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Firms which face the threat of import competition from foreign rivals are conventionally seen as favouring import protection. We show that this is not necessarily the case when domestic firms’ input prices are determined endogenously. In a framework where the input price is determined through bargaining with an (upstream) input supplier, the relationship between a domestic (downstream) firm’s profits and the number of foreign competitors depends on trade costs. If trade costs are sufficiently high, then an increase in the number of foreign entrants can raise the profits of a downstream firm in a home market characterised by Cournot competition. The intuition for this result is that increased product market competition through the entry of foreign firms is mirrored by profit-enhancing moderation of the bargained input price. We examine a number of tariff and non-tariff barriers to international trade and identify conditions under which import-competing firms will favour the removal of barriers to foreign competition.

International audience

International audience

International audience

We investigate the extent to which graduate returns vary according to the class of degree achieved by UK university students and examine changes over time in estimated degree class premia. Using a variety of complementary datasets for individuals born in Britain around 1970 and aged between 30 and 40, we estimate an hourly wage premium for a ‘good’ (relative to a ‘lower’) class of degree of 7% to 9%, implying a wide spread around the average graduate premium. We also estimate the premium for a good relative to a lower degree for different cohorts (those born between the mid-1960s and early-1980s) and find evidence that the premium for a good degree has risen over time as the proportions of cohorts participating in higher education have increased.

We show that a firm's profits under Cournot oligopoly can be increasing in the number of firms in the industry if wages are determined by decentralised bargaining in unionised bilateral oligopoly. The intuition for the result is that increased product market competition following an increase in the number of firms is mirrored by increased labour market rivalry which induces (profit-enhancing) wage moderation. Whether the product or labour market effect dominates depends both on the extent of union bargaining power and on the nature of union preferences. An incumbent monopolist will have an incentive to accommodate entry if the labour market effect dominates. We also show that this incentive is stronger if the incumbent anticipates that, post entry, it will be able to act as a Stackelberg leader.

An increase over time in the proportion of young people obtaining a degree is likely to impact on the relative ability compositions (i) of graduates and non-graduates and (ii) across graduates with different classes of degree award. In a signalling framework, we examine the implications of this on biases across cohorts in estimates of educational returns. In an empirical analysis, we exploit administrative data on whole populations of UK university students for ten graduate cohorts to investigate the extent to which early labour market outcomes vary with class of degree awarded. Consistent with our theoretical model, we find that returns by degree class increased across cohorts during a period of substantial graduate expansion. We also corroborate the empirical findings with evidence from complementary data on graduate sample surveys.

Changes in educational participation rates across cohorts are likely to imply changes in the ability-education relationship and thereby to impact on estimated returns to education. We show that skewness in the underlying ability distribution is a key determinant of the impact of graduate expansion on the college wage premium. Calibrating the model against the increased proportion of university students in Britain, we find that changes in the average ability gap between university students and others are likely to have mitigated demand-side forces.

Changes in educational participation rates across cohorts are likely to imply changes in the ability-education relationship and thereby to impact on estimated returns to education. We show that skewness in the underlying ability distribution is a key determinant of the impact of graduate expansion on the college wage premium. Calibrating the model against the increased proportion of university students in Britain, we find that changes in the average ability gap between university students and others are likely to have mitigated demand-side forces.

An increase over time in the proportion of young people obtaining a degree is likely to impact on the relative ability compositions (i) of graduates and non-graduates and (ii) across graduates with different classes of degree award. In a signalling framework, we examine the implications of this on biases across cohorts in estimates of educational returns. In an empirical analysis, we exploit administrative data on whole populations of UK university students for ten graduate cohorts to investigate the extent to which early labour market outcomes vary with class of degree awarded. Consistent with our theoretical model, we find that returns by degree class increased across cohorts during a period of substantial graduate expansion. We also corroborate the empirical findings with evidence from complementary data on graduate sample surveys.

We exploit a rich administrative panel data-set for cohorts of Economics students at a UK university in order to identify causal effects of class absence on student performance. We utilise the panel properties of the data to control for unobserved heterogeneity across students and hence for endogeneity between absence and academic performance of students stemming from the likely influence of unobserved effort and ability on both absence and performance. Our estimations also exploit features of the data such as the random assignment of students to classes and information on the timetable of classes, which yield potential instruments in our identification strategy. Among other results, we find that there is a causal effect of absence on performance for students: missing class leads to poorer performance. There is evidence from a quantile regression specification that this is particularly true for better-performing students, consistent with our hypothesis that effects of absence on performance are likely to vary with factors such as student ability.

