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A Model of Educational Investments, Social Concerns and Inequality

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Listed:
  • Andrea Gallice
  • Edoardo Grillo

Abstract

We consider a model in which educational investments entail productivity gains, sig- naling power, and social status. The latter depends on the agent's relative achievement in one of three dimensions: (i) innate skills, (ii) level of schooling, and (iii) income. We study the three scenarios separately and characterize the conditions under which social concerns increase or decrease educational and income inequality. Inequality increases (decreases) if education lowers the stigma suffered by low skilled workers less (more) than it boosts the prestige enjoyed by high skilled workers. We discuss the expected results of some policies in light of these findings.

Suggested Citation

  • Andrea Gallice & Edoardo Grillo, 2015. "A Model of Educational Investments, Social Concerns and Inequality," Carlo Alberto Notebooks 405, Collegio Carlo Alberto, revised 2018.
  • Handle: RePEc:cca:wpaper:405
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    References listed on IDEAS

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    More about this item

    Keywords

    education; signaling; social status; inequality.;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D10 - Microeconomics - - Household Behavior - - - General
    • I20 - Health, Education, and Welfare - - Education - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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