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Educational Mobility: The Effect on Efficiency and Distribution
Author(s) -
Eeckhout Jan
Publication year - 1999
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/1468-0335.00173
Subject(s) - economics , redistribution (election) , inequality , pareto principle , path (computing) , social mobility , production (economics) , polarization (electrochemistry) , distribution (mathematics) , labour economics , microeconomics , operations management , computer science , mathematics , mathematical analysis , social science , chemistry , sociology , politics , political science , law , programming language
Within a microeconomic framework, educational mobility and inequality are studied. The labour market is characterized by imperfectly substitutable skills and production occurs in monopolistically competitive industries that exhibit local non‐convexities. Education allows for upward mobility. It is shown that multiple mobility equilibria exist in the stage game. In addition, for some skill levels, Pareto improvements are possible through adjustment policies. In the repeated game, a sufficient condition is derived for polarization, in which case the economy exhibits a low growth path. A higher growth path can be achieved through intertemporal redistribution. Without adjustment, inequality will increase continuously.