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Education, Growth, and Income Inequality

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  • Coen Teulings

    (CPB Netherlands Bureau for Economic Policy Analysis and University of Amsterdam)

  • Thijs van Rens

    (CREI and Universitat Pompeu Fabra)

Abstract

Estimates of the effect of education on GDP (the social return) have been hard to reconcile with micro evidence on the private return to schooling. We present a simple explanation combining two ideas: imperfect substitution and endogenous skill-biased technological progress and use cross-country panel data on inequality and GDP to test these ideas. A one-year increase in the level of education reduces the private return by 2 percentage points, consistent with Katz-Murphy's (1992) elasticity of substitution. We find no evidence for reversal of this initial effect as in Acemoglu (2002). In the short run, the social return equals the private return. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 90 (2008)
Issue (Month): 1 (February)
Pages: 89-104

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Handle: RePEc:tpr:restat:v:90:y:2008:i:1:p:89-104

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Citations

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Cited by:
  1. Alessie, Rob & Portela, Miguel & Teulings, Coen N, 2004. "Measurement Error in Education and Growth Regressions," CEPR Discussion Papers 4637, C.E.P.R. Discussion Papers.
  2. Coen N. Teulings, 2002. "Comparative Advantage, Relative Wages, and the Accumulation of Human Capital," Tinbergen Institute Discussion Papers 02-081/3, Tinbergen Institute, revised 08 Apr 2005.
  3. Schiffbauer, Marc, 2006. "Theoretical and methodological study on the role of public policies in fostering innovation and growth," Papers DYNREG04, Economic and Social Research Institute (ESRI).
  4. Asplund, Rita, 2004. "A Macroeconomic Perspective on Education and Inequality," Discussion Papers 906, The Research Institute of the Finnish Economy.
  5. Bos, Frits & Teulings, Coen, 2011. "Evaluating election platforms: a task for fiscal councils? Scope and rules of the game in view of 25 years of Dutch practice," MPRA Paper 31536, University Library of Munich, Germany.
  6. James J. Heckman, 2003. "Simulation and Estimation of Hedonic Models," CESifo Working Paper Series 1014, CESifo Group Munich.
  7. James J. Heckman & Rosa Matzkin & Lars Nesheim, 2003. "Simulation and Estimation of Nonaddative Hedonic Models," NBER Working Papers 9895, National Bureau of Economic Research, Inc.
  8. Balleer, Almut & van Rens, Thijs, 2009. "Cyclical Skill-Biased Technological Change," IZA Discussion Papers 4258, Institute for the Study of Labor (IZA).
  9. Miguel Portela & Rob Alessie & Coen N. Teulings, 2004. "Measurement Error in Education and Growth Regressions," Tinbergen Institute Discussion Papers 04-040/3, Tinbergen Institute, revised 24 Nov 2005.
  10. Barassou Diawara & Keisuke Osumi, 2010. "Education and job complexity levels," International Review of Economics, Springer, vol. 57(4), pages 361-368, December.
  11. Robert A.J. Dur & Coen N. Teulings, 2001. "Education and Efficient Redistribution," Tinbergen Institute Discussion Papers 01-090/3, Tinbergen Institute, revised 12 Jun 2003.
  12. Robert Dur & Amihai Glazer, 2005. "Subsidizing Enjoyable Education," CESifo Working Paper Series 1560, CESifo Group Munich.
  13. Robert A. J. Dur & Coenraad N. Teulings, 2001. "Education and Efficient Redistribution," CESifo Working Paper Series 592, CESifo Group Munich.

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