Education Policies and Structural Transformation

Pedro Ferreira, Alexander Monge-Naranjo and Luciene Torres de Mello Pereira

No 2014-39, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This article studies the impact of education and fertility in structural transformation and growth. In the model there are three sectors, agriculture, which uses only low-skill labor, manufacturing, that uses high-skill labor only and services, that uses both. Parents choose optimally the number of children and their skill. Educational policy has two dimensions, it may or may not allow child labor and it subsidizes education expenditures. The model is calibrated to South Korea and Brazil, and is able to reproduce some key stylized facts observed between 1960 and 2005 in these economies, such as the low (high) productivity of services in Brazil (South Korea) which is shown to be a function of human capital and very important in explaining its stagnation (growth) after 1980. We also analyze how different government policies towards education and child labor implemented in these countries affected individuals? decisions toward education and the growth trajectory of each economy.

Keywords: economic growth; structural transformation; education; fertility (search for similar items in EconPapers)
JEL-codes: J13 J24 O40 O41 O47 O57 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2014-10-29
New Economics Papers: this item is included in nep-cse, nep-dge, nep-edu, nep-gro and nep-lam
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Citations: View citations in EconPapers (2)

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DOI: 10.20955/wp.2014.039

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