Human Capital Misallocation and General Equilibrium Effects

Abstract

We analyze the general equilibrium effects of human capital misallocation in Chile. First, we utilize tax and educational records to estimate the proportion of educationally mismatched individuals (high-ability individuals with low educational attainment). Second, we estimate the labor market returns on ability, education, and human capital investment. Finally, we construct and calibrate a dynastic overlapping generations model with both private and public human capital investment to decompose the causes of educational mismatch and the general equilibrium effects of changes in sorting.

Agustin Diaz Casanueva

Economist

I study how households make economic decisions about consumption, fertility, and labor supply in response to shocks and policy changes.