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Signalling equilibrium, Intergenerational mobility and long-run growth

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Author Info

  • 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.

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Bibliographic Info

Paper provided by EconWPA in its series GE, Growth, Math methods with number 9603002.

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Length: 19 pages
Date of creation: 19 Mar 1996
Date of revision:
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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Web page: http://128.118.178.162

Related research

Keywords: Signaling Equilibrium; Social Mobility; Endogenous Growth;

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Cited by:
  1. Lykke E. Andersen, 2001. "Low Social Mobility in Bolivia: Causes and Consequences for Development," Kiel Working Papers 1046, Kiel Institute for the World Economy.
  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. Lykke Andersen, 2001. "Social Mobility in Latin America: Links with Adolescent Schooling," Research Department Publications 3130, Inter-American Development Bank, Research Department.
  4. 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.
  5. Sebastian Galiani, 2010. "Social Mobility: What is it and why does it matter?," CEDLAS, Working Papers 0101, CEDLAS, Universidad Nacional de La Plata.
  6. 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.

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