Self-Financing Education, Borrowing Constraints, Government Policies, and Economic Growth

Hoang D. Duong () and Fernando Sánchez-Losada
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Hoang D. Duong: Universitat Autònoma de Barcelona

No 2016/354, UB School of Economics Working Papers from University of Barcelona School of Economics

Abstract: We analyze how public policies for self-financing education, public fund for loans and deferred deductibility of education expenses, affect growth in an overlapping generations economy where individuals can be borrowing-constrained on human capital investment. We show that public loans positively affect growth in the unconstrained economy, while how tax deductibility affects growth depends on the magnitude of both public loans and tax deductibility. In the borrowing-constrained economy, public loans positively affect growth, while tax deductibility does not affect growth. Both government policies affect the borrowing-constraint tightness and, therefore, can shift the economy from being borrowing-constrained to unconstrained or vice versa.

Keywords: Self-financing education; public education fund; tax deduction. (search for similar items in EconPapers)
JEL-codes: H20 I22 O40 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2016
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