A Job Worth Waiting for: Parental Wealth and Youth Unemployment in Ghana (Job Market Paper)
This paper uses data from Ghana to show that youth unemployment is increasing in parental wealth, despite the common view among policymakers that the issue disproportionately affects the poor. I build and estimate a structural model of endogenous education, employment and occupational choice that explains this pattern. I argue that, due to the absence of unemployment insurance, only workers with a sufficiently high stock of parental wealth can afford to remain unemployed, and do so in order to search for scarce, high-productivity jobs. This leads to high income inequality and low match efficiency among workers of heterogeneous ability. I use the estimation results to compare the effectiveness of two alternative policy interventions: an education subsidy and unemployment insurance. I find that the education subsidy is most effective at increasing aggregate productivity, but comes at the cost of increasing income inequality, while unemployment insurance has a smaller effect on aggregate productivity but also decreases income inequality.
Private or Public? Efficiency and Equity Implications of Tertiary Education Choice
While the presence of private universities in developing countries has increased significantly in recent decades, their growth experience varies widely across individual countries. This paper seeks to explain such variation and, consequently, to consider the range of impact private universities may have on the efficiency of human capital allocation, aggregate output. and the dynamic evolution of income inequality. To that end, I build and estimate a structural model of tertiary education choice using data for a group of six developing countries: Armenia, Bolivia, Colombia, Georgia, Ghana and Kenya. I show that underlying parameter values position countries in one of three potential scenarios, each of which has different implications for the composition of the graduate workforce, the growth of private universities, output per worker and income inequality. I find that, over time, when private universities are more productive than public ones, economies tend to move away from the most socially efficient of these scenarios, while the least efficient scenario is highly persistent.
Herding in Quality Assessment: an Application to Organ Transplantation
(with Kaivan Munshi, Soenje Reiche and Hamid Sabourian)
There are many economic environments in which an object is offered sequentially to prospective buyers. It is often observed that once the object for sale is turned down by one or more agents, those that follow do the same. One explanation that has been proposed for this phenomenon, which goes back to Banerjee (1992) and Bikhchandani (1992) is that agents making choices further down the line rationally ignore their own assessment of the object's quality and herd behind their predecessors. We develop novel tests to detect information-based herding, based on heterogeneity in agent ability, together with a methodology to quantify its welfare consequences, that are applied to organ transplantation in the U.K. We find that herding is common and is an important contributor to the high rate at which organs are rejected by transplant centers (and subsequently discarded). However, herding does not raise discard rates much above the level that would be obtained if private assessments were made publicly available. Instead, the (limited) information contained in predecessors' decisions substantially reduces the acceptance of bad organs. This is because in our application (i) high ability centers are often willing to deviate from the herd and follow their own positive signals, and (ii) sequences are exogenously terminated relatively quickly.