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Globalization and human capital formation

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  • Andersson, Frederik
  • Konrad, Kai A.

Abstract

This paper compares education investment in closed and open economies without government and with a benevolent government. Closed economies suffer from a holdup problem of excessive redistribution, and governments use education policy as a second-best tool. Globalization that increases labor mobility reduces governments’ incentives to provide subsidized education and increases private individuals’ incentives for investment in their human capital. Globalization can improve welfare, and even restore full efficiency. Governments’ scope for redistribution – which is a substitute for private income insurance – is reduced, and whether efficiency is restored depends on how private insurance markets react to the change in redistribution policy. -- In dieser Arbeit werden Anreize für private und öffentliche Ausbildungsinvestitionen in geschlossenen und offenen Volkswirtschaften untersucht. In geschlossenen Volkswirtschaften führt zeitkonsistente umverteilende Besteuerung zu einer Form von Staatsversagen in Form von ‚zu viel’ Umverteilung. Regierungen nutzen deshalb öffentliche Ausbildungsinvestitionen als Korrektiv. Globalisierung erhöht die Mobilität der produktiven Individuen. In der Folge bestehen geringere Anreize für die Regierungen, Ausbildung zu subventionieren, und die privaten (von staatlichen Subventionen unabhängigen) Ausbildungsanreize werden gestärkt. Globalisierung kann die Wohlfahrt in den nationalen Volkswirtschaften erhöhen und sogar zu (first – best) Effizienz führen. Der staatliche Handlungsspielraum für Umverteilung wird durch die Globalisierung eingeschränkt. Ob es zu vollständiger (first – best) Effizienz kommt oder nicht, hängt davon ab, wie private Versicherungsmärkte auf die Verringerung staatlicher Umverteilung reagieren.

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Bibliographic Info

Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number FS IV 01-01.

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Date of creation: 2001
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Handle: RePEc:zbw:wzbmpg:fsiv0101

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Keywords: Globalization; commitment; time consistent income taxation; migration; education effort; Globalisierung; Selbstbindung; Zeitkonsistente Besteuerung; Migration; Ausbildungsinvestitionen;

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Citations

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Cited by:
  1. May Elsayyad & Kai A. Konrad, 2010. "Fighting Multiple Tax Havens," CESifo Working Paper Series 3195, CESifo Group Munich.
  2. Andersson, Fredrik & Konrad, Kai A., 2003. "Human capital investment and globalization in extortionary states," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1539-1555, August.
  3. Marceau, Nicolas & Mongrain, Steeve & Wilson, John D., 2010. "Why do most countries set high tax rates on capital?," Journal of International Economics, Elsevier, vol. 80(2), pages 249-259, March.
  4. Alexander Haupt & Eckhard Janeba, 2003. "Bildung im Zeitalter mobilen Humankapitals," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(2), pages 173-187.
  5. Poutvaara, Panu, 2003. "Investment in Education and Redistributive Taxation without Precommitment," Munich Reprints in Economics 19299, University of Munich, Department of Economics.
  6. Claudio Thum & Silke Uebelmesser, 2001. "Mobility and the Role of Education as a Commitment Device," CESifo Working Paper Series 450, CESifo Group Munich.
  7. Alexander Haupt & Eckhard Janeba, 2004. "Education, Redistribution, and the Threat of Brain Drain," NBER Working Papers 10618, National Bureau of Economic Research, Inc.
  8. Dan Anderberg & Carlo Perroni, . "Renegotiation of Social Contracts by Majority Rule," EPRU Working Paper Series 00-15, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  9. van Praag, Bernard M. S. & Ferrer-i-Carbonell, Ada, 2001. "Age-Differentiated QALY Losses," IZA Discussion Papers 314, Institute for the Study of Labor (IZA).
  10. Oliver Busch, 2007. "When Have All the Graduates Gone?: Internal Cross-State Migration of Graduates in Germany 1984-2004," SOEPpapers on Multidisciplinary Panel Data Research 26, DIW Berlin, The German Socio-Economic Panel (SOEP).

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