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Diverging patterns of education premium and school attendance in France and the US: a Walrasian view

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  • DE LA CROIX, David
  • DOCQUIER, Frédéric

Abstract

We evaluate the effect of technology, demographics and policy on the differential evolution of the skill premium and on the rise in education investment in France and the USA. We use a computable general equilibrium model with overlapping generations of individuals, and endogenous education decisions. Human capital is made of two substitutable components, experience and education, both of them evolve endogenously over time. We calibrate this model on the post-war period and run counterfactual experiments to assess the effect of the different exogenous variables. French expansionary education policy boosted the supply of skills and kept the skill premium low. On the contrary, increasing education costs in the US contributed to increase wage differentials by reducing the supply of skills. The skill biased technical shock is key to understand rising school attendance and appears delayed in France.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2003058.

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Date of creation: 00 Sep 2003
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Handle: RePEc:cor:louvco:2003058

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Keywords: human capital; education; experience; skill premium;

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  11. Guido Cozzi, 2003. "The Self-fulfilling International Allocation of Innovation," Levine's Bibliography 666156000000000189, UCLA Department of Economics.
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Cited by:
  1. DE LA CROIX, David & DOCQUIER, Frédéric & LIEGEOIS, Philippe, 2007. "Income growth in the 21st century: Forecasts with an overlapping generations model," CORE Discussion Papers 2007043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Luca, MARCHIORI, 2007. "ChinAfrica : How can the Sino-African cooperation be beneficial for Africa ?," Discussion Papers (ECON - Département des Sciences Economiques) 2007014, Université catholique de Louvain, Département des Sciences Economiques.
  3. Etienne Wasmer, 2004. "Labour Supply Dynamics, Unemployment and Human Capital Investments," Sciences Po publications info:hdl:2441/8943, Sciences Po.
  4. Étienne Wasmer, 2004. "Labor supply dynamics, unemployment and experience in the labor market," Recherches économiques de Louvain, De Boeck Université, vol. 70(4), pages 461-482.
  5. Chojnicki, Xavier & Docquier, Frédéric & Ragot, Lionel, 2005. "Should the U.S. Have Locked the Heaven's Door? Reassessing the Benefits of the Postwar Immigration," IZA Discussion Papers 1676, Institute for the Study of Labor (IZA).

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