Educational funds and economic growth:private versus public funds
Kohei Okada (sge005ok@student.econ.osaka-u.ac.jp)
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Kohei Okada: Graduate School of Economics, Osaka University
No 19-07, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics
Abstract:
This study constructs an overlapping generations model in order to examine the relationshipbetween education and R&D activities. Using this model, we analyze the effect of individuals'borrowing of educational funds on economic growth. We rst consider the benchmark case inwhich individuals borrow educational funds at a market interest rate. We next consider thatindividuals borrow educational funds from a government at a constant rate of interest. If thepolicy interest rate is too low, the number of skilled workers increases, but economic growth isnot achieved in the long run, because an increase in the demand for educational funds owing tothe low policy interest rate crowds out funds for R&D investment and hinders economic growth.In addition, this study examines welfare and intergenerational inequality. When the governmentlowers the policy interest rate, the current generation's welfare level increases. However, futuregenerations' welfare levels will decrease. This study shows that the government faces a trade-offbetween the current generation's welfare and future generations' welfare.
Keywords: Education policy; Occupational choice; Intergenerational inequality; R&D (search for similar items in EconPapers)
JEL-codes: H52 I22 I24 O10 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2019-05
New Economics Papers: this item is included in nep-dge
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1907
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