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Education and inequality: a tank framework
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Orientador(es)
Resumo(s)
Once considered to be the engine of upward mobility, the educational system has been criticized
as a perpetuator of inequality. This paper revisits the discussion initiated in Stiglitz (1973), in the
context of a Two-Agent New Keynesian (TANK) framework augmented, with human capital and
innate ability uncertainty of lower income households. While the model predicts a decrease in
inequality, measured by labour income gap, if government invests in poorer schooling districts, the
outcome is less clear if it subsidizes higher education. It will depend on the quality of the latter. As
it increases, the poorer households lower their beliefs of being admitted, rendering the schooling
system more fitting to reproduce income inequality. Insofar as ability uncertainty decreases with
one´s educational achievements, the model calls for higher government spending on mandatory
education of lower income agent.
Descrição
Palavras-chave
Education Inequality Human capital Fiscal policy and taxation Uncertainty