Download Summer Exams 2010/2011 at NUI Galway: Economics Exams and Modules and more Exams Economics in PDF only on Docsity!
Ollscoil na hÉireann, Gaillimh GX_____
National University of Ireland, Galway
Summer Examinations 2010/ 2011 Exam Code(s) 1EP1, 1EP2, 2EP2, 1MEE1, 1EE1, 1EE2, 2EE2, 1MEM1, 1MHE Exam(s) M.A. & M.Econ.Sc. (Economic Policy Evaluation & Planning) M.A. & M.Econ.Sc. (Economic & Environmental Modelling) M.Econ.Sc. (Health Economics) Module Code(s) EC Module(s) Public Sector Economics Paper No. 1 Repeat Paper External Examiner(s) Professor Patrick McGregor Internal Examiner(s) Professor John McHale Dr. Mary Silles Instructions: 4 Questions, Attempt any 2. Duration 3 hours No. of Pages 3 Discipline (s) Economics Course Co-ordinator(s) Dr. M. Silles Requirements : MCQ Handout Statistical Tables Graph Paper Log Graph Paper Other Material
- Consider the typical formulation of the human capital investment problem:
A [ s ( t )] h ( t ) e dt Ah ( ) e e dt
x rt T x rt −
−
θ τ τ
0
where T denotes the age at which the individual retires from work, and x represents the duration of his or her schooling. 1( i ). Interpret the two terms in this equation. (10 marks) 1( ii ). Derive the marginal rate of return to schooling. [Use Leibniz integral rule which is provided below]. (20 marks) 1( iii ). Using the information from part 1( ii ), show that the marginal rate of return to schooling declines with the date at which study commences. Explain why this result may be of interest to policy-makers concerned with human capital-based interventions from a life-course perspective. (20 marks)
- There is a vast empirical literature on the relationship between education and labor market earnings. 2( i ). Early studies of the relationship between schooling and earnings focused on their correlation conditional on measured individual characteristics using standard OLS regression methods. Explain why these studies must be interpreted with caution. ( marks) 2( ii ). Recently, economists have attempted to address issues of education endogeneity by estimating the causal effect of schooling on labor market earnings using instrumental variable (IV) methods. Evaluate the effectiveness of this estimation strategy. (20 marks) 2( iii ). Apart from instrumental variable methods, economists have also attempted to identify the causal effect of schooling on earnings using twin-level panel data. Outline the problems that may arise in twin studies and how these might be addressed. (20 marks)
- The theory of human capital and the theory of signalling offer alternative hypotheses for why workers with higher levels of education tend to have higher wages. 3( i ). Explain why it is empirically challenging to distinguish between human capital and signalling hypotheses. (10 marks) 3( ii ). Outline a model to illustrate that when abilities are not observed by firms, education may serve as a signal by which the more able can bring themselves to the attention of employers. (20 marks)
