We study the evolution of an educational system founded on a hierarchical differentiation between vocational and general education, with vocational playing an inferior role in the society. The dynamics are best summarized by the ratio of the fraction of the population in vocational to that in general education, which we interpret as a measure of the degree of stratification of the society. We show that this ratio first rises and then declines with the level of development, displaying an inverted U-shape which reflects the complex interaction between economic and political forces, including aggregate income growth, wealth inequality and political participation.
In this paper we explore changes over time in higher education (HE) participation and attainment between people from richer and poorer family backgrounds during a time period when the UK higher education system expanded at a rapid rate. We use longitudinal data from three time periods to study temporal shifts in HE participation and attainment across parental income groups for children going to university in the 1970s, 1980s and 1990s. The key finding is a highly policy relevant one, namely that HE expansion has not been equally distributed across people from richer and poorer backgrounds. Rather, it has disproportionately benefited children from relatively rich families. Despite the fact that many more children from higher income backgrounds participated in HE before the recent expansion of the system, the expansion acted to widen participation gaps between rich and poor children. This finding is robust to different measures of education participation and inequality. It also emerges from non-parametric estimations and from a more detailed econometric model allowing for the sequential nature of education choices with potentially different income associations at different stages of the education sequence.
This paper studies an economy where parents can choose between public or private schools and can vote on taxes used to fund public schools. The model is calibrated to US data and studied using simulations. A bimodal income distribution emerges where public education students converge to a low-income equilibrium while private education students experience endogenous growth with higher incomes. However, public education students experience long-run growth through a spillover from private education students. Possible problems with the existence of a private alternative to pubic education, such as the emergence of a education-based class structure, are identified.
In many countries, student grants, tuition fees, and subsidized loans depend on parental income. This paper examines the efficiency and distributional effects of such conditioning, and assesses whether it is optimal practice when the government wants to reduce after-tax income inequality in the most efficient manner. Increasing the mean level of education among the work-force compresses wage differentials by level of education and thereby the pre-tax income distribution. Hence, subsidizing education may be part of an optimal redistribution policy. However, education subsidies mainly benefit high-ability students, limiting their redistributive virtues. Conditioning education subsidies on parental income may enable the government to reduce inframarginal subsidies, mainly benefiting high-ability students, while preserving the marginal subsidy, and thus the favourable effect on the mean education level which leads to wage compression.
This paper develops a growth theory that captures the replacement of physical capital accumulation by human capital accumulation as a prime engine of growth along the process of development. It argues that the positive impact of inequality on the growth process was reversed in this process. In early stages of the Industrial Revolution, when physical capital accumulation was the prime source of growth, inequality stimulated development by channelling resources towards individuals with a higher propensity to save. As human capital emerged as a growth engine, equality alleviated adverse effects of credit-constraints on human capital accumulation, stimulating the growth process.
The British government's policy towards expanding higher education is based on two beliefs—that it is necessary for an improvement of economic performance, and that it can increase access to better jobs by those from lower socio-economic backgrounds. This article examines these two beliefs. The evidence on the economic impact of and demand for more graduates is ambiguous and contradictory. Meanwhile, the rest of the vocational and education system is likely to suffer damage as a consequence of the expansion of higher education, which is important in an economy where there remain many jobs with educational requirements below degree level. It is doubtful whether higher education is an effective or efficient means of meeting such demand. Given the present social-class composition of higher-education entry, there is a danger that further expansion, unless accompanied by a fundamental redistribution of access opportunities, will lead to a decline in social mobility. At the same time, the range of labour-market opportunities for those without degrees may get worse.
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