Over-education for the rich, under-education for the poor: A search-theoretic microfoundation
Olivier Charlot and
Bruno Decreuse
Labour Economics, 2010, vol. 17, issue 6, 886-896
Abstract:
This paper studies the efficiency of educational choices in a two sector/two schooling level matching model of the labor market where a continuum of heterogenous workers allocates itself between sectors depending on their decision to invest in education. Individuals differ in working ability and schooling cost, the search market is segmented by education, and there is free entry of new firms in each sector. Self-selection in education causes composition effects in the distribution of skills across sectors. This in turn modifies the intensity of job creation, implying the private and social returns to schooling always differ. Provided that ability and schooling cost are not too positively correlated, agents with large schooling costs -- the 'poor' -- underinvest in education, while there is overinvestment among the low schooling cost individuals -- the 'rich'. We also show that education should be more taxed than subsidized when the Hosios condition holds.
Keywords: Ability; Schooling; cost; Heterogeneity; Matching; frictions; Efficiency (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927-5371(10)00074-6
Full text for ScienceDirect subscribers only
Related works:
Working Paper: Over-education for the rich, under-education for the poor: A search-theoretic microfoundation (2010)
Working Paper: Over-education for the rich, under-education for the poor: a search-theoretic microfoundation (2007) 
Working Paper: Over-education for the rich vs under-education for the poor: a search-theoretic microfoundation (2006) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:17:y:2010:i:6:p:886-896
Access Statistics for this article
Labour Economics is currently edited by A. Ichino
More articles in Labour Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().