Public Expenditure on Education and Skill Formation: Is There a Simple Rule to Maximize Skills?

Rossana Patrón () and Marcel Vaillant
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Rossana Patrón: Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República

No 611, Documentos de Trabajo (working papers) from Department of Economics - dECON

Abstract: The ratio of skill to unskilled labour stocks in the economy is widely acknowledged to have an important role for development. Can education policy affect the evolution of this ratio? This paper shows that it can, and it also shows that the actual effect of education policy depends on the allocation rule of the budget across educational levels. The consideration of a stylized hierarchical education model allows us to develop analytical conditions under which the allocation rule favours the accumulation of skills. The analysis has implication for policy makers in developing countries, where skill formation is much needed, because it shows that observed allocation rules usually violate the maximization condition by the assignment of higher-than-optimal resources to higher education.

Keywords: education budget; skills accumulation (search for similar items in EconPapers)
JEL-codes: I2 I21 I22 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2011-02
New Economics Papers: this item is included in nep-edu, nep-lab and nep-lam
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https://hdl.handle.net/20.500.12008/2196 (application/pdf)

Related works:
Journal Article: Public Expenditure on Education and Skill Formation: Is There a Simple Rule to Maximize Skills? (2012)
Working Paper: Public expenditure on education and skill formation: is there a simple rule to maximize skills? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ude:wpaper:0611

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