Specialization in Education

Private markets promote greater diversity in educational opportunities. Emphasis is placed on the central role that teachers play in producing human capital. Students have different needs and teachers vary in characteristics. An assignment process is developed where students and teachers get matched together. A private system creates better incentives for teachers to acquire the skills that students want. This allows for teachers and students to be matched together better, and hence promotes growth. Though the private economy entails higher inequality within a generation and persistence in human capital across generations, it permits a greater degree of economic mobility from one generation to the next.