On Human Capital Formation with Exit Options: Comment and New Results
CESifo, Munich, 2006
CESifo Working Paper No. 1648
Katz and Rapoport (2005) conclude that with linear production technology and the possibility of unilateral migration, region-specific shocks may increase the average level of education. Previously, Poutvaara (2000) derived a corresponding result with Cobb-Douglas technology and migration which may go in both directions. This paper shows that the exit option may reduce human capital formation with a quadratic production technology.
Labour Markets