Public Expenditure on Pre-tertiary and Tertiary Education: Effects on Skilled–Unskilled Wage Inequality

Ujjaini Mukhopadhyay ()
Additional contact information
Ujjaini Mukhopadhyay: Behala College

Chapter Chapter 13 in Persistent and Emerging Challenges to Development, 2022, pp 277-292 from Springer

Abstract: Abstract Due to increased governmental recognition of importance of human capital formation coupled with their egalitarian goal to reduce inequalities, differential public allocation to pre-tertiary (primary and secondary) education and tertiary (higher) education is a pertinent issue. The paper analyses the effects of government subsidy on pre-tertiary and tertiary education, on skilled–unskilled wage gap in the economy. A three-sector full-employment model is set up. There is endogenous skill formation, whereby unskilled and skilled labour supply are determined by intertemporal utility maximizing behaviour of the households. Comparative static analysis indicates that both subsidies on pre-tertiary and tertiary education are beneficial for reducing wage inequality irrespective of the level of skill formation if the low-skill sector is more capital intensive vis-à-vis the high-skill sector. However, if the high-skill sector is more capital intensive, subsidy on tertiary education subsidy may reduce the skilled–unskilled wage inequality only when the skilled labour stock is higher, while pre-tertiary education is likely to be favourable during the period of skill formation only if the returns to education are sufficiently high. The government policies pertaining to public expenditure on education should take into account the relative factor intensity conditions and the level of skill formation in the economy.

Keywords: Skilled labour; Unskilled labour; Pre-tertiary education subsidy; Tertiary education subsidy; Wage inequality (search for similar items in EconPapers)
JEL-codes: D50 F21 I28 J31 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:spr:isbchp:978-981-16-4181-7_13

Ordering information: This item can be ordered from
http://www.springer.com/9789811641817

DOI: 10.1007/978-981-16-4181-7_13

Access Statistics for this chapter

More chapters in India Studies in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().