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School Attendance and Skill Premiums in France and the US: A General Equilibrium Approach

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  • David de la Croix
  • Frédéric Docquier

Abstract

We evaluate the effect of education policies, welfare programmes, technology and demographics on the differential evolution of the skill premium and on the rise in education investment in France and the US. We use a computable general equilibrium model with overlapping generations of individuals and endogenous education decisions. Human capital has two substitutable components - experience and education - both of which evolve endogenously over time. We use an original method to calibrate our model properly on the post-war period and run counterfactual experiments to assess the relative contributions of the different exogenous variables. The expansionary French education policy boosted the supply of skills and kept the skill premium low. In contrast, increasing education costs in the US contributed to increased wage differentials by reducing the rise in educational attainment. Skill-biased technical change is key to understanding rising school attendance and skill premiums in the US. It has a less important role and appears to be delayed in France. Copyright 2007 Institute for Fiscal Studies.

Suggested Citation

  • David de la Croix & Frédéric Docquier, 2007. "School Attendance and Skill Premiums in France and the US: A General Equilibrium Approach," Fiscal Studies, Institute for Fiscal Studies, vol. 28(4), pages 383-416, December.
  • Handle: RePEc:ifs:fistud:v:28:y:2007:i:4:p:383-416
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    Cited by:

    1. Luca Marchiori & I-Ling Shen & Frédéric Docquier, 2013. "Brain Drain In Globalization: A General Equilibrium Analysis From The Sending Countries' Perspective," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1582-1602, April.
    2. Luca, MARCHIORI, 2007. "ChinAfrica : How can the Sino-African cooperation be beneficial for Africa ?," Discussion Papers (ECON - Département des Sciences Economiques) 2007014, Université catholique de Louvain, Département des Sciences Economiques.
    3. de la Croix, David & Docquier, Frederic & Liegeois, Philippe, 2007. "Income growth in the 21st century: Forecasts with an overlapping generations model," International Journal of Forecasting, Elsevier, vol. 23(4), pages 621-635.
    4. Marchiori, Luca, 2011. "Demographic trends and international capital flows in an integrated world," Economic Modelling, Elsevier, vol. 28(5), pages 2100-2120, September.
    5. Wasmer, Etienne, 1998. "Labor Supply Dynamics, Unemployment and Human Capital Investments," Seminar Papers 651, Stockholm University, Institute for International Economic Studies.
    6. Xavier Chojnicki & Lionel Ragot, 2011. "Impacts of Immigration on Aging Welfare-State An Applied General Equilibrium Model for France," Working Papers 2011-13, CEPII research center.
    7. Cho, Sang-Wook (Stanley) & Díaz, Julián P., 2013. "Trade integration and the skill premium: Evidence from a transition economy," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 601-620.
    8. Uli KLEINWECHTER, "undated". "A Utility Function Based Approach Towards the Modeling of Migration in Village Equilibrium Models," EcoMod2010 259600092, EcoMod.
    9. Étienne Wasmer, 2004. "Labor supply dynamics, unemployment and experience in the labor market," Recherches économiques de Louvain, De Boeck Université, vol. 70(4), pages 461-482.
    10. Luca Marchiori & Olivier Pierrard, 2012. "LOLA 2.0: Luxembourg OverLapping generation model for policy Analysis," BCL working papers 76, Central Bank of Luxembourg.
    11. Olivier Pierrard & Henri R. Sneessens, 2009. "LOLA 1.0: Luxembourg overLapping generation model for policy analysis," BCL working papers 36, Central Bank of Luxembourg.
    12. Pensieroso, Luca & Sommacal, Alessandro, 2014. "Economic development and family structure: From pater familias to the nuclear family," European Economic Review, Elsevier, vol. 71(C), pages 80-100.
    13. Chojnicki, Xavier & Docquier, Frédéric & Ragot, Lionel, 2005. "Should the U.S. Have Locked the Heaven's Door? Reassessing the Benefits of the Postwar Immigration," IZA Discussion Papers 1676, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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