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Author: Hizmo, Aurel

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1.	Arcidiacono, Peter Bayer, Patrick Hizmo, Aurel
1.	Beyond Signaling and Human Capital: Education and the Revelation of Ability American Economic Journal: Applied Economics 2,4 (October 2010): 76-104. Also: http://pubs.aeaweb.org/doi/pdfplus/10.1257/app.2.4.76 Cohort(s): NLSY79 Publisher: American Economic Association Keyword(s): Armed Forces Qualifications Test (AFQT); College Enrollment; Discrimination, Employer; High School Completion/Graduates; Modeling, Fixed Effects; Racial Differences; Test Scores/Test theory/IRT; Wages Permission to reprint the abstract has not been received from the publisher. In traditional signaling models, education provides a way for individuals to sort themselves by ability. Employers in turn use education to statistically discriminate, paying wages that reflect the average productivity of workers with the same given level of education. In this paper, we provide evidence that education (specifically, attending college) plays a much more direct role in revealing ability to the labor market. Using the NLSY79, our results suggest that ability is observed nearly perfectly for college graduates. In contrast, returns to AFQT for high school graduates are initially very close to zero and rise steeply with experience. As a result, from very beginning of the career, college graduates are paid in accordance with their own ability, while the wages of high school graduates are initially completely unrelated to their own ability. This view of ability revelation in the labor market has considerable power in explaining racial differences in wages, education, and the returns to ability. In particular, we find no racial differences in wages or returns to ability in the college labor market, but a 6-10 percent wage penalty for blacks (conditional on ability) in the high school market. These results are consistent with the notion that employers use race to statistically discriminate in the high school market but have no need to do so in the college market.
	Bibliography Citation Arcidiacono, Peter, Patrick Bayer and Aurel Hizmo. "Beyond Signaling and Human Capital: Education and the Revelation of Ability." American Economic Journal: Applied Economics 2,4 (October 2010): 76-104.

2.	Arcidiacono, Peter Bayer, Patrick Hizmo, Aurel
2.	Beyond Signaling and Human: Education and the Revelation of Ability NBER Working Paper No. 13951, National Bureau of Economic Research, 2008. Also: http://www.nber.org/papers/w13951.pdf Cohort(s): NLSY79 Publisher: National Bureau of Economic Research (NBER) Keyword(s): Armed Forces Qualifications Test (AFQT); College Enrollment; Discrimination, Employer; Education; High School Completion/Graduates; Modeling, Fixed Effects; Test Scores/Test theory/IRT; Wages In traditional signaling models, education provides a way for individuals to sort themselves by ability. Employers in turn use education to statistically discriminate, paying wages that reflect the average productivity of workers with the same given level of education. In this paper, we provide evidence that education (specifically, attending college) plays a much more direct role in revealing ability to the labor market. We use the NLSY79 to examine returns to ability early in careers; our results suggest that ability is observed nearly perfectly for college graduates but is revealed to the labor market much more gradually for high school graduates. As a result, from very beginning of the career, college graduates are paid in accordance with their own ability, while the wages of high school graduates are initially completely unrelated to their own ability. This view of ability revelation in the labor market has considerable power in explaining racial differences in wages, education, and the returns to ability. In particular, we find no racial differences in wages or returns to ability in the college labor market, but a 6-10 percent wage penalty for blacks (conditional on ability) in the high school market. These results are consistent with the notion that employers use race to statistically discriminate in the high school market but have no need to do so in the college market. That blacks face a wage penalty in the high school but not the college labor market also helps to explains why, conditional on ability, blacks are more likely to earn a college degree, a fact that has been documented in the literature but for which a full explanation has yet to emerge
	Bibliography Citation Arcidiacono, Peter, Patrick Bayer and Aurel Hizmo. "Beyond Signaling and Human: Education and the Revelation of Ability." NBER Working Paper No. 13951, National Bureau of Economic Research, 2008.

3.	Hizmo, Aurel
3.	Essays on Urban and Labor Economics Ph.D. Dissertation, Department of Economics, Duke University, 2011 Cohort(s): NLSY79 Publisher: Department of Economics, Duke University Keyword(s): Armed Forces Qualifications Test (AFQT); College Education; Employment; Modeling; Racial Differences; Skills; Wage Determination; Wage Differentials Permission to reprint the abstract has not been received from the publisher. In the first chapter of this dissertation I develop a flexible and estimable equilibrium model that jointly considers location decisions of heterogeneous agents across space, and their optimal portfolio decisions. Merging continuous-time asset pricing with urban economics models, I find a unique sorting equilibrium and derive equilibrium house and asset prices in closed-form. Risk premia for homes depend on both aggregate and local idiosyncratic risks, and equilibrium returns for stocks depend on their correlation with city-specific income and house price risk. In equilibrium, very risk-averse households do not locate in risky cities although they may have a high productivity match with those cities. I estimate a version of this model using house price and wage data at the metropolitan area level and provide estimates for risk premia for different cities. The estimated risk premia imply that homes are on average about $20000 cheaper than they would be if owners were risk-neutral. This estimate is over $100000 for volatile coastal cities. I simulate the model to study the effects of financial innovation on equilibrium outcomes. For reasonable parameters, creating assets that correlate with city-specific risks increase house prices by about 20% and productivity by about 10%. The average willingness to pay for completing markets per homeowner is between $10000 and $20000. Productivity is increased due to a unique channel: lowering the amount of non-insurable risk decreases the households' incentive to sort on these risks, which leads to a more efficient allocation of human capital in the economy. The second chapter of this dissertation studies ability signaling in a model of employer learning and statistical discrimination. In traditional signaling models, education provides a way for individuals to sort themselves by ability. Employers in turn use education to statistically discriminate, paying wages that reflect the average productivity of workers with the same given level of education. In this chapter, we provide evidence that graduating from college plays a much more direct role in revealing ability to the labor market. Using the NLSY79, our results suggest that ability is observed nearly perfectly for college graduates. In contrast, returns to AFQT for high school graduates are initially very close to zero and rise steeply with experience. As a result, from very beginning of the career, college graduates are paid in accordance with their own ability, while the wages of high school graduates are initially unrelated to their own ability. This view of ability revelation in the labor market has considerable power in explaining racial differences in wages, education, and the returns to ability. In particular, we find a 6-10 percent wage penalty for blacks (conditional on ability) in the high school market but a small positive black wage premium in the college labor market. These results are consistent with the notion that employers use race to statistically discriminate in the high school market but have no need to do so in the college market.
	Bibliography Citation Hizmo, Aurel. Essays on Urban and Labor Economics. Ph.D. Dissertation, Department of Economics, Duke University, 2011.

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