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Human Capital Formation, Education and Earnings Inequality

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  • Uwe Sunde

Abstract

This paper presents a simple model of human capital formation that illustrates how the structure of the education system mediates the effects of shocks on the earnings distribution. This might help understand the differences in changes of inequality in OECD countries despite the similarity of shocks and technological changes affecting these countries. The model emphasizes heterogeneity of individuals and multi-dimensionality of human capital. The reactions in individual behavior triggered by technological change are crucially affected by the education system and are able to rationalize the divergent developments in inequality.

Suggested Citation

  • Uwe Sunde, 2008. "Human Capital Formation, Education and Earnings Inequality," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 54(1), pages 7-26.
    • Handle: RePEc:aeq:aeqaeq:v54_y2008_i1_q1_p7-26
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    Cited by:

    1. Seifried, Mareike & Jurowetzki, Roman & Kretschmer, Tobias, 2020. "Career paths in online labor markets: Same, same but different?," ZEW Discussion Papers 20-090, ZEW - Leibniz Centre for European Economic Research.
    2. Magalhães, Graziella & Turchick, David, 2022. "Growth and inequality under different hierarchical education regimes," Economic Modelling, Elsevier, vol. 116(C).

    More about this item

    Keywords

    Inequality; Ability biased technological change; education system; human capital formation;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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