Efficient Subsidization of Human Capital Accumulation with Overlapping Generations and Endogenous Growth

Wolfram Richter and Christoph Braun

No 2982, CESifo Working Paper Series from CESifo

Abstract: This paper studies second best policies for education, saving, and labour in an OLG model in which endogenous growth results from human capital accumulation. Government expenditures have to be financed by linear instruments so that growth equilibria are inefficient. The inefficiency is exacerbated if selfish individuals externalize the positive effect of education on descendents’ productivity. It is shown to be second best to subsidize education even relative to the first best if the elasticity of the human capital investment function is strictly increasing.

Keywords: OLG model; endogenous growth; endogenous labour; education; and saving; intergenerational externalities; optimal taxation (search for similar items in EconPapers)
JEL-codes: H21 I28 J24 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Efficient Subsidization of Human Capital Accumulation with Overlapping Generations and Endogenous Growth (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2982

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