We exploit a rich administrative panel data-set for cohorts of Economics students at a UK university in order to identify causal effects of class absence on student performance. We exploit the panel properties of the data to control for unobserved heterogeneity across students and hence for endogeneity between class absence and academic performance of students stemming from the likely influence of effort and ability on both absence and performance. Our estimations also exploit features of the data such as the random assignment of students to classes and information on the timetable of classes, which provides potential instruments in our identification strategy. Among other results we find, from a quantile regression specification, that there is a causal effect of absence on performance for students: missing class leads to poorer performance. There is evidence that this is particularly true for better-performing students, consistent with our hypothesis that effects of absence on performance are likely to vary with factors such as student ability.

We present comparable evidence on intergenerational earnings mobility for Denmark,\ud Finland, Norway, the UK and the US, with a focus on the role of gender and marital status.\ud We confirm that earnings mobility in the Nordic countries is typically greater than in the US\ud and in the UK, but find that, in contrast to all other groups, for married women mobility is\ud approximately uniform across countries when estimates are based on women's own\ud earnings. Defining offspring outcomes in terms of family earnings, on the other hand, leads to\ud estimates of intergenerational mobility in the Nordic countries which exceed those for the US\ud and the UK for both men and women, single and married. Unlike in the Nordic countries, we\ud find that married women with children and with husbands from affluent backgrounds tend to\ud exhibit reduced labor supply in the US and the UK. In these countries, it is the combination of\ud assortative mating and labor supply responses which weakens the association between\ud married women's own earnings and their parents' earnings.

Udgivelsesdato: MAR

For the 1990-92 and 1998-2000 cohorts we find the probability of dropping out of medical school is lower for students (i) with better prior qualifications, (ii) with a parent who is a doctor, (iii) living on campus.

We present comparable evidence on intergenerational earnings mobility for Denmark, Finland, Norway, the UK and the US, with a focus on the role of gender and marital status. We confirm that earnings mobility in the Nordic countries is typically greater than in the US and in the UK, but find that, in contrast to all other groups, for married women mobility is approximately uniform across countries when estimates are based on women's own earnings. Defining offspring outcomes in terms of family earnings, on the other hand, leads to estimates of intergenerational mobility in the Nordic countries which exceed those for the US and the UK for both men and women, single and married. Unlike in the Nordic countries, we find that married women with children and with husbands from affluent backgrounds tend to exhibit reduced labor supply in the US and the UK. In these countries, it is the combination of assortative mating and labor supply responses which weakens the association between married women's own earnings and their parents' earnings.

We exploit individual-level administrative data for whole populations of UK university students for the leaving cohorts of 1985-1993 (together with that of 1998) to investigate the influence of degree performance on graduate occupational earnings. We find that there is a significant premium associated with a good performance at university. We also find that this premium increased between 1985/6 and 1993/4, a period of substantial expansion in the graduate population. Among other results, we find that there are significant differences in the occupational earnings of leavers according to university attended, subject studied, and pre-university educational and social background, ceteris paribus.

As in many other countries, government policy in the UK has the objective of raising the participation rate of young people in higher education, while also increasing the share of the costs of higher education borne by students themselves. A rationale for the latter element comes from evidence of a high private return to university undergraduate degrees. However, much of this evidence pre-dates the rapid expansion in the graduate population. In the current paper, we use evidence from a cohort of people born in 1970 to estimate hourly wage returns to a university degree. Among other results, we find (i) that compared to an earlier 1958 birth cohort the average returns to a first degree for men changed very little, while the return for women declined substantially and (ii) substantial evidence of differences in returns to a first degree according to subject area of study and class of degree awarded.

We show that the patterns of intergenerational earnings mobility in Denmark, Finland, and Norway, unlike those for the US and the UK, are highly nonlinear. The Nordic relationship between log earnings of sons and fathers is flat in the lower segments of the fathers’ earnings distribution – sons growing up in the poorest households have the same adult earnings prospects as sons in moderately poor households – and is increasingly positive in middle and upper segments. This convex pattern contrasts sharply with our findings for the United States and the United Kingdom, where the relationship is much closer to being linear. As a result, cross-country comparisons of intergenerational earnings elasticities may be misleading with respect to transmission mechanisms in the central parts of the earnings distribution, and uninformative in the tails of the distribution.

