Title: Formal education versus learning-by-doing: On the labor market efficiency of educational choices
Abstract: Educational choices are studied in a two-sectors search-and-matching model where qualifications are required for access to good jobs. Qualifications can be acquired either before entering the labor market through formal education, or through learning-by-doing in a low-skill job. Spontaneously, the economy creates too many high-skill jobs and accordingly individuals devote too much effort to formal education. However, educational effort alone becomes insufficient when the rate of creation of these high-skill jobs is reduced to its optimal level. In conclusion, we show that an efficient policy would be to subsidize both education and low-skill firms whose workers quit when obtaining a job in the high-skill sector, both elements financed by a tax on high-skill firms.
Publication Year: 2016
Publication Date: 2016-02-23
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 10
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