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Quality and quantity of education in the process of development

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  • Hidalgo-Cabrillana, Ana
  • Castelló-Climent, Amparo

Abstract

We develop a theory of human capital investment to study through which channels students react to school quality when deciding about their investment in higher education (secondary and above) and how educational quality affects the growth process of an economy. In a dynamic general equilibrium closed economy. higher education requires an extra investment of private resources. whereas primary education is mandatory. The theory states that human capital accumulation raises with quality through two main effects: larger quality increases the number ofpeople with higher education (extensive channel). and it increases the volume of investment in higher schooling per individual (intensive channel). That is. even with perfect capital markets. relatively low quality could discourage opportunities to pursue education beyond primary school. since low quality decreases the returns from higher education. As a result, agents could get stuck at primary levels. The intensive channel establishes that once individuals decide to participate in higher schooling. the larger the quality of educational system. the larger the investment made by each agent. Educational quality may allow for different steps of development and that depending on quality the economy may follow different paths, Using cross-country data, empirical evidence shows that the proposed channels seem to be quantitatively important and that the effect of quality and quantity of education on growth depends on the stage of development.

Suggested Citation

  • Hidalgo-Cabrillana, Ana & Castelló-Climent, Amparo, 2010. "Quality and quantity of education in the process of development," UC3M Working papers. Economics we1020, Universidad Carlos III de Madrid. Departamento de Economía.
  • Handle: RePEc:cte:werepe:we1020
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    Cited by:

    1. Md. Rabiul Islam & James B. Ang & Jakob B. Madsen, 2014. "Quality-Adjusted Human Capital And Productivity Growth," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 757-777, April.
    2. Sonja Avlijas, 2016. "Vicious and virtuous cycles of female labour force participation in post-socialist Eastern Europe," LEQS – LSE 'Europe in Question' Discussion Paper Series 119, European Institute, LSE.
    3. Boucekkine, R. & Martínez, B. & Ruiz-Tamarit, J.R., 2013. "Growth vs. level effect of population change on economic development: An inspection into human-capital-related mechanisms," Journal of Mathematical Economics, Elsevier, vol. 49(4), pages 312-334.

    More about this item

    Keywords

    Quality of education;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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