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Search equilibrium and social and private returns to education

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  • Holzner, Christian
  • Launov, Andrey

Abstract

Social and private returns to education are computed using the structural estimates of an extended Burdett-Mortensen search equilibrium model. The extension includes different skill groups linked via a production function with variable degree of homogeneity, allowing thereby for a unimodal earnings density with a decreasing right tail. We find that the decreasing unemployment risk for higher skill groups and the absence of tuition fees in Germany increase private returns and lead to a too large share of high skilled individuals in the workforce, which is suboptimal from the social point of view.

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  • Holzner, Christian & Launov, Andrey, 2010. "Search equilibrium and social and private returns to education," European Economic Review, Elsevier, vol. 54(1), pages 39-59, January.
    • Handle: RePEc:eee:eecrev:v:54:y:2010:i:1:p:39-59
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    Cited by:

    1. Andrey Launov & Klaus Wälde, 2013. "Estimating Incentive And Welfare Effects Of Nonstationary Unemployment Benefits," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(4), pages 1159-1198, November.
    2. Stijepic, Damir, 2013. "Successive Technical Change and the Demand for Skill," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79870, Verein für Socialpolitik / German Economic Association.
    3. Kedir, Abbi & Kyrizi, Andri & Martínez Mora, Francisco,, 2012. "Signalling and Productivity Effects of Overeducation: Is It Really a Waste of Resources?," Working Papers 2072/203170, Universitat Rovira i Virgili, Department of Economics.
    4. Heitor, Manuel & Horta, Hugo & Leocádio, Miguel, 2016. "Enlarging the social basis of higher education: Lessons learned from extending a social support system with a risk-sharing loan scheme in Portugal," Technological Forecasting and Social Change, Elsevier, vol. 113(PB), pages 319-327.
    5. Mendolicchio Concetta & Paolini Dimitri & Pietra Tito, 2012. "Asymmetric Information And Overeducation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-29, October.
    6. Damir Stijepic, 2017. "Globalization, Worker Mobility and Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 25(1), pages 108-131, February.
    7. Gürtzgen, Nicole & Blömer, Maximilian & Pohlan, Laura & Stichnoth, Holger & van den Berg, Gerard, 2016. "Estimating an Equilibrium Job Search Model for the German Labour Market," VfS Annual Conference 2016 (Augsburg): Demographic Change 145950, Verein für Socialpolitik / German Economic Association.
    8. Christian Holzner & Mario Larch, 2022. "Convex vacancy creation costs and on‐the‐job search in a global economy," The World Economy, Wiley Blackwell, vol. 45(1), pages 136-175, January.
    9. Blömer, Maximilian J. & Guertzgen, Nicole & Pohlan, Laura & Stichnoth, Holger & van den Berg, Gerard J., 2018. "Unemployment effects of the German minimum wage in an equilibrium job search model," ZEW Discussion Papers 18-032, ZEW - Leibniz Centre for European Economic Research.
    10. Berens, Johannes & Henao, Leandro & Schneider, Kerstin, 2024. "Tuition fees and academic (in)activity in higher education: How did students adjust to the abolition of tuition fees in Germany?," Ruhr Economic Papers 1074, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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