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You get what you pay for: Incentives and Selection in the Education System

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Author Info

  • Dohmen Thomas
  • Falk Armin

    (ROA rm)

Abstract

We analyse worker self-selection with a special focus on teachers. The point of the paper is that worker composition is generally endogenous, due to worker self-selection. In a first step we analyse lab experimental data to provide causal evidence on particular sorting patterns. This evidence sets the stage for our field data analysis, which focuses specifically on selection patterns of teachers. We find that teachers are more risk averse than employees in other professions, which indicates that relatively risk averse individuals sort into teaching occupations under the current system. Using survey measures on trust and reciprocity we also find that teachers trust more and are less negatively reciprocal than other employees. Finally, we establish differences in personality based on the Big Five concept.

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Bibliographic Info

Paper provided by Maastricht : ROA, Research Centre for Education and the Labour Market in its series Research Memoranda with number 002.

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Date of creation: 2010
Date of revision:
Handle: RePEc:dgr:umaror:2010002

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Web page: http://www.maastrichtuniversity.nl/web/UMPublications.htm

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Keywords: education; training and the labour market;

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References

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  1. Borghans Lex & Lee Duckworth Angela & Heckman James J. & Weel Bas ter, 2008. "The Economics and Psychology of Personality Traits," Research Memoranda 001, Maastricht : ROA, Research Centre for Education and the Labour Market.
  2. Ernst Fehr & Alexander Klein & Klaus M Schmidt, 2007. "Fairness and Contract Design," Econometrica, Econometric Society, vol. 75(1), pages 121-154, 01.
  3. Jeff Dominitz & Charles F. Manski, 1994. "Eliciting Student Expectations of the Returns to Schooling," NBER Working Papers 4936, National Bureau of Economic Research, Inc.
  4. Gould, Eric D & Moav, Omer & Weinberg, Bruce A, 2001. " Precautionary Demand for Education, Inequality, and Technological Progress," Journal of Economic Growth, Springer, vol. 6(4), pages 285-315, December.
  5. Ernst Fehr, 2003. "Psychological Foundations of Incentives," Microeconomics 0305010, EconWPA.
  6. Fehr, Ernst & Fischbacher, Urs & von Rosenbladt, Bernhard & Schupp, Jürgen & Wagner, Gert G., 2003. "A Nation-Wide Laboratory: Examining Trust and Trustworthiness by Integrating Behavioral Experiments into Representative Surveys," IZA Discussion Papers 715, Institute for the Study of Labor (IZA).
  7. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
  8. Dohmen, Thomas & Falk, Armin & Huffman, David & Sunde, Uwe, 2008. "Representative trust and reciprocity: prevalence and determenants," Open Access publications from Maastricht University urn:nbn:nl:ui:27-13668, Maastricht University.
  9. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
  10. Christian Grund & Dirk Sliwka, 2005. "Envy and Compassion in Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(1), pages 187-207, 03.
  11. Falk, Armin & Heckman, James J., 2009. "Lab Experiments Are a Major Source of Knowledge in the Social Sciences," IZA Discussion Papers 4540, Institute for the Study of Labor (IZA).
  12. Michael Kosfeld & Ferdinand A. von Siemens, 2011. "Competition, cooperation, and corporate culture," RAND Journal of Economics, RAND Corporation, vol. 42(1), pages 23-43, 03.
  13. Muriel Niederle & Lise Vesterlund, 2005. "Do Women Shy Away from Competition? Do Men Compete too Much?," Discussion Papers 04-030, Stanford Institute for Economic Policy Research.
  14. Bonin, Holger & Dohmen, Thomas & Falk, Armin & Huffman, David & Sunde, Uwe, 2007. "Cross-sectional earnings risk and occupational sorting: The role of risk attitudes," Labour Economics, Elsevier, vol. 14(6), pages 926-937, December.
  15. Hause, John C, 1974. "The Risk Element in Occupational and Educational Choices: Comment," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 803-07, July/Aug..
  16. Levhari, David & Weiss, Yoram, 1974. "The Effect of Risk on the Investment in Human Capital," American Economic Review, American Economic Association, vol. 64(6), pages 950-63, December.
  17. Dohmen Thomas & Falk Armin & Huffman David & Sunde Uwe & Schupp Jürgen & Wagner Gert, 2009. "Individual Risk Attitudes: Measurement, Determinants and Behavioral Consequences," Research Memoranda 007, Maastricht : ROA, Research Centre for Education and the Labour Market.
  18. Englmaier, Florian & Wambach, Achim, 2010. "Optimal incentive contracts under inequity aversion," Games and Economic Behavior, Elsevier, vol. 69(2), pages 312-328, July.
  19. Lalith Munasinghe & Nachum Sicherman, 2006. "Why Do Dancers Smoke? Smoking, Time Preference, and Wage Dynamics," Eastern Economic Journal, Eastern Economic Association, vol. 32(4), pages 595-616, Fall.
  20. Kolm,Serge-Christophe, 2008. "Reciprocity," Cambridge Books, Cambridge University Press, number 9780521882651.
  21. Dolton, Peter J., 2006. "Teacher Supply," Handbook of the Economics of Education, Elsevier.
  22. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
  23. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  24. Golsteyn, Bart H.H., 2007. "The ability to invest in human capital," Open Access publications from Maastricht University urn:nbn:nl:ui:27-12698, Maastricht University.
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Citations

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Cited by:
  1. Christoph Helbach, 2012. "The Interplay of Standardized Tests and Incentives – An Econometric Analysis with Data from PISA 2000 and PISA 2009," Ruhr Economic Papers 0356, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. Felix Ebeling & Gerlinde Fellner & Johannes Wahlig, 2012. "Peer Pressure in Multi-Dimensional Work Tasks," Working Paper Series in Economics 57, University of Cologne, Department of Economics.
  3. Wiederhold, Simon & Riener, Gerhard, 2012. "Hidden Costs of Control in Social Groups," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 65407, Verein für Socialpolitik / German Economic Association.
  4. Brice Corgnet & Roberto Hernán-González & Stephen Rassenti, 2011. "Real Effort, Real Leisure and Real-time Supervision: Incentives and Peer Pressure in Virtual Organizations," Working Papers 11-05, Chapman University, Economic Science Institute.
  5. Ludger Woessmann, 2010. "Cross-Country Evidence on Teacher Performance Pay," CESifo Working Paper Series 3151, CESifo Group Munich.
  6. Buurman, Margaretha & Dur, Robert & van den Bossche, Seth, 2009. "Public Sector Employees: Risk Averse and Altruistic?," IZA Discussion Papers 4401, Institute for the Study of Labor (IZA).
  7. Robert Dur & Robin Zoutenbier, 2012. "Intrinsic Motivations of Public Sector Employees: Evidence for Germany," Tinbergen Institute Discussion Papers 12-135/VII, Tinbergen Institute.

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