Working Paper BETA #2016-01

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Title : Modelling Education Dynamics with Cliometric Foundations.

Author(s) : Claude Diebolt

Abstract : The numerous analogies in the literature on economics between monetary theory and education policy lead me to propose a new model inspired by the work of Dornbusch [1976] and transposed to a context of ‘diploma inflation’. Supposing the required job skills rigid in the short run, I show a significant over-education phenomenon and an overshooting of the wage penalties in starting jobs. After formal education has been completed, the new graduate cohorts, despite a more significant level of initial training and better salary prospects have to face, paradoxically and in comparison with the previous generations, a higher over-education extent over a long period.

Key-words : Overshooting; Over-education; Education Economics; Economic Policy, Political Economy, Macroeconomic Dynamics, Cliometrics.

JEL Classification : D31, I20, J31, N3.