Does grade retention affect achievement? Some evidence from PISA

Grade retention practices are at the forefront of the educational debate. In this paper, we use PISA 2009 data for Spain to measure the effect of grade retention on students’ achievement. One important problem when analyzing this question is that school outcomes and the propensity to repeat a grade are likely to be determined simultaneously. We address this problem by estimating a Switching Regression Model. We …find that grade retention has a negative impact on educational outcomes, but we confi…rm the importance of endogenous selection, which makes observed differences between repeaters and non-repeaters appear 14.6% lower than they actually are. The effect on PISA scores of repeating is much smaller (-10% of non-repeaters’ average) than the counterfactual reduction that non-repeaters would suffer had they been retained as repeaters (-24% of their average). Furthermore, those who repeated a grade during primary education suffered more than those who repeated a grade of secondary school, although the effect of repeating at both times is, as expected, much larger.

Influence of the claimant’s behavioural features on motor compensation outcomes

The decision to settle a motor insurance claim by either negotiation or trial is analysed. This decision may depend on how risk and confrontation adverse or pessimistic the claimant is. The extent to which these behavioural features of the claimant might influence the final compensation amount are examined. An empirical analysis, fitting a switching regression model to a Spanish database, is conducted in order to analyze whether the choice of the conflict resolution procedure is endogenous to the compensation outcomes. The results show that compensations awarded by courts are always higher, although 95% of cases are settled by negotiation. We show that this is because claimants are adverse to risk and confrontation, and are pessimistic about their chances at trial. By contrast, insurers are risk - confrontation neutral and more objective in relation to the expected trial compensation. During the negotiation insurers accept to pay the subjective compensation values of claimants, since these values are lower than their estimates of compensations at trial.

The Design and efficiency of loyalty rewards

The goal of this paper is to reexamine the optimal design and efficiency of loyalty rewards in markets for final consumption goods. While the literature has emphasized the role of loyalty rewards as endogenous switching costs (which distort the efficient allocation of consumers), in this paper I analyze the ability of alternative designs to foster consumer participation and increase total surplus. First, the efficiency of loyalty rewards depend on their specific design. A commitment to the price of repeat purchases can involve substantial efficiency gains by reducing price-cost margins. However, discount policies imply higher future regular prices and are likely to reduce total surplus. Second, firms may prefer to set up inefficient rewards (discounts), especially in those circumstances where a commitment to the price of repeat purchases triggers Coasian dynamics.

The wage effect of an indexation clause: Evidence from Spanish manufacturing firms

An endogenous switching model of ex-ante wage changes under indexed and non-indexed settlements is estimated for the Spanish manufacturing sector using collective bargaining firm data for the 1984-1991 period. The likelihood of indexing the settlement is higher for nationwide unions than for other union groups within the works council and increases with the expected level of inflation. For wage change equations, a common structure for indexed and non-indexed settlements is strongly rejected, showing a source of nominal rigidity. For indexed contracts, the expected ex-ante total inflation coverage is nearly complete. It is also shown that workers pay a significant ex-ante wage change premium (differential) to obtain a cost of living allowance clause. However, the realised contingent compensation exceeds such a premium for all industries. Finally, important spillover effects in wage setting and the decision to index the settlement have been detected.

How different are returns to education? Evidence from German school choices

This study presents estimates of returns to post-secondary educationand wage differentials among graduates fromdifferent secondary schoolsin Germany. I use an empirical model that captures the basic features ofthe German education system. It controls for selection into post-secondaryeducation and treats latter as endogenous in the wage equation. Myresults show that OLS estimates are severely biased. The direction ofthe bias depends on the secondary school type. Annual returns topost-secondary education differ significantly: they are eight timeshigher for graduates from the highest secondary school than for graduatesfrom the lowest secondary school.

Fiscal Regime Shifts in Portugal

We estimate changes in fiscal policy regimes in Portugal with a Markov Switching regression of fiscal policy rules for the period 1978-2007, using a new dataset of fiscal quarterly series. We find evidence of a deficit bias, while repeated reversals of taxes making the budget procyclical. Economic booms have typically been used to relax tax pressure, especially during elections. One-off measures have been preferred over structural ones to contain the deficit during economic crises. The EU fiscal rules prompted temporary consolidation, but did not permanently change the budgeting process.

Is there a relationship between bilingual language switching and executive functions in bilingualism? Introducing a within-group analysis approach

Several studies have suggested a bilingual advantage in executive functions, presumably due to bilinguals' massive practice with language switching that requires executive resources, but the results are still somewhat controversial. Previous studies are also plagued by the inherent limitations of a natural groups design where the participant groups are bound to differ in many ways in addition to the variable used to classify them. In an attempt to introduce a complementary analysis approach, we employed multiple regression to study whether the performance of 30- to 75-year-old FinnishSwedish bilinguals (N = 38) on tasks measuring different executive functions (inhibition, updating, and set shifting) could be predicted by the frequency of language switches in everyday life (as measured by a language switching questionnaire), L2 age of acquisition, or by the self-estimated degree of use of both languages in everyday life. Most consistent effects were found for the set shifting task where a higher rate of everyday language switches was related to a smaller mixing cost in errors. Mixing cost is thought to reflect top-down management of competing task sets, thus resembling the bilingual situation where decisions of which language to use has to be made in each conversation. These findings provide additional support to the idea that some executive functions in bilinguals are affected by a lifelong experience in language switching and, perhaps even more importantly, suggest a complementary approach to the study of this issue.