We develop methods and employ similar sample restrictions to analyse differences in intergenerational\ud earnings mobility across the United States, the United Kingdom, Denmark, Finland,\ud Norway and Sweden. We examine earnings mobility among pairs of fathers and sons as well\ud as fathers and daughters using both mobility matrices and regression and correlation coefficients.\ud Our results suggest that all countries exhibit substantial earnings persistence across\ud generations, but with statistically significant differences across countries. Mobility is lower in\ud the U.S. than in the U.K., where it is lower again compared to the Nordic countries. Persistence\ud is greatest in the tails of the distributions and tends to be particularly high in the upper\ud tails: though in the U.S. this is reversed with a particularly high likelihood that sons of the\ud poorest fathers will remain in the lowest earnings quintile. This is a challenge to the popular\ud notion of ’American exceptionalism’. The U.S. also differs from the Nordic countries in\ud its very low likelihood that sons of the highest earners will show downward ’long-distance’\ud mobility into the lowest earnings quintile. In this, the U.K. is more similar to the U.S.

In the context of the UK Government’s ambitious programme of medical school expansion, it is important to have an understanding of how the medical school admissions process works, and with what effects. The issue is also relevant for the Schwartz Review (2004) into higher education admissions. Using individual-level data for two entire cohorts of medical student applicants in UK universities and exploiting the panel structure of the applicant-medical school information, we estimate models to analyse the probability that an individual student receives an offer of a place. We find that prior qualifications, school type, gender, age, social class and ethnic background are major influences on whether a student receives an offer from a medical school. We also find that the probability of receiving an offer from a particular medical school is influenced by the identity of other medical schools applied to. Finally, we find evidence that certain groups of applicants are particularly disadvantaged the later they apply within the application process.

As in many other countries, government policy in the UK has the objective of raising the participation rate of young people in higher education, while increasing the share of the costs of higher education paid by students themselves. A rationale for the latter element comes from evidence of a high private return to university undergraduate degrees. However, much of this evidence pre-dates the rapid expansion in the graduate population. In the current paper, we use evidence from a cohort of young people born in Britain in 1970 to update influential evidence on returns to a first degree based on a previous 1958 birth cohort. We also analyse variations in returns by degree subject and by class of degree. Our analysis incorporates proxying and matching, control function and propensity score matching methods. Among other results, we find (i) that the returns to a first degree for men changed very little across the two cohorts while the return for women declined substantially and (ii) evidence of differences in returns to a first degree according to subject area of study and class of degree awarded.

Official employment-related Performance Indicators in UK Higher Education are based on the population of students responding to the First Destination Supplement (FDS). This generates potentially biased performance indicators as this population of students is not necessarily representative of the full population of leavers from each institution. University leavers not obtaining qualifications and those not responding to the FDS are not included within the official analysis. We compare an employment-related performance indicator based on those students responding to the FDS with alternative approaches which address the potential non-random nature of this sub-group of university leavers.

From individual-level data for nine entire cohorts of undergraduate students in UK universities, we estimate the probability that an individual will drop out of university during their first-year. We examine the 1984-85 to 1992-93 cohorts of students enrolling full-time for a three or four-year course, and focus on the sensitivity of the probability of withdrawal to the individual?s prior qualifications relative to those of the other students in their university course. We show not only that weaker students are more likely to withdraw but also that the extent of variation in prior qualifications within the student?s university degree course exerts an influence on the individual's probability of withdrawal in a way that varies with the individual?s own in-class rank.

We exploit individual-level administrative data for whole populations of UK university students for the leaving cohorts of 1985-1993 to investigate the determinants of graduate occupational earnings. Among other results, we find that there are significant differences in the occupational earnings of leavers, according to university attended, subject studied, and degree class awarded, ceteris paribus. We also find that the premium associated with the award of a high degree class increased between 1985/6 and 1993/4, a period of substantial expansion in the graduate population. We suggest that this is consistent with a signalling model of the returns to higher education qualifications.

