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Standards, Inequality in Education and Efficiency

Sevket Alper Koc () and Hakki Cenk Erkin
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Sevket Alper Koc: Kocaeli University, Department of Economics
Hakki Cenk Erkin: Kocaeli University, Department of Economics

World Journal of Applied Economics, 2015, vol. 1, issue 1, 21-43

Abstract: We develop a model of educational standards that includes inequality in educational opportunities. Our model shows that policymakers setting an output maximizing standard need to consider structural factors such as inequality of income and opportunity, skill mismatch in the economy, profit and wage shares and labor market imperfections. High standards are not optimal under severe educational inequality; they lead to lower output when many cannot access quality education. Optimal standard rises along with increasing opportunities for poor students. Targeted subsidies enhance both distributional and efficiency-related objectives. Other effective policies to extend skilled labor and to improve poor workers income are remedying information problems between employers and workers and distributing more of output gains toward labor.

Keywords: Education and Inequality; Government Policy; Human Capital; skills; Occupational Choice; Labor Productivity (search for similar items in EconPapers)
JEL-codes: I24 I28 J24 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.22440/EconWorld.J.2015.1.1.SK.0004

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Handle: RePEc:ana:journl:v:1:y:2015:i:1:p:21-43