most common methods proposed to channel public funds to private schools are unethical because they exclude society’s most vulnerable members, children from poor families, from any possibility of benefit—and furthermore, in nearly all jurisdictions they are, or would be, paid for from a revenue base that includes consumption taxes that all, even the poorest, must pay. Nonetheless, serious problems exist with equity of access to and benefit from public sector education. The most promising policy solution to the current perversely disequalizing tendencies of public education lies in public sector choice, however, not in public funding of private or quasi‐private schools.