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Trade and Divergence in Education Systems

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  • Fali HUANG
  • Pao-Li CHANG

Abstract

This paper presents a theory on the endogenous choice of a country's education policy and the two-way causal relationship between trade and education systems. The setting of a country's education system determines its talent distribution and comparative advantage in trade; 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, although the difference is still less than what is socially optimal for the world. We provide some preliminary empirical evidence on the relationship between education system and talent distribution.

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Bibliographic Info

Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c017_016.

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Length: 45 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:deg:conpap:c017_016

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Related research

Keywords: Education System; Talent Distribution; Comparative Advantage; Trade Pattern;

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References

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  1. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  2. Sauro Mocetti, 2008. "Educational choices and the selection process before and after compulsory schooling," Temi di discussione (Economic working papers) 691, Bank of Italy, Economic Research and International Relations Area.
  3. Matilde Bombardini & Giovanni Gallipoli & Germán Pupato, 2009. "Skill Dispersion and Trade Flows," Working Paper Series 20_09, The Rimini Centre for Economic Analysis, revised Jan 2009.
  4. Kim, Se-Jik & Kim, Yong Jin, 2000. "Growth gains from trade and education," Journal of International Economics, Elsevier, vol. 50(2), pages 519-545, April.
  5. Spiros Bougheas & Raymond Riezman, 2005. "Trade and the Distribution of Human Capital," CESifo Working Paper Series 1475, CESifo Group Munich.
  6. Gene M. Grossman, 2004. "The Distribution of Talent and the Pattern and Consequences of International Trade," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 209-239, February.
  7. Giovanni Maggi & Gene M. Grossman, 2000. "Diversity and Trade," American Economic Review, American Economic Association, vol. 90(5), pages 1255-1275, December.
  8. Pasqualino Montanaro, 2008. "Learning divides across the Italian regions: Some evidence from national and international surveys," Questioni di Economia e Finanza (Occasional Papers) 14, Bank of Italy, Economic Research and International Relations Area.
  9. Findlay, Ronald & Kierzkowski, Henryk, 1983. "International Trade and Human Capital: A Simple General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 91(6), pages 957-78, December.
  10. Falkinger, Josef & Grossmann, Volker, 2004. "Institutions and Development: The Interaction between Trade Regime and Political System," IZA Discussion Papers 1242, Institute for the Study of Labor (IZA).
  11. Hanushek, Eric A. & Woessmann, Ludger, 2010. "The Economics of International Differences in Educational Achievement," IZA Discussion Papers 4925, Institute for the Study of Labor (IZA).
  12. Spiros Bougheas & Richard Kneller & Raymond Riezman, 2009. "Optimal Education Policies and Comparative Advantage," CESifo Working Paper Series 2631, CESifo Group Munich.
  13. Eric W. Bond & Kathleen Trask & Ping Wang, 2003. "Factor Accumulation and Trade: Dynamic Comparative Advantage with Endogenous Physical and Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 1041-1060, 08.
  14. Gianfranco DE SIMONE, 2012. "Render unto primary the things which are primary's. Inherited and fresh learning divides in Italian lower secondary education," Departmental Working Papers 2012-14, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  15. Eric A. Hanushek, 2002. "The Long Run Importance of School Quality," NBER Working Papers 9071, National Bureau of Economic Research, Inc.
  16. Checchi, Daniele & Fiorio, Carlo V. & Leonardi, Marco, 2008. "Intergenerational Persistence in Educational Attainment in Italy," IZA Discussion Papers 3622, Institute for the Study of Labor (IZA).
  17. Katsuya Takii & Ryuichi Tanaka, 2006. "Does the Diversity of Human Capital Increase GDP? A Comparison of Education Systems," Discussion Papers in Economics and Business 06-19, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  18. Franziska Ohnsorge & Daniel Trefler, 2007. "Sorting It Out: International Trade with Heterogeneous Workers," Journal of Political Economy, University of Chicago Press, vol. 115(5), pages 868-892, October.
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Cited by:
  1. Arpita Chatterjee, 2014. "Endogenous Comparative Advantage, Gains From Trade and Symmetry-Breaking," Discussion Papers 2014-18, School of Economics, The University of New South Wales.

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