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A Microfoundation for Increasing Returns in Human Capital Accumulation and the Under-Participation Trap

Booth, Alison L; Coles, Melvyn


This paper considers educational investment, wages and hours of market work in an imperfectly competitive labour market with heterogeneous workers and home production. It investigates the degree to which there might be both underemployment in the labour market and underinvestment in education. A central insight is that the ex-post participation decision of workers endogeneously generates increasing marginal returns to education. Although equilibrium implies underinvestment in education,...[Show more]

CollectionsANU Research Publications
Date published: 2006-12
Type: Working/Technical Paper
Source: European Economic Review
DOI: 10.1016/j.euroecorev.2006.12.004


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