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Public Education, Occupational Choice, and the Growth-Inequality Relationship

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  • Lloyd-Ellis, Huw

Abstract

This article develops a dynamic general equilibrium model in which the occupational structure of the economy drives a wedge between the social and private returns to schooling for some workers. I study the impacts of alternative allocations of public resources between basic and higher levels of education on enrollments, income distribution, and growth. In particular, I illustrate how the growth-inequality relationship depends on the tension between two forces: (1) the "trickle-down" effects of expenditures on higher education and (2) the positive impacts on secondary enrollments generated by high-quality basic education and reduced parental inequality. Copyright 2000 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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  • Lloyd-Ellis, Huw, 2000. "Public Education, Occupational Choice, and the Growth-Inequality Relationship," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 171-201, February.
    • Handle: RePEc:ier:iecrev:v:41:y:2000:i:1:p:171-201
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    References listed on IDEAS

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    1. George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
    2. Hopenhayn, Hugo A & Prescott, Edward C, 1992. "Stochastic Monotonicity and Stationary Distributions for Dynamic Economies," Econometrica, Econometric Society, vol. 60(6), pages 1387-1406, November.
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    6. Huw Lloyd-Ellis & Dan Bernhardt, 2000. "Enterprise, Inequality and Economic Development," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(1), pages 147-168.
    7. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-298, April.
    8. Alain Mingat & Jee-Peng Tan, 1985. "On Equity in Education Again: An International Comparison," Journal of Human Resources, University of Wisconsin Press, vol. 20(2), pages 298-308.
    9. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    10. Eckstein, Zvi & Zilcha, Itzhak, 1994. "The effects of compulsory schooling on growth, income distribution and welfare," Journal of Public Economics, Elsevier, vol. 54(3), pages 339-359, July.
    11. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
    12. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
    13. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-834, August.
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    15. Boissiere, M & Knight, J B & Sabot, R H, 1985. "Earnings, Schooling, Ability, and Cognitive Skills," American Economic Review, American Economic Association, vol. 75(5), pages 1016-1030, December.
    16. Jimenez, Emmanuel, 1986. "The Public Subsidization of Education and Health in Developing Countries: A Review of Equity and Efficiency," The World Bank Research Observer, World Bank, vol. 1(1), pages 111-129, January.
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    Cited by:

    1. Arcalean, Calin & Schiopu, Ioana, 2010. "Public versus private investment and growth in a hierarchical education system," Journal of Economic Dynamics and Control, Elsevier, vol. 34(4), pages 604-622, April.
    2. Takashi Kamihigashi & John Stachurski, 2011. "Existence, Stability and Computation of Stationary Distributions: An Extension of the Hopenhayn-Prescott Theorem," Discussion Paper Series DP2011-32, Research Institute for Economics & Business Administration, Kobe University.
    3. Romero J. Gabriel, 2012. "Determining Public Provision of Education Services in a Sequential Education Process," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-42, December.
    4. Jiang, Neville & Wang, Ping & Wu, Haibin, 2010. "Ability-heterogeneity, entrepreneurship, and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 34(3), pages 522-541, March.
    5. Zhang, Lei, 2008. "Political economy of income distribution dynamics," Journal of Development Economics, Elsevier, vol. 87(1), pages 119-139, August.
    6. Momota, Akira, 2009. "A population-macroeconomic growth model for currently developing countries," Journal of Economic Dynamics and Control, Elsevier, vol. 33(2), pages 431-453, February.
    7. Roy van der Weide & Branko Milanovic, 2018. "Inequality is Bad for Growth of the Poor (but Not for That of the Rich)," The World Bank Economic Review, World Bank, vol. 32(3), pages 507-530.
    8. John Fender & Ping Wang, 2003. "Educational Policy in a Credit Constrained Economy with Skill Heterogeneity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 939-964, August.
    9. Enzo Valentini, 2024. "Patterns of Intergenerational Educational (Im)Mobility," Economies, MDPI, vol. 12(6), pages 1-13, May.
    10. Concetta Mendolicchio & Dimitri Paolini & Tito Pietra, 2014. "Income Taxes, Subsidies to Education, and Investments in Human Capital," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(1), pages 24-47, February.
    11. Tao Zhu & Xingmin Zhang & Xiaoqian Liu, 2022. "Can University Scientific Research Activities Promote High-Quality Economic Development? Empirical evidence from provincial panel data," Review of Economic Assessment, Anser Press, vol. 1(1), pages 34-50, December.
    12. Marisa Hidalgo-Hidalgo & Iñigo Iturbe-Ormaetxe, 2012. "Should we transfer resources from college to basic education?," Journal of Economics, Springer, vol. 105(1), pages 1-27, January.
    13. Dwayne Benjamin & Loren Brandt & John Giles, 2006. "Inequality and Growth in Rural China: Does Higher Inequality Impede Growth?," Working Papers tecipa-237, University of Toronto, Department of Economics.
    14. Desdoigts, Alain & Moizeau, Fabien, 2001. "Multiple politico-economic regimes, inequality and growth," SFB 373 Discussion Papers 2001,65, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    15. Brotherhood, Luiz & Delalibera, Bruno R., 2020. "Minding the gap between schools and universities," Journal of Economic Dynamics and Control, Elsevier, vol. 120(C).
    16. Ranjan, Priya, 2001. "Dynamic evolution of income distribution and credit-constrained human capital investment in open economies," Journal of International Economics, Elsevier, vol. 55(2), pages 329-358, December.
    17. Marisa Hidalgo-Hidalgo & Iñigo Iturbe-Ormaetxe, 2008. "Should we raise public expenditure on basic education and reduce expenditure at college?," Working Papers 08.11, Universidad Pablo de Olavide, Department of Economics.
    18. Sano, Koichiro & Tomoda, Yasunobu, 2010. "Optimal public education policy in a two sector model," Economic Modelling, Elsevier, vol. 27(5), pages 991-995, September.

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