Human Capital Externalities and Private Returns to Education in Kenya

We use micro data to analyse the effect of human capital externality on earnings and private returns to education. The earnings equations are estimated using the OLS method for a sample of full-time workers. The results show that human capital has a positive effect on earnings, indicating that an increase in education benefits all workers. However, men benefit more from women's education than the women do from men's. The effects of human capital externality on private returns to schooling are shown to vary substantially between rural and urban areas and across levels of the education system.

Online Format vs. Live Mode of Instruction: Do Human Capital Differences or Differences in Returns to Human Capital Explain the Differences in Outcomes?

Our paper asks the question: Does mode of instruction format (live or online format) effect test scores in the principles of macroeconomics classes? Our data are from several sections of principles of macroeconomics, some in live format, some in online format, and all taught by the same instructor. We find that test scores for the online format, when corrected for sample selection bias, are four points higher than for the live format, and the difference is statistically significant. One possible explanation for this is that there was slightly higher human capital in the classes that had the online format. A Oaxaca decomposition of this difference in grades was conducted to see how much was due to human capital and how much was due to the differences in the rates of return to human capital. This analysis reveals that 25% of the difference was due to the higher human capital with the remaining 75% due to differences in the returns to human capital. It is possible that for the relatively older student with the appropriate online learning skill set, and with schedule constrains created by family and job, the online format provides them with a more productive learning environment than does the alternative traditional live class format. Also, because our data are limited to the student s academic transcript, we recommend future research include data on learning style characteristics, and the constraints formed by family and job choices.

Comparing Input- and Output-Oriented Measures of Technical Efficiency to Determine Local Returns to Scale in DEA Models

This paper shows how one can infer the nature of local returns to scale at the input- or output-oriented efficient projection of a technically inefficient input-output bundle, when the input- and output-oriented measures of efficiency differ.

Cost Improvements, Returns to Scale, and Cost Inefficiencies for Real Estate Investment Trusts

This paper extends the existing research on real estate investment trust (REIT) operating efficiencies. We estimate stochastic-frontier, panel-data models specifying a translog cost function. The specified model updates the cost frontier with new information as it becomes available over time. The model can identify frontier cost improvements, returns to scale, and cost inefficiencies over time. The results disagree with most previous research in that we find no evidence of scale economies and some evidence of scale diseconomies. Moreover, we also generally find smaller inefficiencies than those shown by other REIT studies. Contrary to previous research, higher leverage associates with more efficiency.

Dynamic Effects of Currency Depreciation on Stock Market Returns during the Asian Financial Crisis

The current international integration of financial markets provides a channel for currency depreciation to affect stock prices. Moreover, the recent financial crisis in Asia with its accompanying exchange rate volatility affords a case study to examine that channel. This paper applies a bivariate GARCH-M model of the reduced form of stock market returns to investigate empirically the effects of daily currency depreciation on stock market returns for five newly emerging East Asian stock markets during the Asian financial crisis. The evidence shows that the conditional variances of stock market returns and depreciation rates exhibit time-varying characteristics for all countries. Domestic currency depreciation and its uncertainty adversely affects stock market returns across countries. The significant effects of foreign exchange market events on stock market returns suggest that international fund managers who invest in the newly emerging East Asian stock markets must evaluate the value and stability of the domestic currency as a part of their stock market investment decisions.

Do Proctored Exams Matter In Online Classes?

Does the format of assessment (proctored or un-proctored exams) affect test scores in online principles of economics classes? This study uses data from two courses of principles of economics taught by the same instructor to gain some insight into this issue. When final exam scores are regressed against human capital factors, the R-squared statistic is 61.6% for the proctored format exams while it is only 12.2% for the un-proctored format. Three other exams in the class that had the proctored final were also un-proctored and also produced lower R-squared values, averaging 30.5%. These two findings suggest that some cheating may have taken place in the un-proctored exams. Although it appears some cheating took place, the results suggest that cheating did not pay for these students since the proctored exam grades were 4.9 points higher than the un-proctored exam grades although this difference was significantly different at only the 10% level. One possible explanation for this is that there was slightly higher human capital in the class that had the proctored exam although this must have occurred by chance since the students did not know if the exams were going to be proctored in advance so there is no issue of selection bias. A Oaxaca decomposition of this difference in grades was conducted to see how much was due to human capital and how much was due to the differences in the rates of return to human capital. This analysis reveals that 17% of the difference was due to the higher human capital with the remaining 83% due to differences in the returns to human capital. It is possible that the un-proctored exam format does not encourage as much studying as the proctored format reducing both the returns to human capital and the exam scores.

Nonparametric Measures of Capacity Utilization: A Dual Approach

This paper develops a nonparametric method of obtaining the minimum of the long run average cost curve of a firm to define its capacity output. This provides a benchmark for measuring of capacity utilization at the observed output level of the firm. In the case of long run constant returns to scale, the minimum of the short run average cost curve is determined to measure short run capacity utilization. An empirical application measures yearly rates of capacity utilization in U.S. manufacturing over the period 1968-1998. Nonparametric determination of the short run average cost curve under variable returns to scale using an iterative search procedure is described in an appendix to this paper.

Are Some Indian Bank Too Large? A Examination of Size Efficiency in Indian Banking

In this paper we use data from the years 1997 through 2003 to evaluate the size efficiency of Indian banks. Following Maindiratta (1990) we consider a bank to be too large if breaking it up into a number of smaller units would result in a larger output bundle than what could be produced from the same input by a single bank. When this is the case, the bank is not size efficient. Our analysis shows that many of the banks are, in deed, too large in various years. We also find that often a bank is operating in the region of diminishing returns to scale but is not a candidate for break up.