02450cam a22002657 4500001000600000003000500006005001700011008004100028100001900069245015200088260006600240490004100306500001800347520133300365530006101698538007201759538003601831690005701867690005701924700002201981710004202003830007602045856003702121856002602158w9408NBER20140710204130.0140710s2003 mau||||fs|||| 000 0 eng d1 aKrueger, Dirk.10aSkill-specific rather then General Educationh[electronic resource]:bA Reason for US-Europe Growth Differences? /cDirk Krueger, Krishna B. Kumar. aCambridge, Mass.bNational Bureau of Economic Researchc2003.1 aNBER working paper seriesvno. w9408 aJanuary 2003.3 aIn this paper, we develop a model of technology adoption and economic growth in which households optimally obtain either a concept-based, general' education or a skill-specific, vocational' education. General education is more costly to obtain, but enables workers to operate new technologies incorporated into production. Firms weigh the cost of adopting and operating new technologies against increased revenues and optimally choose the level of adoption. We show that an economy whose policies favor vocational education will grow slower in equilibrium than one that favors general education. Moreover, the gap between their growth rates will increase with the growth rate of available technology. By characterizing the optimal Ramsey education subsidy policy we demonstrate that the optimal subsidy for general education increases with the growth rate of available technology. Our theory suggests that European education policies that favored specialized, vocational education might have worked well, both in terms of growth rates and welfare, during the 60s and 70s when available technologies changed slowly. In the information age of the 80s and 90s when new technologies emerged at a more rapid pace, however, it may have suboptimally contributed to slow growth and may have increased the growth gap relative to the US. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aO40 - General2Journal of Economic Literature class. 7aO30 - General2Journal of Economic Literature class.1 aKumar, Krishna B.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w9408.4 uhttp://www.nber.org/papers/w9408 uurn:doi:10.3386/w9408