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Optimal higher education enrollment and productivity externalities in a two-sector model

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  • Meier, Volker
  • Schiopu, Ioana

Abstract

We analyze the optimal share of the skilled workforce over the course of development with two sectors using skilled and unskilled labor respectively, and technological spillovers from higher education enrollment. Productivity in each sector depends on the average quality of workers and the size of the workforce. When skill-biased technological change prevails, this structure of externalities coupled with the endogenous ability sorting of workers may well produce a pattern of overenrollment in early and late stages of development and underenrollment in between. Our normative analysis is followed by a positive analysis exploring how policy would differ under alternative political objectives.

Suggested Citation

  • Meier, Volker & Schiopu, Ioana, 2015. "Optimal higher education enrollment and productivity externalities in a two-sector model," Journal of Public Economics, Elsevier, vol. 121(C), pages 1-13.
    • Handle: RePEc:eee:pubeco:v:121:y:2015:i:c:p:1-13
    DOI: 10.1016/j.jpubeco.2014.11.003
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    Cited by:

    1. Adhitya, Dhian & Samudro, Bhimo Rizky, 2019. "The Role of Cognitive and Non-Cognitive Skills on Labour Market Outcomes in Indonesia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(1), pages 3-16.
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    3. Volker Meier & Ioana Cosmina Schiopu, 2015. "Why Academic Quality in Higher Education Declines," CESifo Working Paper Series 5480, CESifo.

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    Keywords

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    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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