Cordoba, Juan Carlos; Ripoll, Marla

Journal of Monetary Economics Vol. 60 no. 2 (March 1 2013): 184-202.

This paper provides a theory that explains the cross-country distribution of average years of schooling, as well as the so called human capital premium puzzle. In our theory, credit frictions as well as differences in access to public education, fertility and mortality turn out to be the key reasons why schooling differs across countries. Differences in growth rates and in wages are second order.

JEL Classification: I, J, O

Keywords: human capital, life expectancy, per capita income di§erences, public education spend- ing, life cycle model