Optimal Education Policies and Comparative Advantage

Spiros Bougheas, Richard Kneller and Raymond Riezman

No 2631, CESifo Working Paper Series from CESifo

Abstract: We consider the optimal education policies of a small economy whose government has a limited budget. Initially, the economy is closed and the government chooses its education policy to maximize welfare under autarky. Then the economy trades with the rest of the world. Lastly, the government chooses a new education policy that maximizes welfare under trade. Is it ever optimal for the government to choose its new policy so that it reverses the economy’s comparative advantage? We find that if the budget stays fixed when it is optimal to ‘move up the skills chain’ it is not feasible. In such a case a foreign loan is welfare improving. A move in the opposite direction can be optimal and when it is optimal it is also feasible.

Keywords: patterns of trade; education policy; welfare (search for similar items in EconPapers)
JEL-codes: F11 O15 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: OPTIMAL EDUCATION POLICIES AND COMPARATIVE ADVANTAGE (2011)
Working Paper: Optimal Educational Policies and Comparative Advantage (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2631

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