46
7
The GED is an exam-certified, alternative high school degree.
8
The share of labor is 0.7 so 0.7
×0.5=0.35 is the contribution of workforce quality
to economic growth.
9
The International Adult Literacy Survey (IALS) was conducted by 13 countries
to collect information on adult literacy. In this survey, large samples of adults (ranging
from 1,500 to 6,000 per country) were given the same broad test of their literacy skills
between 1994 and 1996. Australia, Belgium (Flanders), Canada, Germany, Great Britain,
Ireland, Netherlands, Northern Ireland, New Zealand, Poland, Sweden, Switzerland and
the United States participated in the IALS. More information on the IALS is available in
documents located at http://www.nald.ca/nls/ials/introduc.htm and IALS.
10
Data on these two scales appear in figures A3a and A3b on the web. Prose
literacy is defined as the knowledge and skills required to understand and use information
from texts such as newspaper articles and fictional passages. Quantitative literacy
(numeracy) is defined as the ability to perform arithmetic operations (either alone or
sequentially) to numbers embedded in printed materials, such as calculating savings from
an advertisement or the interest earned on an investment.
11
These cross-country differences are not driven by illiterate immigrants coming to
the U.S. While immigrants perform worse on the three tests relative to natives, including
immigrants in the analysis only raises the proportion of U.S. females in Level 1
47
significantly for prose, quantitative and document literacy. The difference is not
significant for any other group or level.
12
These trends are documented at our website. See figures A4a-44c.
13
See table A1.
14
The extra year of school is assumed to take place during high school years. The
effect of an extra year of kindergarten or college is likely to be rather different.
15
Lochner and Moretti use estimates of victim costs and property losses taken
from Miller, Cohen, and Wiersema, which are based on jury awards in civil suits. Some
costs cannot be quantified accurately or are unobservable. These include costs of
precautionary behavior, private security expenditures, some law enforcement and judicial
costs (i.e., costs that are not related to dealing with particular crimes) and the cost of drug
offenses. Some crimes are also omitted from the analysis.
16
Incarceration cost per crime is equal to the incarceration cost per inmate
multiplied by incarceration rate for that crime (approximately $17,000).
17
It is important to note that this is a steady state calculation. The payoff to pre-K
interventions shows up 10-15 years later, whereas the effects of increasing police on
crime are more immediately realized. The discounted returns from the two policies are
less different, but a 5:1 gap can tolerate a lot of discounting and still be substantial.
18
Lochner and Moretti actually present a comparison of flow costs ($80,000 per
year on a police officer) with a one time stock cost ($600,000 to educate 100 new high
48
school students at a cost of $6,000 per year assuming that dropouts get 11 years of
school). Cameron and Heckman (2001) estimate 10.6 years. Assuming a 40-year working
life (including criminal career life) the annual replacement flow cost is $15,000 a year
($6,000
×2.5). Even cutting the career life in half produces a flow cost that is less than
hiring a policeman. Spending $9,000 per year (to account for the 1.5 year gap between
high school dropouts and graduates) still makes education cost effective. The evidence
from the Perry Preschool Program suggests that our calculation is conservative. At a cost
of $9,000 (2004) per participant, the high school graduation rate was raised by .17 from
.60. To get 2.5 more students to graduate requires that we spend only $5300 per pupil.
Foregone earnings in high school are small and are offset by the rise.
19
See Figure A5a.
20
See Federal Interagency Forum on Child and Family Statistics for more details.
21
See Figure A5b.
22
Ginther and Pollak summarize the evidence succinctly and present a more
nuanced analysis of family types on adverse outcomes.
23
See Ventura and Bachrach. See figure A5c.
24
The corresponding birthrate for married women in these three years was 93.2,
83.8 and 87.3.
25
See figure A5d.
49
26
Birthrates by age within race/ethnic groups show essentially the same patter as
the overall rated by race/ethnicity.
27
See figure A5e.
28
See Figure A5f.
29
See Figure A5g.
30
See Table A2, where we reproduce her results.
31
See Table A3a.
32
See Table A3b.
33
See Table A3c.
34
See Table A3d.
35
See Table A3e.
36
See Table A4a.
37
See Table A4b.
38
See Table A4c.
39
See Table A5.
40
Figures A6a-c in the web appendix show the same pattern for other levels of
educational attainment like high school graduation and college attendance.
41
Figures A8a-c in the web appendix show the same pattern for other reproductive
outcomes.
42
The test measures age-appropriate math knowledge.
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