Teacher proposal tries to increase market power

As reported in the New Zealand Herald last week, the Education Council (the professional organisation for teachers) are floating a change that would require all prospective teachers to have a post-graduate qualification. Here's what was reported:

People wanting to become teachers would need to get a post-graduate qualification, under a change floated by the Education Council in a bid to raise the status of teaching.

The change would cover all teachers - early childhood, primary and secondary - and has the backing of universities.

First, it's not at all surprising that this proposal would have the backing of universities. If teachers require post-graduate qualifications, that means more people studying post-graduate qualifications (albeit probably not a whole lot more - see below), which means more fees for universities.

Second, it's really hard not to be cynical and see this as a simple way for existing teachers to increase their market power. If you raise the threshold for new graduates to become teachers, this creates a barrier to entry for graduates into the teaching market. [*] Essentially this restricts the supply of new teachers, because it would cost more to become a teacher (an additional year of student loans and foregone earnings, made even worse by student allowances not being available for post-graduate study). This would make alternative occupations (that are cheaper to get into), just a little bit more attractive. So, while this wouldn't stop everyone considering teaching as a career from following that path, at the margin it will be enough to dissuade some. Which is essentially what the PPTA says in the article:

However, the PPTA is unconvinced, saying teacher supply problems could worsen as a result.

Requiring all future teachers to get a post-graduate qualification would raise the bar for entry into the profession, and would likely be most keenly felt at the primary and ECE level.

Restricting competition makes sellers (in this case, sellers in the labour market for teachers) better off. It raises the bargaining power of the existing teachers, and when schools are looking for new teachers there are fewer options available, so they have to offer slightly higher salaries to attract applicants. Voila! Existing teachers are made better off, whether they are staying at the same school or moving between schools, at the expense of people who would have become teachers but for the higher barrier to entry.

The Education Council argues that this proposal would "raise the status of teaching". However, it's hard to see how it does that, other than by increasing teacher salaries at the margin. It may increase the quality of new teachers, to the extent that you believe a post-graduate qualification adds to their quality (dubious, when compared with the alternative of giving a graduate a year of actual teaching experience).

I'd argue that we probably need to go in precisely the opposite direction, especially for high school teachers of STEM subjects. When my father was at university, he taught chemistry at a high school in Auckland while studying his Bachelor of Science. That gave him a little bit of free cash flow, and benefited the school by providing a cost-effective way of teaching a subject that was difficult to recruit quality teachers for (and it certainly hasn't gotten any better since then). Why not open up teaching in STEM subjects to final-year graduates (probably economics too), given the teacher shortages in those subjects? Who knows? Some of them may actually enjoy the experience enough to stay on and become teachers (which they wouldn't have done otherwise). Raising the bar for people to become teachers is ridiculous, when you can't fill the vacancies for quality teachers in STEM subjects (and other subjects) now.

*****

[*] Ok, there is already a barrier to entry because teachers require a qualification. However, this proposal raises the barrier to entry even higher.

[HT]: Tertiary Update

Masturbation and partnered sex: Substitutes or complements?

That is the title of a new paper by Mark Regnerus (University of Texas at Austin), Joseph Price and David Gordon (both Brigham Young University), and published in the journal Archives of Sexual Behavior (I don't see an ungated version online). The title pretty much explains what the authors are trying to establish, using data on 15,738 adults (aged 18-60 years) from the Relationships in America study in 2014.

Essentially they are testing two competing models. The first is the compensatory model, which:

...holds that masturbation and paired sexual activity are inversely associated; that is, masturbation is an outlet for sexual energy when paired sexual activity is not possible, either due to lack of a partner or the unwillingness or inability of a partner to engage in sex as often as desired.

The compensatory model suggests that masturbation and partnered sex are substitutes. In contrast, the complementary model suggests that they are complements, i.e.

...that paired sex stimulated demand for additional sex and sexual activities, including masturbation.

Past studies have shown that men's behaviour is consistent with the compensatory model, while women's behaviour is consistent with the complementary model. However, Regnerus show that it isn't quite that simple, and that sexual contentment matters. Their results showed that:

Among men who were content with their sexual frequency, we saw few discernable trends in the likelihood of masturbation based on recent sexual frequency... However, the pattern was different for men who were sexually discontented. Among them, the odds of recent masturbation among those who have had sex 2-3 times, or 4 or more times, in the past 2 weeks were significantly lower than those who have not had sex at all in the past 2 weeks.

For women, the pattern appeared to be reversed. The odds of recent masturbation among women who reported being content with their sexual frequency were more than twice as high if they had had sex four or more times when compared to those who not had [sic] any sex in the past 2 weeks... In this way, sex and masturbation again appeared complementary among them. Meanwhile, there was no discernable association, net of controls, between frequency of recent sex and masturbation for women who reported sexual discontentment.

The concluded that:

...the compensatory model modestly fits sexually unsatisfied men, and a complementary model fits sexually satisfied women.

