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Unequal Opportunities and Human Capital Formation

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  • Daniel Mejía
  • Marc St-Pierre

Abstract

This paper develops a tractable, heterogeneous agents general equilibrium model where individuals have different endowments of the factors that complement the schooling process. The paper explores the relationship between inequality of opportunities, inequality of outcomes, and efficiency in human capital formation. Using numerical solutions we study how the endogenous variables of the model respond to two different interventions in the distribution of opportunities: a mean-preserving spread and a change in the support. The results suggest that a higher degree of inequality of opportunities is associated with lower average level of human capital, a lower fraction of individuals investing in human capital, higher inequality in the distribution of human capital, and higher wage inequality. In other words, the model does not predict a trade-off between efficiency and equality of opportunity in human capital formation.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1383.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1383

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Keywords: human capital; inequality; equity-efficiency trade-off;

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Citations

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Cited by:
  1. Oded Galor, 2009. "Inequality and Economic Development: An Overview," Working Papers 2009-3, Brown University, Department of Economics.
  2. Oded Galor, 2011. "Inequality, Human Capital Formation and the Process of Development," Working Papers 2011-7, Brown University, Department of Economics.
  3. Daniel Suryadarma & Wenefrida Widyanti & Asep Suryahadi & Sudarno Sumarto, 2006. "From Access to Income : Regional and Ethnic Inequality in Indonesia," Development Economics Working Papers 22547, East Asian Bureau of Economic Research.
  4. Carolina Arteaga Cabrales, 2011. "Human Capital Externalities and Growth," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  5. Guido Baldi, 2013. "Physical And Human Capital Accumulation And The Evolution Of Income And Inequality," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(3), pages 57-83, September.
  6. Zakharenko, Roman, 2012. "Human capital acquisition and international migration in a model of educational market," Regional Science and Urban Economics, Elsevier, vol. 42(5), pages 808-816.
  7. Gustavo A. Marrero & Juan G. Rodriguez, 2014. "Inequality and development: the role of opportunities and free-will," Working Papers 327, ECINEQ, Society for the Study of Economic Inequality.
  8. Helmuth Cremer & Philippe Donder & Pierre Pestieau, 2010. "Education and social mobility," International Tax and Public Finance, Springer, vol. 17(4), pages 357-377, August.
  9. Kirdar, Murat G. & Dayioglu-Tayfur, Meltem & Koc, Ismet, 2014. "Does Longer Compulsory Education Equalize Schooling by Gender and Rural/Urban Residence?," IZA Discussion Papers 7939, Institute for the Study of Labor (IZA).
  10. Andrés Ham, 2010. "The Effect of Conditional Cash Transfers on Educational Opportunities - Experimental Evidence from Latin America," CEDLAS, Working Papers 0109, CEDLAS, Universidad Nacional de La Plata.
  11. Marrero, Gustavo A. & Rodríguez, Juan G., 2013. "Inequality of opportunity and growth," Journal of Development Economics, Elsevier, vol. 104(C), pages 107-122.

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