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Signalling equilibrium, Intergenerational mobility and long-run growth

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  • Lakshmi K. Raut

    (University of Hawaii-Manoa)

Abstract

This paper provides a signalling model of endogenous growth in which innate talents and education levels of workers drive the basic scientific knowledge and adoptive knowledge accumulation processes. Whether talented individuals get properly educated and are employed in the appropriate technical sectors are determined by the perfectly competitive employers' beliefs about the relationship between talent and education level. Innate talent of a worker is a private knowledge and it is distributed independent of the individual's family backgrounds; education level of workers act as a signalling device for talents as well as it improves their productivities; the family backgrounds and talents of workers determine their optimal education level, which in turn determines the degree of social mobility. The model generates multiple balanced growth paths which differ in the degree of intergenerational social mobility and growth rate. The paper analyzes policies that generate equilibrium paths with higher social mobility, growth in income and Pareto superior allocations.

Suggested Citation

  • Lakshmi K. Raut, 1996. "Signalling equilibrium, Intergenerational mobility and long-run growth," GE, Growth, Math methods 9603002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpge:9603002
    Note: Type of Document - Postscript; prepared on IBM PC - PC-TEX; to print on PostScript; pages: 19 ; figures: included. We never published this piece and now we would like to reduce our mailing and xerox cost by posting it.
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    References listed on IDEAS

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    1. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition, pages 257-298, National Bureau of Economic Research, Inc.
    2. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-867, June.
    3. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-1189, December.
    4. Bowles, Samuel, 1972. "Schooling and Inequality from Generation to Generation," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 219-251, Part II, .
    5. Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-429, June.
    6. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

    1. Sebastián Galiani, 2013. "Social Mobility: What is it and Why Does it Matter?," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 59, pages 167-229, January-D.
    2. Lykke E. Andersen & Alice Brooks & Alejandro F. Mercado, 2004. "Macroeconomic Policies to Increase Social Mobility and Growth in Bolivia," Development Research Working Paper Series 02/2004, Institute for Advanced Development Studies.
    3. Andersen, Lykke E., 2001. "Low Social Mobility in Bolivia: Causes and Consequences for Development," Kiel Working Papers 1046, Kiel Institute for the World Economy (IfW Kiel).
    4. Lykke Andersen, 2001. "Social Mobility in Latin America: Links with Adolescent Schooling," Research Department Publications 3130, Inter-American Development Bank, Research Department.
    5. Otter, Thomas, 2007. "Does Inequality Harm Income Mobility and Growth? An Assessment of the Growth Impact of Income and Education Inequality in Paraguay 1992: 2002," Proceedings of the German Development Economics Conference, Göttingen 2007 25, Verein für Socialpolitik, Research Committee Development Economics.
    6. Thomas Otter, 2009. "Does Inequality Harm Income Mobility and Growth? An Assessment of the Growth Impact of Income and Education Inequality in Paraguay 1992-2002," Ibero America Institute for Econ. Research (IAI) Discussion Papers 188, Ibero-America Institute for Economic Research.
    7. Andersen, Lykke Eg, 2000. "Social Mobility in Latin America," Documentos de trabajo 3/2000, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.

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    More about this item

    Keywords

    Signaling Equilibrium; Social Mobility; Endogenous Growth;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • D3 - Microeconomics - - Distribution
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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