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Education, structural change and economic development

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  • Saviotti, Pier Paolo
  • Pyka, Andreas
  • Jun, Bogang
Abstract
In this paper we explore the role that can be played by education in economic development using a model called TEVECON. Within the population of our economic system we distinguish two different social classes which differ for their level and quality of education and, as a consequence, for their human capital, wages and income per head. We vary the investment in education as a share of total investment, the share of investment in education allocated to each social class, and the quality of education each class receives. We show that while education can exert a positive effect on social mobility by increasing the population share of the upper social class it also leads to a tradeoff between income inequality and the rate of growth of income. These results are obtained based only on education and do not take into account any wealth effects.

Suggested Citation

  • Saviotti, Pier Paolo & Pyka, Andreas & Jun, Bogang, 2016. "Education, structural change and economic development," Structural Change and Economic Dynamics, Elsevier, vol. 38(C), pages 55-68.
    • Handle: RePEc:eee:streco:v:38:y:2016:i:c:p:55-68
    DOI: 10.1016/j.strueco.2016.04.002
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