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Diverging patterns of education premium and school attendance in France and the US : a Walrasian view

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  • David, de la Croix

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and UNIVERSITE CATHOLIQUE DE LOUVAIN ,Center for Operations Research and Econometrics (CORE) and FNRS Belgium)

  • Frédéric Docquier

    (CADRE, Univ. de Lille 2 and IZA Bonn)

Abstract

We evaluate the effect of technology, demographics and policy on the differential evolution of the skill premium and on the rise in education investment in France and the USA. We use a computable general equilibrium model with overlapping generations of individuals, and endogenous education decisions. Human capital is made of two substitutable components, experience and education, both of them evolve endogenously over time. We calibrate this model on the post-war period and run counterfactual experiments to assess the effect of the different exogenous variables. French expansionary education policy boosted the supply of skills and kept the skill premium low. On the contrary, increasing education costs in the US contributed to increase wage differentials by reducing the supply of skills. The skill biased technical shock is key to understand rising school attendance and appears delayed in France.

Suggested Citation

  • David, de la Croix & Frédéric Docquier, 2003. "Diverging patterns of education premium and school attendance in France and the US : a Walrasian view," LIDAM Discussion Papers IRES 2003010, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2003010
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    File URL: http://sites.uclouvain.be/econ/DP/IRES/2003-10.pdf
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    1. de la Croix, David & Docquier, Frederic & Liegeois, Philippe, 2007. "Income growth in the 21st century: Forecasts with an overlapping generations model," International Journal of Forecasting, Elsevier, vol. 23(4), pages 621-635.
    2. Wasmer, Etienne, 1998. "Labor Supply Dynamics, Unemployment and Human Capital Investments," Seminar Papers 651, Stockholm University, Institute for International Economic Studies.
    3. Étienne Wasmer, 2004. "Labor supply dynamics, unemployment and experience in the labor market," Recherches économiques de Louvain, De Boeck Université, vol. 70(4), pages 461-482.
    4. repec:spo:wpecon:info:hdl:2441/8943 is not listed on IDEAS
    5. Etienne Wasmer, 2004. "Labour Supply Dynamics, Unemployment and Human Capital Investments," SciencePo Working papers hal-01019976, HAL.
    6. repec:hal:spmain:info:hdl:2441/8943 is not listed on IDEAS
    7. Luca, MARCHIORI, 2007. "ChinAfrica : How can the Sino-African cooperation be beneficial for Africa ?," Discussion Papers (ECON - Département des Sciences Economiques) 2007014, Université catholique de Louvain, Département des Sciences Economiques.
    8. repec:hal:wpspec:info:hdl:2441/8943 is not listed on IDEAS
    9. Chojnicki, Xavier & Docquier, Frédéric & Ragot, Lionel, 2005. "Should the U.S. Have Locked the Heaven's Door? Reassessing the Benefits of the Postwar Immigration," IZA Discussion Papers 1676, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Human capital; Education; Skill premium;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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