Friday, December 19, 2008

Open Skies agreements

Over the past couple of weeks, Armenia signed two agreements related to air transportation with the EU and the US that could set the stage for a revolution in this mode of transportation. In particular, the agreement with the US (see here for official text), has the potential for improving the logistics of shipping and travel between Yerevan and Los Angeles, the city with the largest population of Armenians second to Yerevan. In all likelihood this will connect to New York on the east coast of the US, facilitating travel from cities such as Boston, Philadelphia, and Washington among others.

In the week of September 3-9, there were 62 Yerevan-Moscow flights, and another 34 flights to cities in Europe (see here for earlier and much more detailed flights patterns, and here for an earlier post). It should be clear that many of these flights do not carry their passengers to their ultimate destinations, but such statistics do not exist. Obviously, many of the travelers from the US, Canada, and Latin America, connect through these cities on their way to Yerevan. This also applies to much of the cargo, both trade and humanitarian aid related.

These agreements may go a long way in improving transport logistics to and from Yerevan. Much credit should go to the young minister of the economy who has contributed considerably during his short tenure of slightly over a year. But the nagging question remains of why it has taken so long to get the country to this point.

Do we know of any relevant research in the area of transportation?

Sunday, December 07, 2008

The return to education

Education is often what separates the rich from the poor. But a question of interest is how this road to prosperity varies with the level of education. To be more specific, how would an individual's income change if she earns an additional degree or simply spends an additional year in school.

Within the Armenian context, as in many countries, it is not always clear that the most educated are always the most compensated; the return to educationn is an open empirical question.

I am working on a project that examines how wages vary by educational attainment using survey data for 5 years. Below I report summary statistics from one of the cross sections. As we can see the average monthly salary generally rises with education. But given the size of the standard deviations, the differences in mean salaries are not always statistically significant.

2003 Monthly Salary by Education Level (in Drams)
.......Education ... Obs. Mean StdDev
............. primary 17 26471 15322
.incomplete secondary 94 23796 20580
.. general secondary 729 29898 24669
...secondary special 892 26183 24119
... incomplete higher 25 37953 28577
..... high education 869 35374 92064
Note: limited to ages 25-60 and to those who report monthly compensation only; excludes one outlier with general secondary education.

Next I report OLS estimates and control for age, in quadratic form, and gender. Again, there is little statistical difference in the compensation of individuals with different education levels. Other than the finding that women get paid much less than men, by some 22,000 drams, there is nothing remarkable in the estimates reported below.

OLS Estimates of Monthly Salary
...... Variable .... Coefficient Std. Err.
incomplete secondary -2747.38 14631.88
.. general secondary 3624.517 13629.23
...secondary special 3284.955 13604.52
.. incomplete higher 14444.31 17463.65
..... high education 12284.46 13610.02
................ age 2604.828 1144.01
............ age sq. -30.4604 13.67846
............. female -21897.6 2192.599
........... constant -18805.9 26665.94

The above findings, of course, require some serious work to correct for occupational choice (eg, construction workers make more than teachers), private/public sector employment, among others. But for now it would be good to know if any one else is doing work in this area.