Work

A dynamic Roy model of academic specialization

Year: 2025

Type: article

Abstract: This paper generalizes the canonical model of human capital accumulation through schooling to endogenize the process of academic specialization. It provides the solution to a class of dynamic investment problems with switching and stopping under sequential uncertainty. Under mild assumptions, the model's optimal policy has a particularly simple form that can be reduced to the comparison of independent indices. The optimal policy implies that schooling should begin with a period of general education, common to all students, followed by a period of gradual academic specialization before graduation. At the microeconomic level, it is consistent with the dynamics of student course taking observed in the data and the outcomes of educational interventions studied in the literature. At the macroeconomic level, its predictions are consistent with models of how education should adapt to changes in the speed and scope of technological change in labor markets.

Source: Journal of Economic Theory

DOI: 10.1016/j.jet.2025.106077

Authors: Titan Alon, Daniel Fershtman

Institutions: University of California San Diego, Emory University

Language: English

Topic: Economic Growth and Productivity

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Quality education

Open Access status: hybrid

Estimated APC paid: $3,030