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Growth and inequality under different hierarchical education regimes

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  • Graziella Magalhaes
  • David Turchick

Abstract

We study the impacts of different educational regimes on growth and income inequality using a twostage human capital model with heterogeneous agents that takes the hierarchical nature of education into account. The differentiation of educational stages sheds new light on the impacts of human capital accumulation on growth and inequality. Both at the basic (elementary and secondary) and the advanced (higher) educational stages, the school system may be either public or private. Our analysis shows that the educational regime with the highest growth rate has private basic education. The completely public (private) regime is the one in which inequality vanishes the fastest (slowest), albeit leading to the lowest (highest) growth. If the government is to fund only one educational stage, such a decision will hinge on elasticities of the human capital production function and on the interest rate.

Suggested Citation

  • Graziella Magalhaes & David Turchick, 2020. "Growth and inequality under different hierarchical education regimes," Working Papers, Department of Economics 2020_07, University of São Paulo (FEA-USP), revised 25 Jun 2020.
    • Handle: RePEc:spa:wpaper:2020wpecon7
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    References listed on IDEAS

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    More about this item

    Keywords

    Human capital; growth; inequality; educational regime; hierarchical education;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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