Project description
Opening the door to new opportunities for data analysis
An important class of structural economic models focuses on skill and human capital formation which plays a pivotal role in driving growth, amongst other things. The EU-funded NPSkills project will show that these current models rely on seemingly innocuous normalisations which not only impact the interpretation of parameters and predictions but also can lead to poor strategies and policy recommendations. NPSkills will develop new statistical methods to address these shortcomings. It will offer a comprehensive identification analysis and focus on a set of important policy-relevant parameters that yield robust conclusions. The project's work can aid in the areas of economic growth, inequality and investments in children.
Objective
Structural models are key tools of economists to evaluate and design policies. These models specify economic environments, estimate mechanisms that determine outcomes, and can be used for counterfactual predictions. One important class of models deals with skill and human capital formation, which is an important driver of economic growth and inequality. These models study the determinants of skill formation and the timing of optimal investments in children. Since structural models require simplifying assumptions, they are also prone to misspecification.
The proposed research shows that existing skill formation models rely on seemingly innocuous normalizations, which can severely impact counterfactual predictions. For example, simply changing the units of measurements of observed variables can yield ineffective investment strategies and misleading policy recommendations. I plan to tackle these problems by providing a new comprehensive identification analysis and by focusing on a novel set of important policy-relevant parameters that yield robust conclusions. These issues and solutions might extend to many other structural models with latent variables. In addition, I will provide a new flexible estimator for the policy-relevant features and analyze various data sets to reevaluate policy recommendations with potentially large impacts on costs and benefits of large public investments in children, economic growth, and inequality.
Estimation will rely on other objectives of this proposal, which aim to develop new econometric tools. These tools are important contributions on their own rights and are applicable in a wide range of settings. They allow researchers to obtain more precise nonparametric estimators and more reliable conclusions by using shape restrictions implied by economic theory and data-driven dimension reduction techniques. By also providing guidance on which estimation method to use in practice, these results can have a large impact on empirical research.
Keywords
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
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H2020-EU.1.1. - EXCELLENT SCIENCE - European Research Council (ERC)
MAIN PROGRAMME
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Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
ERC-STG - Starting Grant
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Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
(opens in new window) ERC-2020-STG
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Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.
53113 BONN
Germany
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.