Human Capital Accumulation, Policy and Growth (Journal article)
This paper examines the general equilibrium implications of the Decentralized Education (DE) and Centralized Public Education (CPE) systems for growth and welfare in an overlapping generations growth model, where the economy-wide human capital stock generates positive externalities for each individual. Under DE, each individual agent chooses his/her human capital to maximize his/her utility function by treating the economy-wide human capital as a public good. Under CPE the economy-wide human capital can be augmented by government intervention in the form of public expenditures on education Β nanced by distortionary income taxes. A benevolent fiscal authority chooses a uniform tax rate, and the associated expenditure on public education subject to the competitive decentralized equilibrium. It is shown that Centralized Public Education is welfare superior to decentralized education for all values of the preference parameter over total human capital bequests and initial human capital. Furthermore, CPE dominates DE for all but very high values of total human capital externalities. So, even when we abstract from equity considerations, Centralized Public Education may be supported on welfare grounds.
|Institution and School/Department of submitter:||Πανεπιστήμιο Ιωαννίνων. Σχολή Οικονομικών και Κοινωνικών Επιστημών. Τμήμα Οικονομικών Επιστημών|
|Keywords:||Public goods,Human capital,growth,economic policy|
|Appears in Collections:||Άρθρα σε επιστημονικά περιοδικά ( Ανοικτά)|
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|Benos-2005-Human Capital Accumulation.pdf||221.95 kB||Adobe PDF||View/Open|
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