The Role of Education in Development

Marla, Ripoll and Juan, Cordoba (2006): The Role of Education in Development.

Abstract

Most education around the globe is public. Moreover, investment rates in education as well as schooling attainments differ substantially across countries. We construct a general equilibrium life-cycle model that is consistent with these facts. We provide simple analytical solutions for the optimal educational choices, which may entail pure public provision of education, and their general equilibrium effects. We calibrate the model to fit cross-country evidence on demographics and educational variables. The model is able to replicate a number of key regularities in the data beyond the matching targets. We use the model to identify and quantify sources of world income differences, and find that demographic factors, in particular mortality rates, explain most of the differences. We also use the model to the role of public education and the HIV/AIDS pandemic in development.

• Item Type: MPRA Paper
• Institution: Rice University
• Language: English
• Keywords: education; human capital; development; public education; income differences
• Subjects: I - Health, Education, and Welfare > I2 - Education and Research Institutions > I22 - Educational Finance ; Financial Aid; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development