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On Some Undesirable Consequences of Education and Growth


  • Pierre Cahuc
  • Fabien Postel-Vinay


This paper presents a simple endogenous growth model with human capital accumulation in which competition in the educational system can lead to over-education, with rapid output growth and a simultaneous decline in welfare along a balance growth path in some circumstances. This illustrates the idea that satisfaction is not straightforwardly related to economic prosperity. Specifically, our model suggests that more elitist societies and societies with higher wage differentials may do better in terms of growth but worse in terms of welfare.

Suggested Citation

  • Pierre Cahuc & Fabien Postel-Vinay, 2000. "On Some Undesirable Consequences of Education and Growth," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 156(3), pages 445-445, September.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200009)156:3_445:osucoe_2.0.tx_2-5

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    References listed on IDEAS

    1. Harsanyi, John C, 1995. "Games with Incomplete Information," American Economic Review, American Economic Association, vol. 85(3), pages 291-303, June.
    2. Güth, W. & Kliemt, H., 1993. "Competition or Co-Operation," Discussion Paper 1993-39, Tilburg University, Center for Economic Research.
    3. Geoffrey Brennan & Werner Güth & Hartmut Kliemt, 2003. "Trust in the Shadow of the Courts," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 159(1), pages 1-16, March.
    4. Selten, Reinhard, 1983. "Evolutionary stability in extensive two-person games," Mathematical Social Sciences, Elsevier, vol. 5(3), pages 269-363, September.
    5. Werner Güth & Hartmut Kliemt, 1994. "Competition Or Co-Operation: On The Evolutionary Economics Of Trust, Exploitation And Moral Attitudes," Metroeconomica, Wiley Blackwell, vol. 45(2), pages 155-187, June.
    6. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 453-486, April.
    7. Frank, Robert H, 1987. "If Homo Economicus Could Choose His Own Utility Function, Would He Want One with a Conscience?," American Economic Review, American Economic Association, vol. 77(4), pages 593-604, September.
    8. Ockenfels, Axel & Selten, Reinhard, 2000. "An Experiment on the Hypothesis of Involuntary Truth-Signalling in Bargaining," Games and Economic Behavior, Elsevier, vol. 33(1), pages 90-116, October.
    9. repec:cup:apsrev:v:95:y:2001:i:01:p:131-144_00 is not listed on IDEAS
    10. Bohnet, Iris & Frey, Bruno S. & Huck, Steffen, 2001. "More Order with Less Law: On Contract Enforcement, Trust, and Crowding," American Political Science Review, Cambridge University Press, vol. 95(01), pages 131-144, March.
    11. John C Harsanyi, 1997. "Games with incomplete information played by "bayesian" players," Levine's Working Paper Archive 1175, David K. Levine.
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    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I20 - Health, Education, and Welfare - - Education - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models


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