Standards, Inequality in Education and Efficiency
Open Access
- 1 May 2015
- journal article
- Published by WERI Education Research Development Printing Publication, Ltd. in World Journal of Applied Economics
- Vol. 1 (1), 21
- https://doi.org/10.22440/econworld.j.2015.1.1.sk.0004
Abstract
We develop a model of educational standards that includes inequality in educational opportunities. Our model shows that policymakers setting an output maximizing standard need to consider structural factors such as inequality of income and opportunity, skill mismatch in the economy, profit and wage shares and labor market imperfections. High standards are not optimal under severe educational inequality; they lead to lower output when many cannot access quality education. Optimal standard rises along with increasing opportunities for poor students. Targeted subsidies enhance both distributional and efficiency-related objectives. Other effective policies to extend skilled labor and to improve poor workers income are remedying information problems between employers and workers and distributing more of output gains toward labor.Keywords
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