TY  - JOUR
AU  - Azuma,Yoshiaki
AU  - Grossman,Herschel I.
TI  - Educational Inequality
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8206
PY  - 2001
Y2  - April 2001
UR  - http://www.nber.org/papers/w8206
L1  - http://www.nber.org/papers/w8206.pdf
N1  - Author contact info:
Herschel Grossman
Department of Economics
Box B
Brown University
Providence, RI  02912
Tel: 401/863-2606
Fax: 401/863-1970
AB  - This paper develops a theoretical model that relates changes in educational inequality to the combined effects of innovations that have increased the relative demand for more educated labor and innovations that have increased ability premiums. Under the assumption that in the long run individual decisions to become more educated equalize the lifetime earnings of more educated workers and comparable less educated workers, our model yields two novel implications: First, given the existence of ability premiums, an innovation in the relative demand for more educated labor increases educational inequality in the short run, but, ceteris paribus, would decrease educational inequality in the long run. Second, in the long run innovations that increase ability premiums cause educational inequality to be larger than otherwise. In applying our theory to recent changes in educational inequality in the United States, we suggest that increases in ability premiums are dampening the long-run response of the relative supply of more educated workers that otherwise would reverse previous increases in educational inequality.
ER  -