Optimal education policies and comparative advantage

Arbeitspapier

We consider the optimal education policies of a small economy whose government has a limited budget. Initially, the economy is closed and the government chooses its education policy to maximize welfare under autarky. Then the economy trades with the rest of the world. Lastly, the government chooses a new education policy that maximizes welfare under trade. Is it ever optimal for the government to choose its new policy so that it reverses the economy's comparative advantage? We find that if the budget stays fixed when it is optimal to 'move up the skills chain' it is not feasible. In such a case a foreign loan is welfare improving. A move in the opposite direction can be optimal and when it is optimal it is also feasible.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2631

Classification and Topics

• Classification: Wirtschaft ; Neoclassical Models of Trade ; Economic Development: Human Resources; Human Development; Income Distribution; Migration
• Subject: patterns of trade ; education policy ; welfare ; Bildungspolitik ; Bildungsinvestition ; Komparativer Kostenvorteil ; Außenhandelsstruktur ; Wohlfahrtseffekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bougheas, Spiros P. ; Kneller, Richard Anthony ; Riezman, Raymond
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/30625
• Last update: 10.03.2025, 11:43 AM CET