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In this conceptual chapter, we explore and discuss the potential of a private-collective approach to the governance of incentives to innovate in the pharmaceutical industry. We specifically consider the governance models elaborated for the development of Open Source Software (OSS). Its diffusion in the software industry led the literature to acknowledge the existence of a hybrid model of governing incentives to innovate : the private-collective model1. Lay press and medical journals report an increasing number of “Open Source Pharma” experiences but only little systematic enquiry exists on this issue. We contribute to this debate by discussing this issue from an economic and managerial perspective, focusing mainly on the incentives to innovate in different contexts and governance structures.Specifically, we discuss whether and how it is feasible to replicate the OSS model for collaboration among private, not-for-profit and public organizations in pharmaceutical research starting from the analysis of the broad incentive structures, their analogies and their differences in the pharmaceutical industry vis à vis the software industry. Even though important analogies exist, we want to suggest that drug development cannot use the exact same governance models as is used in the code writing business because each coordination or innovation process has specific antecedents. Specific details of attributes of the underlying economic and technological environment in each industry specifically shape incentives to agents and actors, both at the innovation and market stage. Our economic analysis can contribute to developing a framework to shape the legal analysis of private-collective governance in medical research and development and help to craft specific legal and contractual arrangements for the governance of incentives to innovate.

Using a difference-in-differences approach, we exploit a quasi-experiment occurred in a large public university located in Southern Italy, to study whether the introduction of a selective admission test affects two indicators of students’ performances: dropout rate and grade point average (GPA). Our analysis shows that a change of regime to a more restrictive admission policy improves college performances, reducing the dropout rate of first year students by about 11% and increasing their grade point average by 1.2 points. Estimates are robust to various sensitivity analysis. Compared to other studies performed within the same national system, our analysis shows that a change of regime in selective admission policies have dramatically different effects in public versus private universities. We conclude that, in the realm of tertiary education, test based admission policies are effective where they are less used, i.e. in public universities.

The implications of individual heterogeneity for the evolution of wealth distribution are studied in a standard model of occupational choice with financial market imperfections and local non convexities in education investment technology. We consider heterogeneity in the cost of educational investment, interpreted as genetic variation at the level of lineage. Ergodicity of the wealth distribution is obtained whenever the (exogenous)distribution of education costs entails the presence of ability types for which the educational investment is inefficient vis a vis financial investment, regardless of how ”large” the support is. Conversely, poverty traps can emerge only if investment is efficient for every single agent in the economy. We show that under quite general conditions, the accumulation of wealth at the lineage level does not eliminate financial market imperfections over the long run, motivating our exploration of policy implications. In particular heterogeneity requires more persitent policies to achieve similar results as in the standard case. On the other hand policies can be effective in environments where they would fail under the assumption of homogeneous costs.

Dropping out of school has recently become an issue of major policy concern in Italy. A series of reforms of secondary school objectives, programmes and organizational design have been proposed to adapt the public school system to evolutions in the labour market and to increase overall educational attainment. The aim of the present paper is to gain some insight into the causes of dropping out of school and, more generally, of the factors that induce parents to review their choices about their child–s schooling careers. To this end we make use of data from the –school dropout survey– undertaken in Salerno Province by the Centre for Labour Economics and Economic Policy (CELPE). The survey collected a range of information on adolescent young people and their families over the period 2004-06. The paper proposes a model of sequential decision making by parents where the decision can be reviewed in the light of new information emerging about the ability and opportunities of the child in profiting from education relative to her outside (in the unskilled market). The model allows interpretation of such dropout and return behaviour and emphasises the separate role of economic capacity (opportunity costs) and cultural capacity (ability to disentangle signals about future opportunities) for equilibrium decision making. Analysis of the data confirms the role of both economic and cultural capacity of the family of origin in shaping observed choices about drop-out and return to school by individuals in our sample. Interestingly we find that whilst poor performance at, and low attachment to, school – measured by repetition of the school year through end of year failure and attendance records - is a key determinant of initial dropping out, the former does not seem to affect subsequent return to education. An important implication of the results presented here are that, in addition to the factors explicitly identified in the theoretical framework, dropping out behaviour is appears to be strongly influenced by mismatches between school and student. The answer to the question in the title of this paper, interpreted in its normative sense, therefore is no: the process of allocation of talents to school tracks is subject to many trial errors and revisions by families and many of those who leave school return to it subsequently.

The aim of the present paper is to gain some insight into the causes of dropping out of school and, more generally, of the factors that induce parents to review their choices about their child's schooling careers. To this end we apply to data from a school dropout survey insights from a model of sequential decision making by parents, where the initial decision can be reviewed in the light of new information emerging about the ability and opportunities of the child in benefitting from education relative to her outside (in the unskilled market). Analysis of the data confirms the role of both economic capacity (opportunity costs) and cultural capacity (ability to disentangle signals about future opportunities) of the family of origin shape observed choices about drop-out and return to school by individuals in our sample. Dropping out behaviour also appears to be strongly influenced by mismatches between school and student, however, and many of those who leave are not gone for good.