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Unequal Opportunities and Human Capital Formation

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  • Daniel Mejía

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  • Marc St-Pierre

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Abstract

This paper develops a tractable, heterogeneous agents general equilibrium model where individuals have different endowments of the factors that complement the schooling process. The paper explores the relationship between inequality of opportunities, inequality of outcomes, and aggregate efficiency in human capital formation. Using numerical solutions we study how the endogenous variables of the model respond to two different interventions in the distribution of opportunities: a meanpreserving spread and a change in the support. The results suggest that a higher degree of inequality of opportunities is associated with lower average level of human capital, a lower fraction of individuals investing in human capital, higher inequality in the distribution of human capital, and higher wage inequality. In particular, the model does not predict a trade-off between aggregate efficiency in human capital formation (as measured by the average level of human capital in the economy) and equality of opportunity.

Suggested Citation

  • Daniel Mejía & Marc St-Pierre, 2006. "Unequal Opportunities and Human Capital Formation," Borradores de Economia 415, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:415
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    Cited by:

    1. Tansel, Aysit, 2011. "Intergenerational educational mobility in Turkey," MPRA Paper 68435, University Library of Munich, Germany.
    2. Carolina Arteaga Cabrales, 2011. "Human Capital Externalities and Growth," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 29(66), pages 12-47, December.
    3. Marrero, Gustavo A. & Rodríguez, Juan G., 2013. "Inequality of opportunity and growth," Journal of Development Economics, Elsevier, vol. 104(C), pages 107-122.
    4. Murat G. Kırdar & Meltem Dayıoğlu & İsmet Koç, 2016. "Does Longer Compulsory Education Equalize Schooling by Gender and Rural/Urban Residence?," World Bank Economic Review, World Bank Group, vol. 30(3), pages 549-579.
    5. Helmuth Cremer & Philippe Donder & Pierre Pestieau, 2010. "Education and social mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, pages 357-377.
    6. Gustavo A. Marrero & Juan G. Rodriguez, 2014. "Inequality and development: the role of opportunities and free-will," Working Papers 327, ECINEQ, Society for the Study of Economic Inequality.
    7. K?rdar,Murat G. & Day?o?lu,Meltem & Koç,?smet, 2015. "Does longer compulsory education equalize schooling by gender and rural/urban residence ?," Policy Research Working Paper Series 7377, The World Bank.
    8. Guido Baldi, 2013. "Physical And Human Capital Accumulation And The Evolution Of Income And Inequality," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(3), pages 57-83, September.
    9. Daniel Suryadarma & Wenefrida Widyanti & Asep Suryahadi & Sudarno Sumarto, 2006. "From Access to Income : Regional and Ethnic Inequality in Indonesia," Development Economics Working Papers 22547, East Asian Bureau of Economic Research.
    10. Oded, Galor, 2011. "Inequality, Human Capital Formation, and the Process of Development," Handbook of the Economics of Education, Elsevier.
    11. Zakharenko, Roman, 2012. "Human capital acquisition and international migration in a model of educational market," Regional Science and Urban Economics, Elsevier, vol. 42(5), pages 808-816.
    12. Konstantinos Angelopoulos & Andrea Benecchi & Jim Malley, 2017. "Can Subsidising Job-Related Training Reduce Inequality?," CESifo Working Paper Series 6605, CESifo Group Munich.
    13. Andrés Ham, 2010. "The Effect of Conditional Cash Transfers on Educational Opportunities - Experimental Evidence from Latin America," CEDLAS, Working Papers 0109, CEDLAS, Universidad Nacional de La Plata.
    14. Marcelo Arbex & Enlinson Mattos, 2017. "Optimal Paternalistic Health and Human Capital Policies," Working Papers 1709, University of Windsor, Department of Economics.
    15. Yang Song & Guangsu Zhou, 2017. "Inequality of opportunity and household education expenditures: Evidence from panel data in China," Working Papers 439, ECINEQ, Society for the Study of Economic Inequality.
    16. Oded Galor, 2009. "Inequality and Economic Development: An Overview," Working Papers 2009-3, Brown University, Department of Economics.

    More about this item

    Keywords

    Human Capital; Inequality; Equity-Efficiency Trade-off. Classification JEL: J24; J31; O15; D33.;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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