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http://hdl.handle.net/10419/53866
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| Title: | | Schooling, inequality and government policy  |
| Authors: | | Kryvtsov, Oleksiy Ueberfeldt, Alexander |
| Issue Date: | | 2007 |
| Series/Report no.: | | Bank of Canada Working Paper 2007,12 |
| Abstract: | | This paper asks: What is the effect of government policy on output and inequality in an environment with education and labor-supply decisions? The answer is given in a general equilibrium model, consistent with the post 1960s facts on male wage inequality and labor supply in the U.S. In the model, education and labor-supply decisions depend on progressive income taxation, the education system, the social security system, and technology-driven wage differentials. Government policies affect output and inequality through two channels. First, a policy change leads to an asymmetric adjustment of working hours and savings of schooled and unschooled individuals. Second, there is a redistribution of the workforce between schooled and unschooled workers. Using a battery of proposed government policies, we demonstrate that skill redistribution dampens the response of wage inequality to a policy change and amplifies the response of output by an additional 1 to 2 percent. |
| Subjects: | | Labour markets Potential output Productivity |
| JEL: | | H52 J31 J38 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Bank of Canada Working Papers
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