Investments in education and welfare in a two-sector, random matching economy

Concetta Mendolicchio, Dimitri Paolini and Tito Pietra

Journal of Mathematical Economics, 2012, vol. 48, issue 6, 367-385

Abstract: We consider a random matching model where heterogeneous agents choose optimally to invest time and real resources in education. Generically, there is a steady state equilibrium where some agents, but not all of them, invest. Regular steady state equilibria are constrained inefficient in a strong sense. The Hosios (1990) condition is neither necessary nor sufficient for constrained efficiency. We also provide restrictions on the fundamentals sufficient to guarantee that equilibria are characterized by overeducation (or undereducation), present some results on their comparative statics properties, and discuss the nature of welfare improving policies.

Keywords: Random matching; Human capital; Efficiency (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Investments in education and welfare in a two-sector, random matching economy (2012)
Working Paper: Investments in education and welfare in a two-sector, random matching economy (2011)
Working Paper: Investments in education and welfare in a two-sector, random matching economy (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:48:y:2012:i:6:p:367-385

DOI: 10.1016/j.jmateco.2012.08.002

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