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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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  3. 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.
  4. Checchi, Daniele & Fiorio, Carlo V. & Leonardi, Marco, 2013. "Intergenerational persistence of educational attainment in Italy," Economics Letters, Elsevier, vol. 118(1), pages 229-232.
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  7. Spiros Bougheas & Richard Kneller & Raymond Riezman, . "Optimal Educational Policies and Comparative Advantage," Discussion Papers 09/02, University of Nottingham, GEP.
  8. Sauro Mocetti, 2008. "Educational choices and the selection process before and after compulsory schooling," Temi di discussione (Economic working papers) 691, Bank of Italy, Economic Research and International Relations Area.
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  10. Eric A. Hanushek & Ludger Woessmann, 2010. "The Economics of International Differences in Educational Achievement," CESifo Working Paper Series 3037, CESifo Group Munich.
  11. Spiros Bougheas & Raymond Riezman, 2005. "Trade and the Distribution of Human Capital," CESifo Working Paper Series 1475, CESifo Group Munich.
  12. Josef Falkinger & Volker Grossmann, 2005. "Institutions and Development: The Interaction Between Trade Regime and Political System," Journal of Economic Growth, Springer, vol. 10(3), pages 231-272, 09.
  13. De Simone, Gianfranco, 2013. "Render unto primary the things which are primary's: Inherited and fresh learning divides in Italian lower secondary education," Economics of Education Review, Elsevier, vol. 35(C), pages 12-23.
  14. Katsuya Takii & Ryuichi Tanaka, 2006. "Does the Diversity of Human Capital Increase GDP? A Comparison of Education Systems," Discussion Papers in Economics and Business 06-19, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  15. 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.
  16. Matilde Bombardini & Giovanni Gallipoli & German Pupato, 2012. "Skill Dispersion and Trade Flows," American Economic Review, American Economic Association, vol. 102(5), pages 2327-48, August.
  17. Findlay, Ronald & Kierzkowski, Henryk, 1983. "International Trade and Human Capital: A Simple General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 91(6), pages 957-78, December.
  18. Gene M. Grossman, 2004. "The Distribution of Talent and the Pattern and Consequences of International Trade," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 209-239, February.
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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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