How Important is Human Capital for Development? Evidence from Immigrant Earnings,”

Read Hendricks (2002): “How Important is Human Capital for Development? Evidence from Immigrant Earnings,”

1. Brie?y explain the basic idea behind the income accounting in the paper (one short paragraph).

2. Imagine you had to explain to a grandma how to read Figure 1(b) in the paper. How would you explain to her the meaning of the circles, the line and the conclusion one would derive from the plot? (one paragraph)

3. How does the author measure human capital of workers in di?erent countries?

4. Why is self-selection an issue in this analysis? What data does one need to account for it?

PART B

Read Manuelli and Seshadri’s paper “Explaining International Fertility Di?erences,”

1. Explain how the authors model human capital production.

2. What decisions do parents make? How does TFP a?ect these decisions? Explain the intuition.

3. The model abstracts from many features of the real world. Name one feature that is especially relevant for poor countries but which is missing in this model and explain why it is important.