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Does the Diversity of Human Capital Increase GDP? A Comparison of Education Systems

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  • Katsuya Takii

    ()
    (Osaka School of International Public Policy, Osaka University)

  • Ryuichi Tanaka

    (Graduate School of Information Science and Engineering, Tokyo Institute of Technology)

Abstract

This paper examines how different education systems affect GDP by influencing the diversity of human capital. We construct an overlapping generation model in which agents are heterogeneous in income and innate ability, and the final goods are produced with differentiated intermediate goods. We analyze an economy in which an income distribution converges to a stationary distribution. It is shown that the diversity of human capital induced by income inequality always lowers the GDP of the next period, while the diversity of human capital induced by heterogeneous ability can increase GDP, if the produced intermediate goods are sufficiently substitutable and firms have a large span of control. Hence, as public education equalizes education resources across households, it mitigates the negative effect of income inequality on GDP, while the effects of ability tracking crucially depend on the production structure of the economy.

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Bibliographic Info

Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 06-19.

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Length: 33 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:osk:wpaper:0619

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Web page: http://www.econ.osaka-u.ac.jp/
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Keywords: Span of control; Complementarities; Human capital; Ability tracking;

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Citations

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Cited by:
  1. 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.
  2. Fali HUANG & Pao-Li CHANG, 2012. "Trade and Divergence in Education Systems," DEGIT Conference Papers c017_016, DEGIT, Dynamics, Economic Growth, and International Trade.
  3. Cheng-te Lee & Chen Fang & Kuo-hsing Kuo, 2014. "Common Market and Equilibrium Growth," Economics Bulletin, AccessEcon, vol. 34(1), pages 480-493.
  4. Katsuya Takii & Ryuichi Tanaka, 2013. "On the role of job assignment in a comparison of education systems," Canadian Journal of Economics, Canadian Economics Association, vol. 46(1), pages 180-207, February.
  5. Ryo Arawatari, 2007. "Informatization, Voter Turnout and Income Inequality," Discussion Papers in Economics and Business 07-28, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  6. Hideki Nakamura, 2013. "Wages of regular and irregular workers, the price of education, and income inequality," Journal of Economic Inequality, Springer, vol. 11(4), pages 517-533, December.
  7. Francisco Martínez-Mora & Gianni De Fraja, 2012. "The desegregating effect of school tracking," Discussion Papers in Economics 12/24, Department of Economics, University of Leicester.
  8. Leonel Prieto & Tagi Sagafi-nejad & Balaji Janamanchi, 2013. "A Bourdieusian Perspective on Acculturation: Mexican Immigrants in the United States," Administrative Sciences, MDPI, Open Access Journal, vol. 3(4), pages 290-305, December.

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