Education fever: inequality, fertility, and growth, with application to China

Abstract Demand for skilled labor and social status accorded by educational achievements induce a race to acquire education, dubbed “education fever.” In conjunction with credit market constraints and in the context of quantity-quality tradeoff, this, in turn, may reduce fertility, especially in well-educated families, and create cross-sectional inequality while limiting intergenerational mobility. The resulting inequality is persistent, which, in turn, may have adverse implications for economic growth. I argue that these phenomena are consistent with recent economic and social developments in China.