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Education, Growth and Income Inequality

Author

Listed:
  • Coen N. Teulings

    (SEO, University of Amsterdam)

  • Thijs van Rens

    (Department of Economics, Princeton University)

Abstract
Estimates of the effect of education on GDP (the social return) have been hard to reconcile with micro evidence on the private return to schooling. We present a simple explanation combining two ideas: imperfect substitution and endogenous skill-biased technological progress and use cross-country panel data on inequality and GDP to test these ideas. A one-year increase in the level of education reduces the private return by 2 percentage points, consistent with Katz-Murphy's (1992) elasticity of substitution. We find no evidence for reversal of this initial effect as in Acemoglu (2002). In the short run, the social return equals the private return. This discussion paper has resulted in a publication in the Review of Economics and Statistics , 2008, 90(1), 89-104.

Suggested Citation

  • Coen N. Teulings & Thijs van Rens, 2002. "Education, Growth and Income Inequality," Tinbergen Institute Discussion Papers 02-001/3, Tinbergen Institute, revised 05 Mar 2003.
  • Handle: RePEc:tin:wpaper:20020001
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    More about this item

    Keywords

    education; inequality; growth;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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