Ben Eltham’s cheap education funding shot at Tone and Chrissie

John Brumby: deregulated the VET sector while Premier.

John Brumby: deregulated the VET sector while Premier.

Ben Eltham has posted an article in New Matilda about the financial and regulatory travails of Victorian VET private mega-provider Vocation:

Christopher Pyne’s higher education legislation will channel hundreds of millions of dollars to private providers. When it happened in Victoria’s VET system, the consequences were dire, writes Ben Eltham.

The share price collapse of high-flying private education provider Vocation reminds us of the perils of privatising education.

On its website and Annual Report, Vocation asks us to “be extraordinary”.

… Vocation presents itself as high-quality and respectable. It boasts none other than John Dawkins, the architect of the Hawke government’s university reforms, as the chair of its board.

But the performance of ASX-listed private training provider Vocation in recent weeks has been anything but extraordinary.

The problem with a voucher-based portable funding system for VET is that it creates a situation that makes it very difficult to monitor and ensure quality of service provision.

Continue reading

How the aged crowd out the young, and how it’s inefficient

This paper is pretty interesting. The last generation has seen the triumph of the baby boomers in attracting resources to themselves, at the cost of other generations, most obviously illustrated in throwing off the shackles of university fees (so other generations and the uneducated could pay for their university education) and then returning to ramp up fees on the oncoming generations. Ditto for the pension – which they’ll enjoy but get later generations to self-fund. Ditto all the tax breaks for self-funded boomers and on it goes though quite possibly the effect of house prices may be as or more important than all that.

Meanwhile think how those who rise to a certain position in the workforce tend to stay there, regardless of merit. This is not so true at the very top of large companies any more that seem to turn over their CEOs pretty quickly and ruthlessly (thought the terms of separation show a great deal of ruth). So economists tend to think of firms as making efficient decisions to survive competition, but they’re full of humangoes, and humangoes, just like mangoes have soft squishy bits that tend to do pretty much what they’re going to do whatever the state of competition is.

Demographics and Entrepreneurship

: by James Liang, Hui Wang, Edward P. Lazear – #20506 (IO LS)

Abstract: Entrepreneurship requires creativity and business acumen. Creativity may decline with age, but business skills increase with experience in high level positions. Having too many older workers in society slows entrepreneurship. Not only are older workers less innovative, but more significant is that when older workers occupy key positions they block younger workers from acquiring business skills. A formal theoretical structure is presented and tested using the Global Entrepreneurship Monitor data. The results imply that a one-standard deviation decrease in the median age of a country increases the rate of new business formation by 2.5 percentage points, which is about forty percent of the mean rate. Furthermore, older societies have lower rates of entrepreneurship at every age.

Scottish independence: a good idea or a bad idea?

Today the people residing in Scotland can decide whether they want to see an independent Scotland or to have Scotland remain in the UK. The betting markets concur with the opinion polls and favour the status quo: the markets give roughly 20% chance that the ‘yes’ vote will win and that Scotland will become independent.

The majority of economists talking about the referendum have focused on whether or not the Scots would be financially better off with their own country, debating things like North Sea oil revenues and currency unions. I think that is a distraction: looking at small and large countries in Europe, you would have to say there is no noticeable advantage or disadvantage to being a small country and that the Scots are hence unlikely to be materially affected in the long run by independence.
Independence is more about self-image and identity than it is about money. Even though the push for independence might well come from politicians and bureaucracies that gain prestige and income if they ruled an independent country, the population deciding on the vote will probably vote on emotional grounds, not economic. Young male Scots appear overwhelmingly in favour of independence; females and old people prefer to keep things the way they are. The latter groups are bigger and are expected to sway the day.

Personally, I have two related reasons to oppose the breaking up of larger countries in Europe into smaller ethnically defined states, not just Scotland, but also Catalonia, the Basque region, the Frisian province, Bavaria, and all the other regions of Europe:

  1. These independence movements are ethnic and hence by definition exclusionary. This is a big concern: large nation states have slowly moved away from the story that they exist for people of the ‘right’ bloodlines and with ancestors who lived in the ‘right’ place. The UK, the US, France, Australia, and even Germany and Spain have moved towards an identity based on stories about what it means to be British, American, French, Australian, etc., rather than a ‘blood and earth’ ethnic nation state story. Speaking tongue-in-cheek, the Brits have an upper lip story, the Americans have an exceptionalism story, the French have been convinced they like reading Proust, the new Australians are told in their citizenship exams that they believe in a fair go, etc. These stories contain treasured national stereotypes, complete with imagined histories. The key thing is that are inclusive, ie any newcomer from another place can participate in such stories. The Australian national anthem is a beautiful example of this super-inclusive attitude as it, almost uniquely, mentions neither ethnicity nor religion as a basis for being Australian. The ethnic stories of the independence movements are, in contrast, exclusionary and hence harmful to the self-image of any migrant. It is a move to a past that we have little reason to be proud of, as it marginalises current and future migrants. The story surrounding Scottish independence is thus not that the Scots are people who like to wear kilts and enjoy haggis, but that they make up the people who have suffered 700 years of oppression by the English. What is a recent newcomer from, say, Poland to do with such a self-image but conclude that they do not really belong there? Continue reading

Do people know what’s good for them – or their children. (Hint: Not always)

