On the emergence of public education in land-rich economies

Sebastian Galiani, Daniel Heymann, Carlos Dabús and Fernando Tohmé , Journal of Development Economics 86(2) , 434-446 , June 2008.

We analyze the emergence of large-scale education systems by modeling the incentives that the economic elite could have (collectively) to accept taxation destined to nance the education of credit-constrained workers. Contrary to previous work, in our model this incentive does not arise from a complementarity between physical and human capital in manufacturing. Instead, we emphasize the demand for human-capitalintensive services by high-income groups. Our model seems capable to account for salient features of the development of Latin America in the 19th century, where, in particular, land-rich countries such as Argentina established an extensive public education system and developed a sophisticated service sector before starting signicant manufacturing activities.

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