Relationship Skills in the Labor and Marriage Markets By Gueorgui Kambourov, Aloysius Siow and Laura Turner

July 7, 2015

Abstract: This paper examines the roles of relationship skill and human capital in determining life-cycle outcomes in education, labor, and marriage markets. We find strong empirical evidence of an individual fixed factor that affects both job and marriage separation hazards and extract an index of non-cognitive skill that increases the durability of relationships in marriages and in the labor market. Using this index, we develop and estimate a two-factor life-cycle model of schooling, job search, and marriage. We find that relationship skill can explain about 40% of the persistence in employment turnover and 35% of the persistence in marriage turnover.

Downloads: (external link) Main Text (application/pdf)


Human capital and income distribution in a model of corruption By Humna Ahsan and Keith Blackburn

July 7, 2015

Abstract: This paper studies the role of corruption in determining the distribution of income and, with this, the degree of poverty and inequality. The analysis is based on an overlapping generations model in which individuals may seek to improve their productive e¢ ciency by supplementing or substituting publicly-provided services (education and health care) with their own expenditures on human capital formation. Financial market imperfections mean that their ability to do this depends on their initial wealth status, implying the possibility of persistent inequality in multiple long-run equilibria. We show how corruption may exacerbate this by compromising public service provision. This occurs through the double whammy of both reducing the earnings and increasing the population of those who rely most on such services. Higher levels of corruption are associated with higher levels of poverty and may result in a complete polarisation between the rich and poor through the elimination of any middle class.

Downloads: (external link) … apers/dpcgbcr208.pdf (application/pdf)

Trust and the Welfare State: the Twin Peaks Curve by Yann Algan, Pierre Cahuc and Marc Sangnier

July 7, 2015

Abstract: We show the existence of a twin peaks relation between trust and the size of the welfare state that stems from two opposing forces. Uncivic people support large welfare states because they expect to benefit from them without bearing their costs. But civic individuals support generous benefits and high taxes only when they are surrounded by trustworthy individuals. We provide empirical evidence for these behaviors and this twin peaks relation in the OECD countries.

Downloads: (external link) … urces/twin-peaks.pdf (application/pdf)

Human Capital Quality and Aggregate Income Differences: Development Accounting for U.S. States by Eric A. Hanushek (, Jens Ruhose ( and Ludger Woessmann (

July 7, 2015

Abstract: Although many U.S. state policies presume that human capital is important for state economic development, there is little research linking better education to state incomes. In a complement to international studies of income differences, we investigate the extent to which quality-adjusted measures of human capital can explain within-country income differences. We develop detailed measures of state human capital based on school attainment from census micro data and on cognitive skills from state- and country-of-origin achievement tests. Partitioning current state workforces into state locals, interstate migrants, and immigrants, we adjust achievement scores for selective migration. We use the new human capital measures in development accounting analyses calibrated with standard production parameters. We find that differences in human capital account for 20-35 percent of the current variation in per-capita GDP among states, with roughly even contributions by school attainment and cognitive skills. Similar results emerge from growth accounting analyses.

Downloads: (external link) (application/pdf)