Trade and Divergence in Education Systems

30 Pages Posted: 29 Oct 2014

See all articles by Pao‐Li Chang

Pao‐Li Chang

Singapore Management University

Fali Huang

Singapore Management University - School of Social Sciences

Date Written: November 2014

Abstract

This article presents a theory on the endogenous choice of education policy and the two‐way causal relationship between trade and education systems. A country's education system determines its talent distribution and comparative advantage; the possibility of trade by raising the returns to the sector of comparative advantage in turn induces countries to further differentiate their education systems and reinforces the initial pattern of comparative advantage. Specifically, the Nash equilibrium choice of education systems by two countries interacting strategically are necessarily more divergent than their autarky choices, and yet less than what is socially optimal for the world.

Suggested Citation

Chang, Pao‐Li and Huang, Fali, Trade and Divergence in Education Systems (November 2014). International Economic Review, Vol. 55, Issue 4, pp. 1251-1280, 2014. Available at SSRN: https://ssrn.com/abstract=2516104 or http://dx.doi.org/10.1111/iere.12089

Pao‐Li Chang (Contact Author)

Singapore Management University

Li Ka Shing Library
70 Stamford Road
Singapore 178901, 178899
Singapore

Fali Huang

Singapore Management University - School of Social Sciences ( email )

90 Stamford Road
Singapore, 178903
Singapore
65-68280859 (Phone)
65-68280833 (Fax)

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