The main downside of this study of course is that it was based on a cross-sectional sample, so the results are correlations, not causal. They had a number of control variables, including most of the obvious ones like whether people were partnered. However, they only ever look at the differences between people, and it's possible that there is something systematically different between those who report masturbating and those who don't which isn't captured by the variables in the model. Having longitudinal (panel) data would go some way (but not all the way!) towards solving this issue, since it would allow you to observe at least some of the people in the sample at times when they are content, and at other times when they are not, and see if that affects the likelihood of reporting masturbation. Still, for the moment this is the best study on the topic and provides a more nuanced picture than earlier studies.

[HT: Marginal Revolution]

The price tag for a top decile Auckland education is not $2m+

I meant to write a post on this a while back, when Corazon Miller wrote in the New Zealand Herald:

Parents wanting to send their children to some of Auckland's prestigious state schools may be forced to fork out more than $2m to buy a house in the zone, or more than $700 a week in rent - double the cost ten years ago.

Figures from property analysis site Relab.co.nz which analysed 33 Auckland school zones showed buying a home was more costly close to higher decile schools.

Topping the list were two decile nine school zones, Auckland Grammar and Epsom Girls Grammar - with median values topping $2m last year...

Relab marketing director Bill Ma said the figures showed parents what they should be budgeting for.

"The higher decile schools definitely come with a premium price."

Yes, homes in good school zones do have a premium for the school zone. But no, the premium is not the whole price. The reason is simple - if you weren't living in a house in the double Grammar zone, you'd have to be living somewhere else, and presumably that somewhere else is not free. To find out the actual premium for school zoning, you have to look at two otherwise-identical houses: one in the zone; and one outside the zone.

This relies on the concept of hedonic pricing - an idea that was first introduced by Irma Adelman, who sadly passed away in February. Hedonic pricing recognises that when you buy some (or most?) goods you aren't so much buying a single item but really a bundle of characteristics, and each of those characteristics has value. The value of the whole product is the sum of the value of the characteristics that make it up. For example, when you buy a house, you are buying its characteristics (number of bedrooms, number of bathrooms, floor area, land area, location, etc.). When you buy land, you are buying land area, soil quality, slope, location and access to amenities, etc.

In the case of Auckland, school zone is only one of many characteristics that make up the value of the house. And it is possible to separately identify and value those characteristics if you have good data, as my colleague John Gibson and his wife Geua Boe-Gibson did in this 2014 working paper using data on 8000 houses in Christchurch. They didn't look at school zones, but looked at the value of school outcomes (measured by NCEA pass rates), and found that a standard deviation increase in school performance raises house prices by 6.4%.

So overall, the 'price tag for a top decile Auckland education' won't be $2m or more. If we (generously) assumed that the premium was the difference between the $2.09 million median in the Auckland Grammar school zone mentioned in the article above, and the $1.05 million median across Auckland as a whole (as of today), then the premium is a little over $1 million. However, that wouldn't be correct, since the median house in the Auckland Grammar zone is clearly not the same as the median house across all of Auckland, as well as having access to different amenities (besides the school zone). So the premium for the Auckland Grammar zone is likely to be substantially lower than $1 million.

Latest research seems to support the Kuznets hypothesis

Simon Kutzets won the Nobel Prize in Economics in 1971 for his work on economic growth, but he made a number of contributions to the discipline. One of these related to the empirical relationship between economic growth and inequality, the so-called Kuznets curve.

Kuznets hypothesised that, at low levels of development, inequality was relatively low. Then, as a country developed, the owners of capital would be the first to benefit because of the greater investment opportunities that the economic growth provided. This would lead to an increase in inequality associated with economic growth. Eventually though, at even greater levels of development the taxes paid by the capitalists would increase, leading to developments such as a welfare state, improved education and healthcare, all of which would improve the incomes of the poor. So, at higher levels of development, inequality would decrease with economic growth. This leads to the Kuznets curve:

The empirical support for the Kuznets hypothesis was drawn from the experience of western developed countries since the Industrial Revolution. However, the relevance of the experiences of western countries to the current development trajectories of developing countries is fairly limited, so the Kuznets hypothesis has been called into question. For instance, in China economic growth has been high for last last few decades, and yet to date inequality has shown little sign of slowing down.

However, in a recent Bloomberg view article Noah Smith recently pointed to two new pieces of research that seem to provide new support for the Kuznets hypothesis. He wrote:

...recent evidence is coming down on the side of Kuznets.

In Latin America, inequality has been falling for over a decade. A recent study by economists Nora Lustig, Luis Felipe López-Calva and Eduardo Ortiz-Juarez found that almost all Latin American countries became more economically equal from 2002-2012...

Only in Honduras did inequality go up during this period...

Lustig and her colleagues found that government transfers and pensions accounted for between 21 and 26 percent of the decline in inequality. That’s important, but it’s far from the whole story. The biggest share of the improvement, by far, was caused by reductions in wage inequality. Lustig's group connected this to increasing levels of education -- in the 1990s, a lot more Latin Americans started going to school. Economic growth has been another reason for increasing wages...

As for China, there are signs that inequality there has peaked as well. A recent study by economists Ravi Kanbur, Yue Wang and Xiaobo Zhang combed through China’s notoriously murky data and found that the Gini coefficient declined to 0.495 in 2014 from 0.533 in 2010.  That's a high level of inequality by international standards, but a trend in the right direction.

The jury may be called back in on the Kuznets hypothesis. It seems it cannot be quite written off yet.

[HT: Marginal Revolution]