How employee churn drives the labor market dynamics: an initial descriptive investigation using firm-level evidence from Costa Rica
Abstract
Two models were reviewed that allowed us to calculate the churn rate per company per year - 2020 (pandemic), 2021 (pandemic), and 2022 (post-pandemic), by sector, by the process that those companies carry out in the country, and per year of operation in the country. The findings show there seems to be a pandemic-induced decrease in churn rates for corporate services. Churn reallocates workers from less productive uses to more productive ones. Using model 1 of Burgess et al. (2000) we find that for every new reallocated job there were on average 4 rellocated workers in services and 4.5 in manufacturing during the study period. This result is a measure of how dynamic these sectors are for Costa Rica. In addition, using the definition of churn of Lazear & McCue (2018) we find that the churn rate is higher for jobs with less labor specialization, but the churn rate for women is lower than that of men in these less specialized jobs. For more specialized jobs, however, the churn rate seems similar between genders, although it tends to be lower for women. Workers over the age of 40 have a lower job reallocation rate. Finally, churn rates in manufacturing companies behave differently from those of information technology-related services due primarily to the heterogeneity of the worker composition in the different job specialization categories.
Keywords: Churn rate, pandemic, foreign companies, gender, job specialization, job position, Costa Rica
Effect of Quality Education Public Expenditure on Economic Growth and Inequality in Costa Rica: country-level evidence
We determined the impact of public expenditure on quality education on economic (GDP) growth and inequality measured by the Gini coefficient. We used an econometric specification built on a modification to the overlapping generations model of Blankenau et al. (2007). In our case, the production function of human capital depends on the quality of education. The empirical specification estimates a growth equation and an inequality equation both conditioned by the government budget constraint and institutional factors. A panel of 70 countries was used, with 10 time periods of 5 years each from 1970 to 2020. The probability of quality education was approximated with the global database of quality of education developed by Altinok et al. (2018) and estimates from logit models. Robustness checks with the PISA test scores are also performed.
We found that investment in quality education has returns as strong as investment in infrastructure. The probability of quality education in Costa Rica is around 53%. Furthermore, if Costa Rica's public spending on education were immediately transformed to 100% quality in a particular year, the country would automatically increase its spending on quality education by 3.05% as a percentage of GDP. This would translate into an additional growth near 0.6 pp. five years later. Additionally, the Gini coefficient would fall by about 8.1 points; it would go from 48 to 39.9, which means that the gap between Costa Rica’s Gini and the Gini of the less unequal countries of the OECD would be reduced by almost 48% in only five years.
Among policy recommendations to improve the quality of education, increasing the attainment rate in primary education to be equal to that of developed countries stands out. This boost in education will increase economic growth and attack the inequality problem.
Abstract:
We determined the impact of public expenditure on quality education on economic (GDP) growth and inequality measured by the Gini coefficient. We used an econometric specification built on a modification to the overlapping generations model of Blankenau et al. (2007). In our case, the production function of human capital depends on the quality of education. The empirical specification estimates a growth equation and an inequality equation both conditioned by the government budget constraint and institutional factors. A panel of 70 countries was used, with 10 time periods of 5 years each from 1970 to 2020. The probability of quality education was approximated with the global database of quality of education developed by Altinok et al. (2018) and estimates from logit models. Robustness checks with the PISA test scores are also performed.
We found that investment in quality education has returns as strong as investment in infrastructure. The probability of quality education in Costa Rica is around 53%. Furthermore, if Costa Rica's public spending on education were immediately transformed to 100% quality in a particular year, the country would automatically increase its spending on quality education by 3.05% as a percentage of GDP. This would translate into an additional growth near 0.6 pp. five years later. Additionally, the Gini coefficient would fall by about 8.1 points; it would go from 48 to 39.9, which means that the gap between Costa Rica’s Gini and the Gini of the less unequal countries of the OECD would be reduced by almost 48% in only five years.
Among policy recommendations to improve the quality of education, increasing the attainment rate in primary education to be equal to that of developed countries stands out. This boost in education will increase economic growth and attack the inequality problem.
Key words: Government Expenditures, Education, Inequality, Economic Growth, Development.
JEL. Classification: H52, I24, I25, I26.