(Un)equal educational opportunities and the labor market: a theoretical analysis FORTALEZA –

Abstract

This paper studies the effects of public school quality supply on the labor market performance. With this objective in mind, we build a matching model of the labor market with two sectors: schooled and nonschooled. The skilled segment of the economy is endogenous and composed by a continuum of workers who differ in the quality of the school attended. We show that there exists a trade-off between quantity and the quality of education and that a reduction in the schooling costs increases the school enrollment rate. However, it adversely reduces the job creation dynamics in the skilled sector, due to the Composition Effect. We also verify that a first order improvement in school quality distribution may generate an increase in the schooling rate and a greater job vacancy creation in the skilled sector with no negative effects on the unskilled sector.