Human Capital Effects of Anti-Poverty Programs: Evidence from a Randomized Housing Voucher Lottery by Brian Jacob, Max Kapustin, Jens Ludwig – #20164 (CH ED HE PE)

Abstract:

Whether government transfer programs increase the human capital of low-income children is a question of first-order policy importance. Such policies might help poor children if their parents are credit constrained, and so under-invest in their human capital. But it is also possible that whatever causes parents to have low incomes might also directly influence children’s development, in which case transfer programs need not improve poor children’s long-term life chances. While several recent influential studies suggest anti-poverty programs have larger human capital effects per dollar spent than do even the best educational interventions, identification is a challenge because most transfer programs are entitlements. We overcome that problem by studying the effects on children of a generous transfer program that is heavily rationed–means-tested housing assistance. We take advantage of a randomized housing voucher lottery in Chicago in 1997, for which 82,607 people applied, and use administrative data on schooling, arrests, and health to track children’s outcomes over 14 years. We focus on families living in unsubsidized private housing at baseline, for whom voucher receipt generates large changes in both housing and non-housing consumption. Estimated effects are mostly statistically insignificant and always much smaller than those from recent studies of cash transfers, and are smaller on a per dollar basis than the best educational interventions.

 

Windows, workplaces, job quality and productivity

Life is miserable: run, run, run

I’ve always been struck by how we debate flexibility in the labour market without paying attention to the other problem in the labour market which is that it’s extremely difficult to find out whether you’re really going to like a job until you take it, and then, if you don’t well it’s too late – lots of costs and general angst getting out and moving onto something better. (Will it be better, or just the same old, same old – I’d better stick it out where I am).

So I took the problem down to Troppo labs which came up with Windows on Workplaces which starred (not) at the 20:20 Summit. Hey why pay attention to something new when you can go with the same old same old same old same old Golden Gurus. (See the same article I just linked to.) The basic idea of Windows on Workplaces – quoted from the linked post is as follows:

Say you particularly value some aspect of a job you’re applying for – for instance a good career path, intrinsically rewarding work or flexible family friendly hours. If youre applying from outside the firm youre generally in the dark. . . .

Now firms regularly survey their employees regarding their satisfaction with these things. So it would be good if you could get a peek at their answers. [But] firstly, firms that did badly wouldn’t want to release their information. The second problem is trickier still. Even if you somehow compelled firms to release this data, their survey results cant be readily or reliably compared because they’re not reported against some common standard. I propose . . . not that governments mandate some standard, but rather that they organise and campaign to encourage a standard to emerge. . . . The best firms have an interest in such a standard emerging as it would advantage them in competing to attract employees. And governments are also major employers, so they could establish standards for their own agencies to report against, which, if deftly done might form the kernel around which more widely used standards might emerge.

I’ve never tried to do any empirical work on the extent to which this could improve productivity – though I think it would be large. Now, in the process of completing a major project on estimating the value of open data to the Australian economy, a colleague referenced this paper.

“Match Quality, Worker Productivity, and Worker Mobility: Direct Evidence From Teachers”
by C. Kirabo Jackson. Here’s the abstract. Extremely promising I reckon! Continue reading

What’s wrong with TED talks – hint: quite a lot

I have almost certainly fulminated in various asides against TED talks on this blog, and even one full on cri de coeur against retail profundification. (I promised one on business class profundification but I haven’t managed to do it yet.

Anyway, a friend sent me this TEDx talk which is about what’s wrong with TED Talks. It’s terrific. Indeed, if you want to watch it you can, but you can also see the text of the speech reproduced on the speaker’s website and in the Guardian. It’s always annoyed me that transcripts aren’t provided as a matter of course. They save a lot of time.

My favourite quote on economics:

Our options for change range from basically what we have plus a little more Hayek, to what we have plus a little more Keynes. Why?

Enjoy.

The singularity: which jobs will go?

 

Pretty interesting paper (pdf).

The abstract:

We examine how susceptible jobs are to computerisation. To assess this, we begin by implementing a novel methodology to estimate the probability of computerisation for 702 detailed occupations, using a Gaussian process classifier. Based on these estimates, we examine expected impacts of future computerisation on US labour market outcomes, with the primary objective of analysing the number of jobs at risk and the relationship between an occupation’s probability of computerisation, wages and educational attainment. According to our estimates, about 47 percent of total US employment is at risk. We further provide evidence that wages and educational attainment exhibit a strong negative relationship with an occupation’s probability of computerisation.

The last paragraph of the conclusion.

Finally, we provide evidence that wages and educational attainment exhibit a strong negative relationship with the probability of computerisation. We note that this finding implies a discontinuity between the nineteenth, twentieth and the twenty-first century, in the impact of capital deepening on the relative demand for skilled labour. While nineteenth century manufacturing technologies largely substituted for skilled labour through the simplification of tasks (Braverman, 1974; Hounshell, 1985; James and Skinner, 1985; Goldin and Katz, 1998), the Computer Revolution of the twentieth century caused a hollowing-out of middle-income jobs (Goos, et al., 2009; Autor and Dorn, 2013). Our model predicts a truncation in the current trend towards labour market polarisation, with computerisation being principally confined to low-skill and low-wage occupations. Our findings thus imply that as technology races ahead, low-skill workers will reallocate to tasks that are non-susceptible to computerisation – i.e., tasks requiring creative and social intelligence. For workers to win the race, however, they will have to acquire creative and social skills.