Community structure and labour market segmentation in a stochastic model of

We analyse an economy where heterogeneous agents are partitioned in communities and individual human capital accumulation, the source of growth, is the joint result of private investment in education, public expenditure and externalities within a community. We characterize the long-run growth rate and the distribution of human capital under alternative specifications regarding community structure, the method to finance public expenditure and labour market. The maximum growth rate is reached for a full integrated economy (just one community). In a stratified economy public expenditure financed by government is preferred to locally financed education. The segmentation of labour market has a negative effect on aggregate growth by decreasing the resources devoted to education