Does Public Education Expansion Lead to Trickle-Down Growth?
Sebastian Böhm (),
Volker Grossmann and
Thomas Steger
Additional contact information
Sebastian Böhm: University of Leipzig
No 8542, IZA Discussion Papers from Institute of Labor Economics (IZA)
Abstract:
The paper revisits the debate on trickle-down growth in view of the widely discussed evolution of the earnings and income distribution that followed a massive expansion of higher education. We propose a dynamic general equilibrium model to dynamically evaluate whether economic growth triggered by an increase in public education expenditure on behalf of those with high learning ability eventually trickles down to low-ability workers and serves them better than redistributive transfers. Our results suggest that, in the shorter run, low-skilled workers lose. They are better off from promoting equally sized redistributive transfers. In the longer run, however, low-skilled workers eventually benefit more from the education policy. Interestingly, although the expansion of education leads to sustained increases in the skill premium, income inequality follows an inverted U-shaped evolution.
Keywords: transitional dynamics; directed technological change; publicly financed education; redistributive transfers; trickle-down growth (search for similar items in EconPapers)
JEL-codes: H20 J31 O30 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2014-10
New Economics Papers: this item is included in nep-dge, nep-edu, nep-fdg, nep-gro and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Published - published as 'Does Expansion of Higher Education Lead to Trickle-Down Growth?' in: Journal of Public Economics, 2015, 132, 79-94
Downloads: (external link)
https://docs.iza.org/dp8542.pdf (application/pdf)
Related works:
Working Paper: Does Public Education Expansion Lead to Trickle-Down Growth? (2015) 
Working Paper: Does Public Education Expansion Lead to Trickle-Down Growth? (2014) 
Working Paper: Does Public Education Expansion Lead to Trickle-Down Growth? (2014) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp8542
Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Access Statistics for this paper
More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().