Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84805
Authors: 
Stark, Oded
Hyll, Walter
Wang, Yong
Year of Publication: 
2011
Series/Report no.: 
ZEF Discussion Papers on Development Policy 148
Abstract: 
This paper considers a setting in which the acquisition of human capital entails a change of location in social space that causes individuals to revise their comparison groups. Skill levels are viewed as occupational groups, and moving up the skill ladder by acquiring additional human capital, which in itself is rewarding, leads to a shift in the individual´s inclination to compare himself with a different, and on average better-paid, comparison group, which in itself is penalizing. The paper sheds new light on the dynamics of human capital formation, and suggests novel policy interventions to encourage human capital formation in the aggregate and, at the same time, reduce inter-group income inequality.
Subjects: 
Human capital formation
Skill levels as occupational groups
Interpersonal comparisons
Relative deprivation
Tax policy
Subsidization
JEL: 
D11
H24
H30
J24
Document Type: 
Working Paper

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