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http://hdl.handle.net/10419/33620
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| Title: | | International capital market integration, educational choice and economic growth  |
| Authors: | | Egger, Hartmut Egger, Peter Falkinger, Josef Grossmann, Volker |
| Issue Date: | | 2005 |
| Series/Report no.: | | IZA Discussion Papers 1863 |
| Abstract: | | This paper examines the impact of capital market integration (CMI) on higher education and economic growth. We take into account that participation in higher education is non-compulsory and depends on individual choice. Integration increases (decreases) the incentives to participate in higher education in capital-importing (-exporting) economies, all other things equal. Increased participation in higher education enhances productivity progress and is accompanied by rising wage inequality. From a national policy point of view, education expenditure should increase after integration of similar economies. Using foreign direct investment (FDI) as a measure for capital flows, we present empirical evidence which largely confirms our main hypothesis: An increase in net capital inflows in response to CMI raises participation in higher education and thereby fosters economic growth. We apply a structural estimation approach to fully track the endogenous mechanisms of the model. |
| Subjects: | | capital mobility capital-skill complementarity educational choice education policy economic growth wage income inequality |
| JEL: | | F20 H52 J24 O10 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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