Search equilibrium and social and private returns to education

Christian Holzner and Andrey Launov ()

European Economic Review, 2010, vol. 54, issue 1, 39-59

Abstract: Social and private returns to education are computed using the structural estimates of an extended Burdett-Mortensen search equilibrium model. The extension includes different skill groups linked via a production function with variable degree of homogeneity, allowing thereby for a unimodal earnings density with a decreasing right tail. We find that the decreasing unemployment risk for higher skill groups and the absence of tuition fees in Germany increase private returns and lead to a too large share of high skilled individuals in the workforce, which is suboptimal from the social point of view.

Keywords: Social; and; private; returns; to; education; Search; frictions (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:54:y:2010:i:1:p:39-59

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