Katsuya Takii () (Osaka School of International Public Policy, Osaka University) Ryuichi Tanaka (Graduate School of Information Science and Engineering, Tokyo Institute of Technology)
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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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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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Matilde Bombardini & Giovanni Gallipoli & Germán Pupato, 2009.
"Skill Dispersion and Trade Flows,"
NBER Working Papers
15097, National Bureau of Economic Research, Inc.
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