Search

In this paper we explore the role that can be played by education in economic development using a model called TEVECON. Within the population of our economic system we distinguish two different social classes which differ for their level and quality of education and, as a consequence, for their human capital, wages and income per head. We vary the investment in education as a share of total investment, the share of investment in education allocated to each social class, and the quality of education each class receives. We show that while education can exert a positive effect on social mobility by increasing the population share of the upper social class it also leads to a tradeoff between income inequality and the rate of growth of income. These results are obtained based only on education and do not take into account any wealth effects. [ABSTRACT FROM AUTHOR]