Social Background, Education and Inequality

33 Pages Posted: 27 Feb 2015

See all articles by Torben M. Andersen

Torben M. Andersen

University of Aarhus - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 2015

Abstract

The role of social background for educational choices and outcomes is considered in an overlapping generations setting. It is shown that the impediments for education created by social factors are similar to a market imperfection, and publicly provided education may lead to a Pareto improvement. Policies affecting the share of skilled release a dynamic adjustment process via the change in the social background of youth. An increase (decrease) in the share of skilled thus has a cumulative effect over time increasing (decreasing) the share of skilled further. Active and passive means of redistribution thus differ both in the impact and long-run effects. Passive redistribution benefits non-skilled on impact but increases their share over time, while active redistribution does not benefit the non-skilled on impact (but their children) but leads to more skilled over time. It is an implication that a large "active" public sector may lead to higher income and less inequality than a more "passive" public sector.

Keywords: active and passive redistribution, education, intergenerational mobility, Social barriers

JEL Classification: D3, H2, H4, I2

Suggested Citation

Andersen, Torben M., Social Background, Education and Inequality (February 2015). CEPR Discussion Paper No. DP10433, Available at SSRN: https://ssrn.com/abstract=2569263

Torben M. Andersen (Contact Author)

University of Aarhus - Department of Economics ( email )

University Park
Building 322
DK-8000 Aarhus C
Denmark
+45 8 942 1609 (Phone)
+45 8 613 6334 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2
Abstract Views
460
PlumX Metrics