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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

    ()
    (Université catholique de Louvain)

  • Docquier, Frédéric

    ()
    (Université catholique de Louvain)

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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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 846.

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Length: 37 pages
Date of creation: Aug 2003
Date of revision:
Publication status: published as 'School attendance and skill premiums in France and the US: a general equilibrium approach' in: Fiscal Studies, 2007, 28 (4), 383-416
Handle: RePEc:iza:izadps:dp846

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

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  1. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain The Rising Return To College For Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 705-746, May.
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  6. Guido Cozzi, 2003. "The Self-fulfilling International Allocation of Innovation," Levine's Bibliography 666156000000000189, UCLA Department of Economics.
  7. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
  8. Marimon, Ramon & Zilibotti, Fabrizio, 1998. "Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits," Seminar Papers 661, Stockholm University, Institute for International Economic Studies.
  9. Caroli, Eve & Van Reenen, John, 1999. "Skill biased organizational change? Evidence from a panel of British and French establishments," CEPREMAP Working Papers (Couverture Orange) 9917, CEPREMAP.
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  14. Thierry MAGNAC & David THESMAR, 2002. "Analyse économique des politiques éducatives : l'Augmentation de la scolarisation en France de 1982 à 1993," Annales d'Economie et de Statistique, ENSAE, issue 65, pages 1-33.
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Cited by:
  1. de la Croix, David & Docquier, Frederic & Liegeois, Philippe, 2007. "Income growth in the 21st century: Forecasts with an overlapping generations model," International Journal of Forecasting, Elsevier, vol. 23(4), pages 621-635.
  2. Wasmer, Etienne, 1998. "Labor Supply Dynamics, Unemployment and Human Capital Investments," Seminar Papers 651, Stockholm University, Institute for International Economic Studies.
  3. 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).
  4. 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.
  5. Etienne WASMER, 2004. "Labor supply dynamics, unemployment and experience in the labor market," Discussion Papers (REL - Recherches Economiques de Louvain) 2004044, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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