Unequal Opportunities and Human Capital Formation

44 Pages Posted: 14 Jan 2005

See all articles by Daniel Mejía

Daniel Mejía

Brown University - Department of Economics

Marc St-Pierre

Brown University - Department of Economics

Date Written: January 2005

Abstract

This paper develops a tractable, heterogeneous agents general equilibrium model where individuals have different endowments of the factors that complement the schooling process. The paper explores the relationship between inequality of opportunities, inequality of outcomes, and efficiency in human capital formation. Using numerical solutions we study how the endogenous variables of the model respond to two different interventions in the distribution of opportunities: a mean-preserving spread and a change in the support. The results suggest that a higher degree of inequality of opportunities is associated with a lower average level of human capital, a lower fraction of individuals investing in human capital, higher inequality in the distribution of human capital, and higher wage inequality. In other words, the model does not predict a trade-off between efficiency and equality of opportunity in human capital formation.

Keywords: human capital, inequality, equity-efficiency trade-off

JEL Classification: J24, J31, O15, D33

Suggested Citation

Mejía, Daniel and St-Pierre, Marc, Unequal Opportunities and Human Capital Formation (January 2005). Available at SSRN: https://ssrn.com/abstract=648603

Daniel Mejía (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

Marc St-Pierre

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

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