The purpose of this book is to learn the relationship among education, productivity, income distribution, and economic growth, as well as to link the structure of the educational system to the economic and social character of the society. Essay 1 examines the equilibrium levels of public and private education in a model where public and private education can exist at the same time. There is no possibility for collapse of the public education system; however, the private education system will collapse in the long run if human capital grows faster in the public education sector than in the private education sector. Income inequality declines over time, and a heterogeneous economy becomes a homogeneous society in the long run. As long as income convergence exists in an economy, a balance growth path exists in the long run. Essay 2 investigates the effects of investment in education and the role of technical progress on economic growth in Taiwan in 1964 - 2000. Education provides a positive and significant effect on output growth in Taiwan, but the role of technical progress does not appear to be extraordinarily important.

As the interest in Economics on inequality has exploded, intergenerational mobility is one of the fundamental areas concerning inequality since it is related to many normative questions such as equal opportunity and fairness. Despite its importance, research on measuring intergenerational mobility has received relatively little attention. The dominant approach is still the scalar-based regression approach, which employs a regression of some statistics of offspring on some statistics of parents. In connection with this issue, this dissertation introduces a novel measure for intergenerational mobility based on modern economic theory and empirically analyzes intergenerational mobility in the U.S. and Korea.The first chapter analyzes the empirical aspect of the relationship between parental income trajectory and a child's success in the U.S. using a novel approach, functional approach.In particular, we find that parental income when their children are in their late teens is more correlated with children's income in their early 30s. In addition, children whose parental income tends to increase in their late teens are more likely to have a higher economic position than their parents. This implies that upward income mobility is positively associated with the steadily increasing economic status of the family over the first 20 years of children's life. Investigated further are the effects on explaining a child's success of the role of other trajectories, such as the family structure of unemployment and job type of household head, and the impact of parental education level. We also investigate the association between parental income profile and their children's college attendance and derive a similar finding that late teens are crucial periods when parents' income has a more significant impact on children's educational success.While the first chapter addresses issues in intergenerational mobility in the U.S., the second chapter focuses on intergenerational mobility in Korea. In the second chapter, using a similar approach to Chapter 1, we analyze the intergenerational mobility in all three dimensions - income, education, and occupation. In addition, reflecting Korea's unique historical and social characteristics, we study the association between investment in private tutoring and a child's economic and educational success. Our findings highlight the importance of parental intervention in teens on a child's educational success. The pattern of parental income profile of the upward mobility group shows a stronger upward trend than that of the downward mobility group, similar to what we observe in the U.S. data in Chapter 1. In Korea, both upward and downward mobility groups show steadily increasing parental income trajectories, reflecting the rapid economic growth Korea has experienced over the last six decades. This interesting and unique finding of mobility patterns in Korea reveals various social and economic structural changes Korea has gone through.The third chapter studies the various methodological issues. In this chapter, we consider how our functional estimate can be varied by the fluctuation of measurement error in parental income. Using Beveridge-Nelson decomposition, we decompose parental income into permanent and transitory components and consider the transitory component as a measurement error. We also compare our estimation method with the methods based on the fixed basis approach. Using too many bases in this approach yields nonsensical estimates, while the estimates using too few bases strongly depend on the shape of the basis. We also find that the fixed basis approach is not robust to measurement error. A possible endogeneity issue is also studied in this chapter. Parental income can affect their children's success through two channels, transmission of human capital and providing financial resources. To focus on the effect of financial resources, we measure intergenerational income mobility using instrumental variables to control the effect of human capital.

This dissertation discusses some of the causes and consequences of inequality, vertical and horizontal, some theoretically and others empirically. In doing so, I try to touch upon old and new themes in the economics literature, as old as rent seeking and as new as the effect of cultural norms.The first essay reflects on the inequality of opportunity as manifest in the quality of education available to families in India. The paper explores the relative roles of the quality of schools and household attributes on a household's choice of school in India. I find that income is the most important predictor of a household's choice of school, with a doubling of per capita income increasing the likelihood of choosing a private school over a public school by 10 percentage points. Public schools can rarely compete with private schools even with comparable infrastructure and free school supplies. As incomes rise (India's GDP has nearly doubled in the last 10 years), it is reasonable to expect that there will be de facto higher demand for private schooling and not public.The second essay is a theoretical examination of inequality-generating rent seeking and the feedback mechanism between the two. In this paper, I model rent seeking in an unequal endowment economy to analyze the conditions under which more inequality leads to more rent seeking. I find that, when rent-seeking costs are fixed, a more unequal economy fosters a greater proportion of rentiers. When rent-seeking costs are flexible, the proportion of rentiers shrinks with more inequality. However, both the quantity of rents per person and the resources wasted in pursuing rent-seeking activities increase.In the third essay, I link the education choices of women to gender-specific norms of marriage. Hypergamy (the practice of women "marrying up" by caste, age, education or any indicator of economic well-being) implies that too much education could lower women's prospects of finding a suitable spouse. To understand its impact on pre-marital investments in education, this project studies women's choice of educational attainment as a function of men's. To do so, I examine the impact of an exogenous change in the schooling level of men on the schooling level of women in the United States in the last 50 years. The source of variation is the change in US' immigration policy in 1965, which has been documented to have considerably altered the demography and skill pool in the US since 1965. I find evidence of a positive relationship between men and women's education outcomes. This is a result suggestive of hypergamy and its dragging effect on women's education. The result is robust to the use of another control group: immigrant women in the US.