Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2002-01-22 Revision-Date: 2003-03-05 Number: 02-001/3 Author-Name: Coen N. Teulings Author-Email: email@example.com Author-Workplace-Name: SEO, University of Amsterdam Author-Name: Thijs van Rens Author-Email: firstname.lastname@example.org Author-Workplace-Name: Department of Economics, Princeton University Title: Education, Growth and Income Inequality Abstract: Estimates of the effect of education on GDP (the social return) have been hard to reconcile with micro evidence on the private return to schooling. We present a simple explanation combining two ideas: imperfect substitution and endogenous skill-biased technological progress and use cross-country panel data on inequality and GDP to test these ideas. A one-year increase in the level of education reduces the private return by 2 percentage points, consistent with Katz-Murphy's (1992) elasticity of substitution. We find no evidence for reversal of this initial effect as in Acemoglu (2002). In the short run, the social return equals the private return.
This discussion paper has resulted in a publication in the Review of Economics and Statistics, 2008, 90(1), 89-104. Classification-JEL: E20; J24; O10; O15 Keywords: education; inequality; growth File-Url: http://papers.tinbergen.nl/02001.pdf File-Format: application/pdf File-Size: 567046 bytes Handle: RePEc:tin:wpaper:20020001