Why education matters: On the interplay of three different mechanisms

In this contribution we give an overview of the three main theories on the role of education: education as a source of productive skills, education as a positional good and education as a means of social closure. Since the latter is driven by artificial scarcity, we discern some newer forms of social closure, namely through information asymmetry and positional productivity. We identify the underlying assumptions and driving mechanisms for each of the three theories and provide an empirical evaluation. We will argue that elements of all three theories may co-exist and that it is important to identify the conditions under which one or the other mechanism becomes more dominant. To help understand how the three theories are connected, we develop a unifying analytical model that organizes the different mechanisms.