From a unique data-set identifying the school attended prior to university for a full cohort of UK university students, we examine the determinants of final degree classification.\ud We exploit the detailed school-level information and focus on the influence of school characteristics,\ud such as school type, on subsequent performance of students at university. We\ud estimate that, on average, a male (female) graduate who attended an Independent school\ud is 6.5 (5.4) percentage points less likely to obtain a `good' degree than is a student who\ud attended an LEA (that is, state-sector) school, ceteris paribus. We also find considerable\ud variation around this average figure across different Independent schools. We find that, for\ud males, the variation in the probability of attaining a `good' degree across schools can largely\ud be explained by the level of school fees.

From individual-level data for nine entire cohorts of undergraduate students in UK\ud universities, we estimate the probability that an individual will drop out of university during\ud their first-year. We examine the 1984-85 to 1992-93 cohorts of students enrolling full-time for\ud a three or four-year course, and focus on the sensitivity of the probability of withdrawal to the\ud individual’s prior qualifications relative to those of the other students in their university course.\ud We show not only that weaker students are more likely to withdraw but also that the extent of\ud variation in prior qualifications within the student’s university degree course exerts an\ud influence on the individual's probability of withdrawal in a way that varies with the individual’s\ud own in-class rank.

We show that a firm’s profits under Cournot oligopoly can be increasing in the number of firms in the industry if wages are determined by (decentralised) bargaining in unionized bilateral oligopoly. The intuition for the result is that increased product market competition following an increase in the number of firms is mirrored by increased labor market rivalry which induces (profit-enhancing) wage moderation. Whether the product or labor market effect dominates depends both on the extent of union bargaining power and on the nature of union preferences. A corollary of the results derived is that if the upstream agents are firms rather than labor unions, then profits are always decreasing in the number of firms, as in the standard Cournot model. We also show that if bargaining is\ud centralized then there is no wage moderation effect and wages are the same independent of the number of firms, as in the standard model with exogenous factor costs.

In this paper, we use the individual-level USR data for the whole population of 1993 leavers from the ¿old¿ universities of the UK to investigate the determinants of graduate occupational earnings. Among other results, we find that there are significant differences in the occupational earnings of leavers, according to: university attended, subject studied, degree class awarded, and Social Class of family background, ceteris paribus. Our results suggest that there is likely to be significant variation around the average rate of return to a first degree.

This paper presents both theoretical analysis and econometric evidence for the United States, Great Britain and Norway on the extent to which hourly wages of different groups of workers are sensitive to local labour market conditions. We focus on differences by union status. Our theoretical framework captures both a turnover-based efficiency wage mechanism and one originating in union-firm bargaining. Under fairly general conditions, we show that wages are less sensitive to local unemployment the higher is the bargaining power of the union. In accordance with this theoretical prediction, we find that the absolute value of the elasticity of wages with respect to unemployment is higher in the nonunion sector than in the union sector for all three countries. We interpret the evidence as giving support to an efficiency wage interpretation of the wage curve.

We show that a firm’s profits under Cournot oligopoly can be increasing in the number of firms in the industry if wages are determined by (decentralised) bargaining in unionized bilateral oligopoly. The intuition for the result is that increased product market competition following an increase in the number of firms is mirrored by increased labor market rivalry which induces (profit-enhancing) wage moderation. Whether the product or labor market effect dominates depends both on the extent of union bargaining power and on the nature of union preferences. A corollary of the results derived is that if the upstream agents are firms rather than labor unions, then profits are always decreasing in the number of firms, as in the standard Cournot model. We also show that if bargaining is centralized then there is no wage moderation effect and wages are the same independent of the number of firms, as in the standard model with exogenous factor costs.

This paper compares Cournot and Bertrand equilibria in a downstream differentiated duopoly in which the input price (wage) paid by each downstream firm is the outcome of a strategic bargain with its upstream supplier (labour union). We show that the standard result that Cournot equilibrium profits exceed those under Bertrand competition - when the differentiated duopoly game is played in imperfect substitutes - is reversible. Whether equilibrium profits are higher under Cournot or Bertrand competition is shown to depend upon the nature of the upstream agents’ preferences, on the distribution of bargaining power over the input price and on the degree of product market differentiation. We find that the standard result holds unless unions are both powerful and place considerable weight on the wage argument in their utility function. One implication of this is that if the upstream agents are profit-maximising firms, then the standard result will obtain.

