Capital mobility, skill formation and polarization

We bring in hierarchical education and skill formation within a standard Jonesian specific-factor model of production and trade for a developing economy. There are three types of labor, unskilled, medium skilled and high-skilled. The unskilled can only develop into medium-skilled and medium-skilled into high-skilled. As capital becomes internationally mobile, educational capital gets concentrated in particular types of education. In the process the society gets polarized between the highly educated and the absolutely uneducated.

Research Highlights► Multi-factor model of production and trade. ► Specificity of factors. ► Distinction between educational capital and physical capital. ► Concentration of capital. ► Polarization between educated and uneducated.