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Trade, educational costs, and skill acquisition
Author(s) -
Ma Shihui,
Liu Yue,
Zhou Mohan
Publication year - 2019
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12431
Subject(s) - economics , polarization (electrochemistry) , labour economics , dreyfus model of skill acquisition , distribution (mathematics) , microeconomics , economic growth , mathematical analysis , chemistry , mathematics
A model of heterogeneous agents is built to study the effects of trade and educational costs in shaping individual educational outcomes and their aggregate distribution. In a two‐country model, trade has nonmonotonic impacts on individual education choices and causes education and job polarization for both countries. We use this model to evaluate the effects of reductions in educational costs. A reduction in educational cost has no impact on occupational choice in a closed economy. In the open economy, however, it creates an expanded middle class in the home country, whereas the opposite happens in its trading partner.