Lobbying for Education in a Two-Sector Model

Debora Di Gioacchino and Paola Profeta

Economics and Politics, 2014, vol. 26, issue 2, 212-236

Abstract: type="main" xml:id="ecpo12031-abs-0001">

Firms specialized in two different sectors lobby to induce the government to subsidize the type of education complementary to their production. Lobbying is endogenous. We show that, if lobbying is not costly, both sectors will lobby in equilibrium and the education policy will induce the same skill composition that would be chosen by the social planner. However, if lobbying is costly and there is sufficient asymmetry between the sectors, only one sector will exert pressure on the policy-maker in the attempt to direct resources toward the type of education required by its production. Which sector will engage in lobbying depends on relative size, productivity, and price. We also provide some preliminary evidence that lobbying activity by firms may influence the production of skills needed by those firms.

Date: 2014
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Related works:
Working Paper: Lobbying for Education in a Two-sector Model (2011)
Working Paper: Lobbying for Education in a Two-sector Model (2010)
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