Education Policies, Economic Growth and Wage Inequality

Günther Rehme

FinanzArchiv: Public Finance Analysis, 2002, vol. 59, issue 4, 479-503

Abstract: It is assumed that education simultaneously affects growth and wage inequality. Human capital is taken as lumpy, and education policy has a direct bearing on growth, the number of high-skilled people, and wages. It is shown that the optimal policy for the unskilled is Rawlsian and implies high after-tax returns on capital and high growth, whereas the skilled prefer an anti-Rawlsian policy with less education, lower growth, and more wage inequality. In contrast, a strictly utilitarian government chooses more education and less inequality than the Rawlsian. Thus, the unskilled prefer a more efficient and more equitable outcome than the skilled, and a strictly utilitarian policy may be more egalitarian than a Rawlsian policy.

JEL-codes: D3 D6 H2 I2 O4 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (3)

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Working Paper: Education Policies, Economic Growth and Wage Inequality (2003)
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