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Trade and Divergence in Education Systems

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  • Pao-Li Chang

    ()
    (School of Economics, Singapore Management University)

  • Fali Huang

    ()
    (School of Economics, Singapore Management University)

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. Speci cally, 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, talent distribution, and trade.

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Bibliographic Info

Paper provided by Singapore Management University, School of Economics in its series Working Papers with number 33-2010.

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Length: 47 pages
Date of creation: Dec 2010
Date of revision:
Publication status: Published in SMU Economics and Statistics Working Paper Series
Handle: RePEc:siu:wpaper:33-2010

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

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References

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  1. 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.
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  7. Grossman, Gene & Maggi, Giovanni, 1998. "Diversity and Trade," CEPR Discussion Papers 2005, C.E.P.R. Discussion Papers.
  8. 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).
  9. Spiros Bougheas & Raymond Riezman, 2005. "Trade and the Distribution of Human Capital," CESifo Working Paper Series 1475, CESifo Group Munich.
  10. 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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  13. Takii, Katsuya & Tanaka, Ryuichi, 2009. "Does the diversity of human capital increase GDP? A comparison of education systems," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 998-1007, August.
  14. 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.
  15. 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.
  16. Spiros Bougheas & Richard Kneller & Raymond Riezman, 2011. "Optimal Education Policies And Comparative Advantage," Pacific Economic Review, Wiley Blackwell, vol. 16(5), pages 538-552, December.
  17. 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.
  18. 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.
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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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