Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2007:10: Enrollment in higher education, ability and growth

Camilo von Greiff ()
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Camilo von Greiff: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: This paper examines the importance of the ability of high-educated individuals on the growth rate. I consider two sources of heterogeneity among individuals: ability and consumption value of education. The latter is assumed to depend on family background and will thus generate different ability thresholds to enroll in higher education for different family background types. If the effect of high-educated individuals on the growth rate depends on their ability, this will affect the willingness of low-educated individuals to contribute to the funding of higher education. Whether state funded subsidies to higher education benefit some of the low-educated individuals or even are Pareto improving is shown to depend on the switchers’ ability and hence their influence on the growth rate.

Keywords: Higher education; Growth

JEL-codes: I22

25 pages, June 26, 2007

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