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Human Capital and Inequality Dynamics: The Role of Education Technology


The paper offers a unified way to examine several puzzles on inequality dynamics. It focuses on differences in the education technology and their effects on income distributions. Our overlapping generations economy has the following features: (1) consumers are heterogenous with respect to ability and parental human capital; and (2) intergenerational transfers take place via parental direct investment in education and, public education financed by taxes (possibly, with a level determined by majority voting). We explore several variations in the production of human capital, some attributed to 'home-education' and others related to 'public-education', and indicate how various changes in education technologies affect the intragenerational income inequality along the equilibrium path. Copyright (c) The London School of Economics and Political Science 2008.

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Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 76 (2009)
Issue (Month): 304 (October)
Pages: 760-778

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Handle: RePEc:bla:econom:v:76:y:2009:i:304:p:760-778
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  1. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
  2. Jong-Wha Lee & Robert J. Barro, 1997. "Schooling Quality in a Cross Section of Countries," NBER Working Papers 6198, National Bureau of Economic Research, Inc.
  3. Wößmann, Ludger, 2005. "Educational production in East Asia: The impact of family background and schooling policies on student performance," Munich Reprints in Economics 19657, University of Munich, Department of Economics.
  4. Joseph Francois & Hugo Rojas-Romagosa, 2007. "The Construction and Interpretation of Combined Cross-Section and Time-Series Inequality Datasets," IIDE Discussion Papers 20070805, Institue for International and Development Economics.
  5. William G. Gale & John Karl Scholz, 1991. "Intergenerational Transfers and the Accumulation of Wealth," UCLA Economics Working Papers 624, UCLA Department of Economics.
  6. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
  7. Diego Restuccia & Carlos Urrutia, 2004. "Intergenerational Persistence of Earnings: The Role of Early and College Education," American Economic Review, American Economic Association, vol. 94(5), pages 1354-1378, December.
  8. Corneo, Giacomo & Jeanne, Olivier, 2001. " Status, the Distribution of Wealth, and Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(2), pages 283-93, June.
  9. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
  10. Hassler, John & Mora, José V Rodríguez & Storesletten, Kjetil & Zilibotti, Fabrizio, 2001. "The Survival of the Welfare State," CEPR Discussion Papers 2905, C.E.P.R. Discussion Papers.
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  13. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
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  17. Cardak, B.A., 1998. "Preferences Over Education Expenditure," Department of Economics - Working Papers Series 623, The University of Melbourne.
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  20. Spilimbergo, Antonio & Londono, Juan Luis & Szekely, Miguel, 1999. "Income distribution, factor endowments, and trade openness," Journal of Development Economics, Elsevier, vol. 59(1), pages 77-101, June.
  21. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  22. Glaeser, Edward L., 1994. "Why does schooling generate economic growth?," Economics Letters, Elsevier, vol. 44(3), pages 333-337.
  23. Chiu, W Henry, 1998. "Income Inequality, Human Capital Accumulation and Economic Performance," Economic Journal, Royal Economic Society, vol. 108(446), pages 44-59, January.
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