Document Type
Article
Publication Date
2006
Abstract
We propose a model of schooling that can account for the observed heterogeneity in workers’ productivity and educational attainment. Identical unskilled agents can get a degree at a cost, but becoming skilled entails an additional unobservable effort cost. Individual labor can then be used as an input in pairwise production matches. Two factors affect students’ desire to build human capital: degrees imperfectly signal productivity, and contract imperfections generate holdup problems. Multiple stationary equilibria exist, some of which are market failures characterized by a largely educated workforce of low average skill. Policy implications are explored.
Recommended Citation
Blankenau, W.F., and G. Camera (2006). A simple economic theory of skill accumulation and schooling decisions. Review of Economic Dynamics 9, 93-115. doi: 10.1016/j.red.2005.05.002
Peer Reviewed
1
Copyright
Elsevier
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Comments
NOTICE: this is the author’s version of a work that was accepted for publication in Review of Economic Dynamics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Review of Economic Dynamics, volume 9 (2006). DOI: 10.1016/j.red.2005.05.002
The Creative Commons license below applies only to this version of the article.