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MISMATCH IN HUMAN CAPITAL ACCUMULATION
Author(s) -
Cooper Russell,
Liu Huacong
Publication year - 2019
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12386
Subject(s) - human capital , educational attainment , economics , econometrics , taste , noise (video) , focus (optics) , empirical evidence , demographic economics , psychology , computer science , economic growth , philosophy , physics , epistemology , neuroscience , artificial intelligence , optics , image (mathematics)
Abstract This article studies the allocation of heterogeneous agents to levels of educational attainment. The goal is to understand the magnitudes and sources of mismatch in this assignment, both in theory and in the data. The article presents evidence of substantial mismatch between ability and educational attainment across 21 OECD countries, with a main focus on Germany, Italy, Japan, and the United States. Model parameters are estimated using a simulated method of moments approach. The main empirical finding is that measured mismatch arises largely from noise in test scores and does not reflect borrowing constraints. Taste shocks play a minor role in explaining mismatch.