Mixed oligopoly in education

This paper studies oligopolistic competition in education markets when schools can be private and public and when the quality of education depends on ìpeer groupî e§ects. In the Örst stage of our game schools set their quality and in the second stage they Öx their tuition fees. We examine how the (subgame perfect Nash) equilibrium allocation (qualities, tuition fees and welfare) is a§ected by the presence of public schools and by their relative position in the quality range. When there are no peer group e§ects, e¢ ciency is achieved when (at least) all but one school are public. In particular in the two school case, the impact of a public school is spectacular as we go from a setting of extreme di§erentiation to an e¢ cient allocation. However, in the three school case, a single public school will lower welfare compared to the private equilibrium. We then introduce a peer group e§ect which, for any given school is determined by its student with the highest ability. These PGE do have a signiÖcant impact on the results. The mixed equilibrium is now never e¢ cient. However, welfare continues to be improved if all but one school are public. Overall, the presence of PGE reduces the e§ectiveness of public schools as regulatory tool in an otherwise private education sector.

Conflict and child labor: evidence from poor households in Colombia

Colombia suffers from one of the longest civil conflicts in the world, which is believed to have had several consequences on the country’s economic and development performance. This study uses measures of central government deterrence effort as instruments of conflict to estimate the impact of conflict on children’s time allocation to two different types of work: housework and work performed outside the household for poor families living in small municipalities in Colombia. I find that conflict significantly increases the amount of time children allocate to work. Both housework, for girls, and work outside the household, for boys, increase with Guerrilla attacks. However, the later effect is the opposite for Paramilitary attacks.

Beyond the mincer equation: the internal rate of return to higher education in Colombia

In order to present an estimation of the Internal Rate of Return (IRR) to higher education in Colombia we take advantage of the methodological approach provided by Heckman, Lochner and Todd (2005). Trying to overcome the criticism that surrounds interpretations of the education coefficient of Mincer equations as being the rate of return to investments in education we develop a more structured approach of estimation, which controls for selection bias, includes more accurate measures of labor income and the role of education costs and income taxes. Our results implied a lower rate of return than the ones found in the Colombian literature and show that the Internal Rate of Return for higher education in Colombia lies somewhere between 0.074 and 0.128. The results vary according to the year analyzed and individual’s gender. This last result reinforces considerations regarding gender discrimination in the Colombian labor market.