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Trade And Divergence In Education Systems

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  • Pao‐Li Chang
  • Fali Huang

Abstract

This article presents a theory on the endogenous choice of education policy and the two‐way causal relationship between trade and education systems. A country's education system determines its talent distribution and comparative advantage; the possibility of trade by raising the returns to the sector of comparative advantage in turn induces countries to further differentiate their education systems and reinforces the initial pattern of comparative advantage. Specifically, the Nash equilibrium choice of education systems by two countries interacting strategically are necessarily more divergent than their autarky choices, and yet less than what is socially optimal for the world.

Suggested Citation

  • Pao‐Li Chang & Fali Huang, 2014. "Trade And Divergence In Education Systems," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(4), pages 1251-1280, November.
    • Handle: RePEc:wly:iecrev:v:55:y:2014:i:4:p:1251-1280
    DOI: 10.1111/iere.12089
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