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Education Policies, Economic Growth and Wage Inequality


  • Güther Rehme


It is assumed that education simultaneously affects growth and wage inequality. Human capital is taken as lumpy, and education policy has a direct bearing on growth, the number of high-skilled people, and wages. It is shown that the optimal policy for the unskilled is Rawlsian and implies high after-tax returns on capital and high growth, whereas the skilled prefer an anti-Rawlsian policy with less education, lower growth, and more wage inequality. In contrast, a strictly utilitarian government chooses more education and less inequality than the Rawlsian. Thus, the unskilled prefer a more efficient and more equitable outcome than the skilled, and a strictly utilitarian policy may be more egalitarian than a Rawlsian policy.

Suggested Citation

  • Güther Rehme, 2002. "Education Policies, Economic Growth and Wage Inequality," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(4), pages 479-479, December.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(2002/200312)59:4_479:epegaw_2.0.tx_2-u

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    Cited by:

    1. Günther Rehme, 2008. "Roemer, J. E.: Democracy, Education, and Equality," Journal of Economics, Springer, vol. 93(1), pages 95-100, February.
    2. Toshiki Tamai, 2015. "Redistributive taxation, wealth distribution, and economic growth," Journal of Economics, Springer, vol. 115(2), pages 133-152, June.

    More about this item

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • I2 - Health, Education, and Welfare - - Education
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D3 - Microeconomics - - Distribution
    • D6 - Microeconomics - - Welfare Economics


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