Educational Choice Wage Determination and Rates of Return to Education in Taiwan

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796 IAER: NOVEMBER 2000, VOL. 6, NO. 4

observation by comparing the aftermath of the crisis in countries that accepted IMF aid and attached conditions with that of Malaysia, which declined. (JEL G10)

Educational Choice, Wage Determination, and Rates of Return for Education in Taiwan YIH-CHYI CHUANG AND CHEN-YENG CHAO

National Chengchi University and Jin Wen Institute of Technology--Taiwan

This paper estimates educational choice, wage determination, and the rate of return for education in Taiwan using Manpower Utilization Survey data for 1996. As education investment is a self- selection process, this paper adopts a two-stage estimation method. First, a ploychotomous-ordered probit model is used to estimate the education decision. Second, wage equations of different educational attainments are estimated by incorporating the possible selection bias obtained in the probit model. Finally, rates of return on each education level are calculated from the estimation results.

The main findings of the paper are as follows:

1) Family factors significantly affect a person's selection of education level.

2) Significant negative selection bias is found in the male group for the senior high school and graduate school levels and in the female group for the junior high school, vocational school, junior college, and university levels. Significant positive bias is only found in the female group for senior high school.

3) The estimated annual rates of return for schooling are -0.30 percent for high school, 6.68 percent for vocational school, 5.66 percent for junior college, and 12.26 percent for university. In general, females have a higher return rate for education than males for most educational levels. (JEL J00)

Transmission Pricing and the German Electricity Market MATTHIAS NIEDERPRIJM AND MICHAEL PICKHARDT GMO Management Consulting and Bergische University--Germany

This paper considers the electricity transmission pricing system applied in Germany since January 2000. The actual cost structure of a grid operator and the transmission price calculation procedure is described in some detail. Under the new system, Germany is divided into two electricity trade areas. For transmissions within each trade area, there is a single transmission charge, the grid utilization charge, which is effectively a grid access charge. This charge covers not only the actual transmission costs with respect to the voltage levels used, but in addition, the costs of ancillary services provided by the grid operator and fine losses. Within each trade area, the charge depends simply on total grid costs and the magnitude of transacted power. Despite the fact that the new pricing system represents a substantial improvement with respect to its predecessor (the system that was in force between 1998 and 1999), we find that the new system still contains elements that may prevent an efficient electricity market. We suggest completely dropping the transportation charge (applied to cross-border trade) to make sure that minor charges have no distorting effects and to move to a nodal pricing system. 0 E L L10)

Unemployment in Estonia and Economic Policies MARE RANDVEER

Tallinn Technical University--Estonia

The paper seeks to analyze the reasons for unemployment and respective policy responses in Estonia. Our economy today is characterized by technological progress, which is the main threat to low-skilled workers. In Estonia, they have a much higher unemployment rate than skilled workers. The position of less-educated workers is also weak. It will likely remain weak for a