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Paper Information

Journal:   JOURNAL OF PSYCHOLOGY AND EDUCATION   Spring-Summer 2001 , Volume 6 , Number 1; Page(s) 203 To 227.
 
Paper: 

EDUCATION AND INCOMES DISTRIBUTION

 
 
Author(s):  EMADZADEH M.*
 
* University of Esfahan
 
Abstract: 
According to the human capital theory, the skills transmitted by schooling are held to increase worker productivity. Thus, individuals invest in education in order to raise their productivity and income power. Investment in schooling is a function of the marginal rate of return, and the marginal interest cost of the funds used to finance them.
The formal model is developed in a supply and demand framework, in which, the demand curve is downward sloping, that is additional investments yield smaller and smaller returns. The supply curve is upward sloping, under the assumption that cheaper sources of funds are used before more expensive ones. Persons with more favorable social "opportunities" (supply side) tend to invest more in schooling. Individuals with higher "ability" (demand side) also tend to invest more, as they have greater capacity to benefit from these investments. This means that the distribution of incomes is more concentrated the more unequal the distribution of the supply and demand curves. This negative correlation may stem from a positive association between "opportunities"and "abilities".
Public policies are designed to alter the dispersions of the supply and demand curves, and the correlation between them. Programs to enrich the educational experiences of childern from poor and deprived families reduce the dispersion in ability.The provision of free public education, and loans for higher education, for students from low-income families also reduce the inequality in opportunity and hence the correlation between ability and access to funds
 
Keyword(s): EDUCATION, INCOMES DISTRIBUTION, LEVEL OF EDUCATION, HUMAN CAPITAL.
 
References: 
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