Schooling and distortions in a vintage capital model. Southampton, UK, University of Southampton, 41pp.
(Discussion Papers in Economics and Econometrics, 0030).
This paper integrates the analysis of choices on education and on technology adoption
to study international economic disparities. Two candidate explanations are considered:
di¤erences in distortions that a¤ect the cost of technology adoption and di¤erences in the
e¤ectiveness of schools. The implications of these two factors for di¤erences in output per
capita, educational attainment, and the age of technologies across-countries are assessed in a
vintage capital model with technology-speci…c learning-by-doing. Predictions are obtained
for a parameterized economy that matches US aggregate observations and evidence on
learning. Di¤erences in investment distortions produce plausible correlations only if the
major role of education is to improve the ability to learn technologies. On the other hand,
di¤erences in school e¤ectiveness produce plausible results only if the role of education is
to provide a productive ability that is independent of learning.
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