Stephen V. Cameron

Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males

This paper examines an empirical regularity found in many societies: that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education. We examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it. We show that the implicit economic model assumes myopia. The intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data. We produce an alternative choice‐theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions.

The Dynamics of Educational Attainment for Black, Hispanic, and White Males

This paper estimates a dynamic model of schooling attainment to investigate the sources of racial and ethnic disparity in college attendance. Parental income in the child’s adolescent years is a strong predictor of this disparity. This is widely interpreted to mean that credit constraints facing families during the college‐going years are important. Using NLSY data, we find that it is the long‐run factors associated with parental background and family environment, and not credit constraints facing prospective students in the college‐going years, that account for most of the racial‐ethnic college‐going differential. Policies aimed at improving these long‐term family and environmental factors are more likely to be successful in eliminating college attendance differentials than short‐term tuition reduction and family income supplement policies aimed at families with college age children.

The Nonequivalence of High School Equivalents

This article analyzes the causes and consequences of the growing proportion of high-school-certified persons who achieve that status by exam certification rather than through high school graduation. Examcertified high school equivalents are statistically indistinguishable from high school dropouts. Whatever differences are found among examcertified equivalents, high school dropouts and high school graduates are accounted for by their years of schooling completed. There is no cheap substitute for schooling. The only payoff to exam certification arises from its value in opening postsecondary schooling and training opportunities, but completion rates for exam-certified graduates are much lower in these activities than they are for ordinary graduates.

Estimation of Educational Borrowing Constraints Using Returns to Schooling

This paper measures the importance of borrowing constraints on education decisions. Empirical identification of borrowing constraints is secured by the economic prediction that opportunity costs and direct costs of schooling affect borrowing‐constrained and unconstrained persons differently. Direct costs need to be financed during school and impose a larger burden on credit‐constrained students. By contrast, gross forgone earnings do not have to be financed. We explore the implications of this idea using four methodologies: schooling attainment models, instrumental variable wage regressions, and two structural economic models that integrate both schooling choices and schooling returns into a unified framework. None of the methods produces evidence that borrowing constraints generate inefficiencies in the market for schooling in the current policy environment. We conclude that, on the margin, additional policies aimed at improving credit access will have little impact on schooling attainment.

Mobility costs and the dynamics of labor market adjustment to external shocks: Theory

We construct a dynamic, stochastic rational expectations model of labor reallocation that is designed so that its key parameters can be estimated for trade policy analysis. A key feature is the presence of time-varying idiosyncratic moving costs faced by workers. As a consequence of these shocks: (i) gross flows exceed net flows (an important feature of empirical labor movements); (ii) the economy features gradual and anticipatory adjustment to aggregate shocks; (iii) wage differentials across locations or industries can persist in the steady state; and (iv) the normative implications of policy can be very different from a model without idiosyncratic shocks, even when the aggregate behavior of both models is similar. It is shown that the solution to a particular planner’s problem yields a competitive equilibrium, thus facilitating the analysis and simulation of the model for policy purposes.