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Government's high education policy under a dual economy in developing and developed countries

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  • Michel Strawczynski

Abstract

This paper explores the government's role in higher education policy within a dual economy, where skilled workers invest in higher education while unskilled workers do not. The novel question is whether the government should refrain from subsidizing higher education while imposing regulations, supporting a restricted, elitist system. I demonstrate that under an optimal linear income tax, government favors a restricted system. Through simulations, I show that this result also holds under a nonlinear system. Concerning developing countries, their preference for a restricted system is even more pronounced, and if trapped in a low equilibrium, international institutions can provide enhancing social welfare subsidies.

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  • Michel Strawczynski, 2025. "Government's high education policy under a dual economy in developing and developed countries," International Journal of Economic Theory, The International Society for Economic Theory, vol. 21(4), pages 447-472, December.
    • Handle: RePEc:bla:ijethy:v:21:y:2025:i:4:p:447-472
    DOI: 10.1111/ijet.70003
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