Economic implications of better information in a dynamic framework

Bernhard Eckwert*, Itzhak Zilcha

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Scopus citations


We consider an OLG model with accumulation in human capital and analyze the economic implications of information about individual skills. Agents in each period differ by the random innate ability assigned to each individual. When young, all agents are screened for their abilities and this screening process (signal) constitutes a public information which is used in choosing the level of private investment in education. We demonstrate that in the presence of risk sharing markets better information may be harmful for all in equilibrium, and find conditions under which better information either enhances growth or reduces growth.

Original languageEnglish
Pages (from-to)561-581
Number of pages21
JournalEconomic Theory
Issue number3
StatePublished - Oct 2004


  • Human capital accumulation
  • Information system
  • Risk sharing markets


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