IZA DP No. 1903: On Human Capital Formation with Exit Options: Comment and New Results
published in: Journal of Population Economics, 2008, 21 (3), 679-684
Katz and Rapoport (2005) conclude that with linear production technology and the possibility of unilateral migration, region-specific shocks may increase the average level of education. Previously, Poutvaara (2000) derived a corresponding result with Cobb-Douglas technology and migration which may go in both directions. This paper shows that the exit option may reduce human capital formation with a quadratic production technology.