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Globalization and Human Capital Formation

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  • Andersson, Fredrik
  • Konrad, Kai A

Abstract

This Paper compares education investment in closed and open economies without government and with a benevolent government. Closed economies suffer from a hold-up problem of excessive redistribution, and governments use education policy as a second-best tool. Globalization that increases labour mobility reduces governments' incentives to provide subsidized education and increases private individuals' incentives for investment in their human capital. Globalization can improve welfare, and even restore full efficiency. Governments' scope for redistribution – which is a substitute for private income insurance – is reduced, and whether efficiency is restored depends on how private insurance markets react to the change in redistribution policy.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2657.

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Date of creation: Jan 2001
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Handle: RePEc:cpr:ceprdp:2657

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Related research

Keywords: Commitment; Education Effort; Globalization; Migration; Time Consistent Income Taxation;

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References

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Citations

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Cited by:
  1. Nicolas Marceau & Steeve Mongrain & John D. Wilson, 2007. "Why Do Most Countries Set Higher Tax Rates on Capital?," Working Papers dp07-09, CRABE, Department of Economics, Simon Fraser University.
  2. Panu Poutvaara, 2002. "Investment in Education and Redistributive Taxation without Precommitment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(2), pages 177-, May.
  3. May Elsayyad & Kai A. Konrad, 2010. "Fighting Multiple Tax Havens," CESifo Working Paper Series 3195, CESifo Group Munich.
  4. Oliver Busch, 2007. "When Have All the Graduates Gone?: Internal Cross-State Migration of Graduates in Germany 1984-2004," SOEPpapers on Multidisciplinary Panel Data Research 26, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. Bernard M.S. van Praag & Ada Ferrer-i-Carbonell, 2002. "Age-differentiated QALI Losses," Tinbergen Institute Discussion Papers 02-015/3, Tinbergen Institute.
  6. Andersson, Fredrik & Konrad, Kai A., 2001. "Human Capital Investment and Globalization in Extortionary States," IZA Discussion Papers 239, Institute for the Study of Labor (IZA).
  7. Alexander Haupt & Eckhard Janeba, 2003. "Bildung im Zeitalter mobilen Humankapitals," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(2), pages 173-187.
  8. Anderberg, D. & Perroni, C., 2000. "Renegotiation of Social Contracts by Majority Rule," The Warwick Economics Research Paper Series (TWERPS) 566, University of Warwick, Department of Economics.
  9. Alexander Haupt & Eckhard Janeba, 2009. "Education, redistribution and the threat of brain drain," International Tax and Public Finance, Springer, vol. 16(1), pages 1-24, February.
  10. Claudio Thum & Silke Uebelmesser, 2001. "Mobility and the Role of Education as a Commitment Device," CESifo Working Paper Series 450, CESifo Group Munich.

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