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How Long Should We Stay In Education If Ability Is Screened?

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  • Takashi Oshio
  • Masaya Yasuoka

Abstract

We examine how ability‐screening affects demand for education and the shape of an optimal education system. Explicitly incorporating gradual screening by education into the model, we illustrate how individuals of different abilities decide to stay in education or drop out. Gradual screening induces low‐ability individuals to receive over‐education, reducing the net benefit obtained from education by society as a whole, as well as such individuals. A mixed education system, in which public education is provided before private education, is superior to a wholly private system, in terms of both efficiency and equity, because it reduces the over‐education of low‐ability individuals.

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  • Takashi Oshio & Masaya Yasuoka, 2009. "How Long Should We Stay In Education If Ability Is Screened?," Metroeconomica, Wiley Blackwell, vol. 60(3), pages 409-431, July.
    • Handle: RePEc:bla:metroe:v:60:y:2009:i:3:p:409-431
    DOI: 10.1111/j.1467-999X.2008.00350.x
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    References listed on IDEAS

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    Cited by:

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