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Trade and Divergence in Education Systems

Fali Huang () and Pao-Li Chang ()

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: This paper presents a theory on the endogenous choice of a country's education policy and the two-way causal relationship between trade and education systems. The setting of a country's education system determines its talent distribution and comparative advantage in trade; the possibility of trade by raising the returns to the sector of comparative advantage in turn induces countries to further differentiate their education systems and reinforces the initial pattern of comparative advantage. Specifically, the Nash equilibrium choice of education systems by two countries interacting strategically are necessarily more divergent than their autarky choices, although the difference is still less than what is socially optimal for the world. We provide some preliminary empirical evidence on the relationship between education system and talent distribution.

Keywords: Education System; Talent Distribution; Comparative Advantage; Trade Pattern (search for similar items in EconPapers)
JEL-codes: F16 I20 J24 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2012-09
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Related works:
Working Paper: Trade and Divergence in Education Systems (2012) Downloads
Working Paper: Trade and Divergence in Education Systems (2010) Downloads
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