Lecture Notes

A brief outline of course topics and lecture notes is provided below. It is organized around broad topic areas rather than the course calendar, and can also be used as a study guide for the final exam.

Course Outline

I. Why We Might Care More about the Market for Education than the Market for Beets

• The role of education in economic growth.
• The role of education in reducing income inequality.
• The role of education in intergenerational mobility.

II. Human Capital Theory

• Viewing education as an investment which yields a net rate of return (The Return to Education).
• People choosing amount of education to maximize NPV.
• The calculation of NPV has to take into account both the cost of the education and the opportunity cost of foregone earnings.
• When individuals compute NPV, they may use a personal discount rate that is higher (or occasionally lower) than the market rate of interest.

III. A Recent History of the Return to Education

• Fell during the 1970s and has risen since.

IV. What Estimates of the Return to Education are Actually Estimating

• Maybe a signal.
• Maybe they're being confounded with the effect of ability.
• Maybe you actually learn something useful in school.
• How you can set up regressions that try to distinguish among these models.

V. Computers and Offshoring

• Why demand is shifting toward more educated labor.
• What type of labor computers and offshoring substitute for and what type they complement.
• What the effect is on the wage structure and the return to education.
• The implications of this for what should be taught in school.

VI. School Quality and School Reform (General)

• The educational production function framework.
• Hanushek's study of studies showing little relationship between resources and achievement.

VII. School Quality and School Reform (Specific Proposals)

• Smaller class sizes. (Krueger's paper about Tennessee STAR)
• Vouchers and choice. (Rouse on vouchers in Milwaukee; Hoxby v. Rothstein on Tiebout choice)
• Standards and testing. (Jacob on Chicago; Clotfelter and Ladd on South Carolina and Dallas)
• Teacher pay. (Loeb and Page)
• Screening teachers during their pre-tenure period. (Gordon, Kane, and Staiger)
• Teacher training including training of tenured teachers. (Alvarado piece; Angrist and Lavy)

VIII. Black/White Test Score Gap

• Reducing this may be key to reducing economic inequality.
• Debate about whether it's genetic or environmental and what should be done to try to reduce the gap.
• While Heckman's material on very early childhood education was discussed earlier, it is actually more relevant here.

IX. Incorporating Technology in the Classroom

• What kinds of skills have to be learned.
• What is the evidence on technology improving basic skills.
• How might technology improve more advanced skills. (e.g. case-based reasoning which is a specific case of pattern recognition.)

X. Higher Education

• What colleges do. (Winston)
• How to increase the number of college graduates. (Dynarski)
• What is the role of junior colleges. (Kane and Rouse)