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Subsidizing Education in the Economic Periphery: Another Pitfall of Regional Policies?

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Author Info
Jens Suedekum () (Universität Konstanz)

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Abstract

A very prominent instrument of regional policy is to foster education and human capital for-mation in economically lagging regions. However, this type of regional policy might actually hurt instead of help the recipient areas. The reason is that individual geographical mobility increases with the personal skill level. Through education subsidies, particularly if targeted on relatively high skilled workers, individuals can cross some threshold level of qualification beyond which emigration pays off. Regional policies then result in a human capital flight harmful to individuals remaining in the economic periphery. This fatal result does not hold for policies that focus on the relatively low skilled.

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Publisher Info
Paper provided by cege – Center for European, Governance and Economic Development Research, University of Goettingen (Germany). in its series cege – Center for European, Governance and Economic Development Research Discussion Papers with number 17.

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Length: 29
Date of creation: 01 Jan 2003
Date of revision:
Handle: RePEc:got:cegedp:17

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Web page: http://www.cege.uni-goettingen.de
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Related research
Keywords: Regional Policy; Education Subsidies; Human Capital; Labour Mobility; European Union;

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Find related papers by JEL classification:
H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
R1 - Urban, Rural, and Regional Economics - - General Regional Economics

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