Clinical consequences of switching from olanzapine to risperidone and vice versa in outpatients with schizophrenia: 36-month results from the worldwide schizophrenia outpatients health outcomes (W-SOHO) study

BACKGROUND: With many atypical antipsychotics now available in the market, it has become a common clinical practice to switch between atypical agents as a means of achieving the best clinical outcomes. This study aimed to examine the impact of switching from olanzapine to risperidone and vice versa on clinical status and tolerability outcomes in outpatients with schizophrenia in a naturalistic setting. METHODS: W-SOHO was a 3-year observational study that involved over 17,000 outpatients with schizophrenia from 37 countries worldwide. The present post hoc study focused on the subgroup of patients who started taking olanzapine at baseline and subsequently made the first switch to risperidone (n=162) and vice versa (n=136). Clinical status was assessed at the visit when the first switch was made (i.e. before switching) and after switching. Logistic regression models examined the impact of medication switch on tolerability outcomes, and linear regression models assessed the association between medication switch and change in the Clinical Global Impression-Schizophrenia (CGI-SCH) overall score or change in weight. In addition, Kaplan-Meier survival curves and Cox-proportional hazards models were used to analyze the time to medication switch as well as time to relapse (symptom worsening as assessed by the CGI-SCH scale or hospitalization). RESULTS: 48% and 39% of patients switching to olanzapine and risperidone, respectively, remained on the medication without further switches (p=0.019). Patients switching to olanzapine were significantly less likely to experience relapse (hazard ratio: 3.43, 95% CI: 1.43, 8.26), extrapyramidal symptoms (odds ratio [OR]: 4.02, 95% CI: 1.49, 10.89) and amenorrhea/galactorrhea (OR: 8.99, 95% CI: 2.30, 35.13). No significant difference in weight change was, however, found between the two groups. While the CGI-SCH overall score improved in both groups after switching, there was a significantly greater change in those who switched to olanzapine (difference of 0.29 points, p=0.013). CONCLUSION: Our study showed that patients who switched from risperidone to olanzapine were likely to experience a more favorable treatment course than those who switched from olanzapine to risperidone. Given the nature of observational study design and small sample size, additional studies are warranted.

Endogenous integration and welfare in complementary goods markets

This paper analyzes the strategic decision to integrate by firms that produce complementary products. Integration entails bundling pricing. We find out that integration is privately profitable for a high enough degree of product differentiation, that profits of the non-integrated firms decrease, and that consumer surplus need not necessarily increase when firms integrate despite the fact that prices diminish. Thus, integration of a system is welfare-improving for a high enough degree of product differentiation combined with a minimum demand advantage relative to the competing system. Overall, and from a number of extensions undertaken, we conclude that bundling need not be anti-competitive and that integration should be permitted only under some circumstances.

Redistributive taxation with endogenous sentiments

We present a model in which an individual's sentiments towards others are determined endogenously on the basis of how they perform relative to the societal average. This, in turn, affects the individual's own behavior and hence other agents' sentiments toward her. We focus on stationary patterns of utility interdependence. To demonstrate the effects of such endogeneity, we consider an example of a production economy with redistributive taxation. There are two types of stationary equilibria: one in which all agents conform to the societal norm, into two or three groups. The main conclusion is that the tax structure, in that it affects behavior which in turn affects sentiments, plays a crucial role in determining which type of equilibrium occurs and its characteristics as well as the extent of altruism and social cohesion in society.

Research policy and endogenous growth

This paper studies the effects of different types of research policy on economic growth. We find that while tax incentives to private research, public funding of private projects, and basic research performed at public institutions have unambiguously positive effects on economic growth, performing applied research at public institutions could have negative growth effects. This is due to the large crowding out of private research caused by public R\&D when it competes with private firms in the "patent race". Concerning the effects of these policies on welfare, it is found that research policy can either improve or reduce consumer welfare depending on the characteristics of the policy and that an excessively high research subsidy will reduce it.

Endogenous capacity utilization and the asymmetric effects of monetary policy

This paper investigates the role of variable capacity utilization as a source of asymmetries in the relationship between monetary policy and economic activity within a dynamic stochastic general equilibrium framework. The source of the asymmetry is directly linked to the bottlenecks and stock-outs that emerge from the existence of capacity constraints in the real side of the economy. Money has real effects due to the presence of rigidities in households' portfolio decisions in the form of a Luces-Fuerst 'limited participation' constraint. The model features variable capacity utilization rates across firms due to demand uncertainty. A monopolistic competitive structure provides additional effects through optimal mark-up changes. The overall message of this paper for monetary policy is that the same actions may have different effects depending on the capacity utilization rate of the economy.

Endogenous population subgroups: the best population partition and optimal number of groups

The aim of this paper is to suggest a method to find endogenously the points that group the individuals of a given distribution in k clusters, where k is endogenously determined. These points are the cut-points. Thus, we need to determine a partition of the N individuals into a number k of groups, in such way that individuals in the same group are as alike as possible, but as distinct as possible from individuals in other groups. This method can be applied to endogenously identify k groups in income distributions: possible applications can be poverty