# Discussion Papers

Papers from 1998 onwards are available on-line as .PDF files.

If you would like to submit your paper to **Repec**, please email econplone@le.ac.uk

**10 Most Recent Papers**

### 17/11 Philippe De Donder & Francisco Martinez-Mora

17/11 The Political Economy of Higher Education Admission Standards and Participation Gap

We build a political economy model in order to shed light on the empirically observed simultaneous increase in university size and participation gap. Parents differ in income and in the ability of their unique child. They vote over the minimum ability level required to attend public universities, which are tuition-free and financed by proportional income taxation. Parents can invest in private tutoring to help their child pass the admission test. A university participation gap emerges endogenously with richer parents investing more in tutoring. A unique majority voting equilibrium exists, which can be either classical or “ends-against-the-middle” (in which case parents of both low- and high-ability children favor a smaller university). Four factors increase the university size (larger skill premium enjoyed by university graduates, smaller tutoring costs, smaller university cost per student, larger minimum ability of students), but only the former two also increase the participation gap. A more unequal parental income distribution also increases the participation gap, but barely affects the university size.

### 17/10 Caterina Calsamiglia & Francisco Martinez-Mora & Antonio Miralles

17/10 Sorting in public school districts under the Boston Mechanism

We show that the widely used Boston Mechanism (BM) fosters ability and socioeconomic segregation across otherwise identical public schools, even when schools do not have priorities over local students. Our model includes an endogenous component of school quality - determined by the peer group - and an exogenous one. If there is an exogenously worse public school, BM generates sorting of types between a priori equally good public schools: an elitist public school emerges. A richer model with some preference for closer schools and flexible residential choice does not eliminate this effect. It rather worsens the peer quality of the nonelitist school. The existence of private schools makes the best public school more elitist, while reducing the peer quality of the worst school. The main alternative assignment mechanism, Deferred Acceptance, is resilient to such sorting effects.

### 17/09 Rui Luo

17/09 Skill Premium and Technological Change in the Very Long Run: 1300-1914

This paper sets out to explain the historical development of the skill premium in western Europe over a period ranging from the pre-modern era to the modern era (circa 1300 to 1914). We develop a model of the skill premium and technological change over the very long run which endogenously accounts for the transition across different growth regimes in this period. The model integrates two key elements in long-run growth, the human capital investment and the capital-human capital ratio, into the analysis and successfully explains the declining skill premium from 1300 to 1600 and the stable skill premium from 1600 to 1914. The explanation elucidates a number of well-known historical facts that have not been previously examined in the study of the skill premium.

### 17/08 Martin Foureaux Koppensteiner & Jesse Matheson & Réka Plugor

### 17/07 M**engxing Wei & ****Ali al-Nowaihi & ****Sanjit Dhami**

**Ali al-Nowaihi &**

**Sanjit Dhami**17/07 Can quantum decision theory explain the Ellsberg paradox?

We report the results of an experiment we performed to test the matching probabilities for the Ellsberg paradox predicted by the quantum decision model of al-Nowaihi and Dhami (2016). We fi…nd that the theoretical predictions of that model are in conformity with our experimental results. This supports the thesis that violations of classical (Kolmogorov) probability theory may not be due to irrational behaviour but, rather, due to inadequacy of classical probability theory for the description of human behaviour. Unlike earlier quantum models of the Ellsberg paradox, our model makes essential use of quantum probability. It is also more parsimonious than earlier models.

### 17/06 Dimitrios Varvarigos

17/06 Economic Growth and the Cultural Transmission of Attitudes towards Education

### 17/05 Dimitrios Varvarigos & Nikolaos Kontogiannis

17/05 Entrepreneurial Status, Social Norms, and Economic Growth

### 17/04 Arkadiusz Szydłowski

### 17/03 D.S.G. Pollock

17/03 Stochastic processes of limited frequency and the effects of oversampling

### 17/02 D.S.G. Pollock

17/02 Trends Cycles And Seasons: Econometric Methods Of Signal Extraction

Alternative methods of trend extraction and of seasonal adjustment are described that operate in the time domain and in the frequency domain. The time-domain methods that are implemented in the TRAMO–SEATS and the STAMP programs are compared. An abbreviated time-domain method of seasonal adjustment that is implemented in the IDEOLOG program is also presented. Finite-sample versions of the Wiener–Kolmogorov filter are described that can be used to implement the methods in a common way. The frequency-domain method, which is also implemented in the IDEOLOG program, employs an ideal frequency selective filter that depends on identifying the ordinates of the Fourier transform of a detrended data sequence that should lie in the pass band of the filter and those that should lie in its stop band. Filters of this nature can be used both for extracting a low-frequency cyclical component of the data and for extracting the seasonal component.