NUI Galway Summer Exams 2007/2008: Economics Questions & Instructions, Exams of Economics

Download NUI Galway Summer Exams 2007/2008: Economics Questions & Instructions and more Exams Economics in PDF only on Docsity! Ollscoil na hÉireann, Gaillimh GX_____ National University of Ireland, Galway Summer Examinations 2007 / 2008 Exam Code(s) 1EP1, 1EP2, 2EP2, 1MEE1, 1EE1, 1EE2, 2EE2, 1MEM1 Exam(s) M.A. & M.Econ.Sc. (Economic Policy Evaluation & Planning) M.A. & M.Econ.Sc. (Economic & Environmental Modelling) Module Code(s) EC526 Module(s) Public Sector Economics Paper No. 1 Repeat Paper External Examiner(s) Professor Robert E. Wright Internal Examiner(s) Mr. Brendan Kennelly Dr. Mary Silles Instructions: 4 Questions, Attempt any 2. Duration 3 hours No. of Pages 3 Department(s) Economics Course Co-ordinator(s) Dr. M. Silles Requirements: MCQ Handout Statistical Tables Graph Paper Log Graph Paper Other Material 4 Questions, Attempt any 2. 1. Consider the typical formulation of the human capital investment problem: ( )[ ] ( ) ( ) dteeAhdtethtsA rtx T x rt ! + ! "" +!=# $ % % % 0 1 where T is the age at which the person retires from work, and x denotes the duration of his or her education. 1(i). Interpret the above equation. (10 marks) 1(ii). What is the marginal rate of return to education? [Use Leibniz integral rule which is provided below]. (20 marks)
 1(iii). Using the information from the last question, explain why the marginal return to schooling declines with the date at which study commences. (20 marks) 2. Estimating the causal relationship between education and earnings poses a number of econometric challenges. 2(i). Explain why standard regression estimates of the return to education may not be credible measures of the true causal effect of education on earnings. (10 marks) 2(ii). Several studies have used institutional aspects of the education system to form estimates of the true rate of return to schooling. Evaluate the effectiveness of instrumental variable techniques to purge the returns to education of possible sources of bias. (20 marks) 2(iii). Apart from instrumental variable methods, a number of recent studies have focused on panel techniques to provide evidence about the causal relationship between education and earnings. Explain the problems which are encounter in panel methods and how these might be addressed. (20 marks) 3. The positive correlation between education and earnings is one of the most consistent findings of the human capital literature. 3(i). Explain why it has proved difficult to empirically distinguish between human capital and signaling explanations of the observed positive relationship between education and earnings. (10 marks)