Original scientific paper
https://doi.org/10.1080/1331677X.2022.2053783
Can public subsidy on education reduce wage inequality in the presence of automation?
Pengqing Zhang
Abstract
We examine the impacts of a public education subsidy on the
wage differential in the presence of automation by establishing
general equilibrium models with two-stage skill formation. We
show that for an economy with full employment, a public education subsidy will increase the wage differential in the first stage of
skill formation, but in the second stage, the wage differential may
be reduced if the ratio of unskilled labor to skilled labor is large
enough. For an economy with unemployment, a public education
subsidy will narrow down the wage differential in the first stage,
but in the second stage, the wage differential may be widened if
that ratio is large enough.
Keywords
Education subsidy; wage inequality; automation; general equilibrium approach
Hrčak ID:
303020
URI
Publication date:
31.3.2023.
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