Social Stratification, Capital-Skill Complementarity and the Non-Monotonic Evolution of the Education Premium
Maurice Falk Institute for Economic Research in Israel Working Paper No. 00.09
20 Pages Posted: 12 Nov 2000
Date Written: July 2004
This paper presents a model that generates a non-monotonic evolution of the return to education. The model highlights the role played by socioeconomic stratification in the joint determination of the supply of educated labor and the supply of physical capital. The recent theoretical literature attributes the increased education premium of the last decades to skill-biased technological progress. In contrast, our explanation is based on capital-skill complementarity and endogenous accumulation of physical and human capital in an environment characterized by credit constraints.
JEL Classification: D31, J31, O11, O40
Suggested Citation: Suggested Citation