Optimal policies, middle class development and human capital accumulation under elite rivalry

Elena Sochirca () and Pedro Cunha Neves ()
Additional contact information
Elena Sochirca: School of Economics and Management and NIPE
Pedro Cunha Neves: Department of Management and Economics and CEFAGE-UBI, Universidade da Beira Interior

No 16/2018, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: We build a dynamic model with endogenous middle class development, human capital accumulation and policy choices, in order to analyse the interactions between the optimal policies implemented by the rulling elite and the key drivers of economic growth in the presence of elite rivalry. We consider that: (i) the specic policy choices depend on economic and political incentives of the elite; (ii) the individuals' decisions regarding their childrens' education are endogenously determined by specic economic and political factors. Our results suggest that, contrarily to the economically motivated policies, the politically motivated policy choices imply innecient economic outcomes and limit the development of the middle class and human capital accumulation. The results also show that higher middle class and human capital accumulation growth rates can lower the degree of elite rivalry by reducing the level of the optimal tax rate, increase public investments in education and yield positive changes in all economic outcomes.

Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.nipe.eeg.uminho.pt/Uploads/WP_2018/NIPE_WP_16_2018.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.nipe.eeg.uminho.pt/Uploads/WP_2018/NIPE_WP_16_2018.pdf [301 Moved Permanently]--> https://nipe.eeg.uminho.pt/Uploads/WP_2018/NIPE_WP_16_2018.pdf)

Related works:
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:nip:nipewp:16/2018

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in NIPE Working Papers from NIPE - Universidade do Minho Núcleo de Investigação em Políticas Económicas e Empresariais, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal. Contact information at EDIRC.
Bibliographic data for series maintained by NIPE ().