On human capital formation with exit options: comment and new results
Katz and Rapoport (2005) conclude that with linear production technology and the possibility of unilateral migration, region-specific shocks may increase the average level of education. Previously, Poutvaara (2000) derived a corresponding result with Cobb-Douglas technology and migration which may go in both directions. This paper extends the analysis to all strictly concave production functions, and shows how the effect of the region-specific shocks depends on the shape of the production function. Also, the paper establishes when the presence of exit option increases and when it reduces investment in education. The results are robust to allowing for migration costs.
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Volume (Year): 21 (2008)
Issue (Month): 3 (July)
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- Panu Poutvaara, 2000.
"Education, Mobility of Labour and Tax Competition,"
International Tax and Public Finance,
Springer, vol. 7(6), pages 699-719, December.
- Eliakim Katz & Hillel Rapoport, 2005. "On human capital formation with exit options," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(2), pages 267-274, 06.
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