From individual level longitudinal data for two entire cohorts of medical students in UK universities, we use multilevel models to analyse the probability that an individual student will drop out of medical school. We find that academic preparedness—both in terms of previous subjects studied and levels of attainment therein—is the major influence on withdrawal by medical students. Additionally, males and more mature students are more likely to withdraw than females or younger students respectively. We find evidence that the factors influencing the decision to transfer course differ from those affecting the decision to drop out for other reasons.

This paper compares Cournot and Bertrand equilibria in a downstream differentiated duopoly in which the input price (wage) paid by each downstream firm is the outcome of a strategic bargain with its upstream supplier (labour union). We show that the standard result that Cournot equilibrium profits exceed those under Bertrand competition - when the differentiated duopoly game is played in imperfect substitutes - is reversible. Whether equilibrium profits are higher under Cournot or Bertrand competition is shown to depend upon the nature of the upstream agents’ preferences, on the distribution of bargaining power over the input price and on the degree of product market differentiation. We find that the standard result holds unless unions are both powerful and place considerable weight on the wage argument in their utility function. One implication of this is that if the upstream agents are profit-maximising firms, then the standard result will obtain.

Objectives To assess the extent to which various factors influence the probability that an individual medical student will drop out of medical school during their first year of study, focussing on the influence both of prior qualifications, such as A-level subjects taken and scores attained, and of type of school and family background. Design Individual-level administrative data for entire cohorts of medical students from 1980/81 to 1992/93 (that is, the graduating cohorts of 1985/86 to 1997/98), yielding data on 51,810 students in 20 medical schools in the UK. The nature of the data permits two different approaches to the modelling of medical school dropout. First, by focussing on the determinants of first-year dropout we are able to exploit data for cohorts up to and including the entry cohort of 1992. Second, as an alternative, for any given cohort one can analyse the probability of a student dropping out in any one of the 5 years of their programme: but in this case one is restricted to data on cohorts no more recent than the 1986 entry cohort.1 In the current paper, we follow the first of these research strategies. Statistical analysis is by logistic regression. Main outcome measures First-year dropout from medical school versus continuation into second year of study. A (first-year) dropout is anyone who left their medical school programme before the end of their first year of study. Results The probability that a student will drop out of medical school during their first year of study is influenced significantly both by the subjects studied at A-level and by the scores achieved. Among students who took Biology, Chemistry and Physics at A-level, each extra grade achieved reduces the probability of dropping out by about one-third of a percentage point. There is an additional effect for students with the maximum A-level score of 30 points in their best 3 A-levels (that is, three grade As): such a student is almost one percentage point less likely to drop out of medical school, ceteris paribus, compared to a student with 28 points. Furthermore, this estimated effect of A-level performance on dropout behaviour is very similar for each of the 13 cohorts. In general, indicators of both the social class and the previous school background of the student are largely insignificant, with the exception that students with a parent who is a medical doctor are significantly less likely to drop out. There are significant differences by gender, with males more likely to drop out. There is also evidence of significant age effects, with a tendency for the dropout probability to fall with age. Conclusions Policies aimed at increasing the size of the medical student intake in the UK and of widening access to students from non-traditional backgrounds should be informed by evidence that student dropout probabilities are sensitive to measures of A-level attainment such as subject studied and scores achieved. If traditional entry requirements or standards are relaxed, then this is likely to have detrimental effects on medical schools’ retention rates unless accompanied by appropriate measures such as targeted admissions and focussed student support.

We derive the sub-game perfect Nash equilibria for the foreign direct investment (FDI) game played between two unionised firms. Among other results, we show that FDI is less likely, ceteris paribus, the greater is union bargaining power, the stronger the weight the union attaches to wages, and the more substitutable are firms’ products in the potential host country. We derive results concerning the conditions under which FDI will be reciprocal. We also examine conditions under which the FDI game between firms will possess the characteristics of a Prisoners’ Dilemma. Finally, we consider the possibility that firms might delegate wage determination to unions as a method of strategic deterrence against entry by FDI.

We show that whether trade is one-way or two-way depends on wage strategies adopted by trade unions. The union’s wage strategy choices themselves depend upon the conditions under which trade takes place, as well as upon the characteristics of both the labour and the product markets in the trading countries. The impact of economic integration on union choices and therefore upon both labour market and trade outcomes is shown to vary according to the nature of the prevailing trade regime. We generate testable hypotheses and discuss the implications for the development of econometric tests of these hypotheses.