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Land-Rich Economies, Education and Economic Development

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  • Sebastian Galiani
  • Daniel Heymann

Abstract

We analyze the emergence of large-scale education systems in a setup where growth is associated with changes in the configuration of the economy. The model is based on three central elements: first, individual preferences over consumption goods generate changes in the composition of individual spending as income grows, embodied in Engel curves. Second, the production of sophisticated services is intensive in human capital. Third, investment in human capital by individual households faces borrowing constraints. Our model uses an overlapping generation framework similar to the one in Galor and Moav (2003). As that paper does, we also model the incentives that the economic ´elite may have (collectively) to accept taxation destined to finance the education of credit-constrained workers. In our model this incentive does not necessarily arise from a complementarity between physical and human capital in manufacturing. Rather, we emphasize the demand for human-capital-intensive services by high-income groups. The argument model seems capable to account for salient features of the development of Latin America in the 19th century, where, in particular, land-rich countries such as Argentina established an extensive public education system and a sophisticated service sector before developing significant manufacturing activities.

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Bibliographic Info

Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c010_048.

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Length: 27 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:deg:conpap:c010_048

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  1. Banerjee, Abhijit V & Newman, Andrew F, 1991. "Risk-Bearing and the Theory of Income Distribution," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 211-35, April.
  2. Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2008. "Income and Democracy," American Economic Review, American Economic Association, vol. 98(3), pages 808-42, June.
  3. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  4. Acemoglu, Daron & Johnson, Simon & Robinson, James A, 2004. "Institutions as the Fundamental Cause of Long-Run Growth," CEPR Discussion Papers 4458, C.E.P.R. Discussion Papers.
  5. Syrquin, M. & Chenery, H.B., 1989. "Patterns Of Development, 1950 To 1983," World Bank - Discussion Papers 41, World Bank.
  6. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  7. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  8. Benabou, Roland, 1996. "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, Wiley Blackwell, vol. 63(2), pages 237-64, April.
  9. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472 Elsevier.
  10. Oded Galor & Omer Moav & Dietrich Vollrath, 2005. "Land Inequality and the Emergence of Human Capital Promoting Institutions," Development and Comp Systems 0502018, EconWPA.
  11. Kenneth L. Sokoloff & Stanley L. Engerman, 2000. "Institutions, Factor Endowments, and Paths of Development in the New World," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 217-232, Summer.
  12. Bourguignon, F. & Verdier, T., 1999. "Is Financial Openness bad for Education? A Political Economy Perspective on Development," DELTA Working Papers 1999-20, DELTA (Ecole normale supérieure).
  13. Oded Galor & Omer Moav, 2000. "Das Human Kapital," Working Papers 2000-17, Brown University, Department of Economics.
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Cited by:
  1. Mariana Marchionni & Germán Bet & Ana Pacheco, 2007. "Empleo, Educación y Entorno Social de los Jóvenes: Una Nueva Fuente de Información," CEDLAS, Working Papers 0061, CEDLAS, Universidad Nacional de La Plata.
  2. Diego Battiston & Francisco Franchetti, 2008. "Inequality in Health Coverage, Empirical Analysis with Microdata for Argentina 2006," CEDLAS, Working Papers 0063, CEDLAS, Universidad Nacional de La Plata.
  3. Ricardo N. Bebczuk, 2008. "Dolarización y Pobreza en Ecuador," CEDLAS, Working Papers 0066, CEDLAS, Universidad Nacional de La Plata.
  4. Leopoldo Tornarolli & Adriana Conconi, 2007. "Informalidad y Movilidad Laboral: Un Análisis Empírico para Argentina," CEDLAS, Working Papers 0059, CEDLAS, Universidad Nacional de La Plata.
  5. Walter Sosa Escudero & Anil K. Bera, 2008. "Tests for Unbalanced Error Component Models Under Local Misspecication," CEDLAS, Working Papers 0065, CEDLAS, Universidad Nacional de La Plata.
  6. Paula Giovagnoli, 2007. "Failures in school progression," CEDLAS, Working Papers 0050, CEDLAS, Universidad Nacional de La Plata.
  7. Maribel Jimenez & Monica Jimenez, 2009. "La Movilidad Intergeneracional del Ingreso: Evidencia para Argentina," CEDLAS, Working Papers 0084, CEDLAS, Universidad Nacional de La Plata.
  8. Ricardo Bebczuk, 2009. "SME Access to Credit in Guatemala and Nicaragua: Challenging Conventional Wisdom with New Evidence," CEDLAS, Working Papers 0080, CEDLAS, Universidad Nacional de La Plata.

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