Concetta, Mendolicchio; Dimitri, Paolini; Tito, Pietra - In: The B.E. Journal of Economic Analysis & Policy 12 (2012) 1, pp. 1-29
We consider an economy where production may use labor of two different skill levels. Workers are heterogeneous and, by investing in education, self-select into one of the two skills. Ex-ante, when firms choose their investments in physical capital, they do not know the level of human capital...