Education policies and development with threshold human capital externalities

Jinli Zeng and Jie Zhang

Economic Modelling, 2022, vol. 108, issue C

Abstract: Historiacally, all countries have experienced economic stagnation without schooling until compulsory schooling was instituted. This study argues that a stable poverty trap exists at a low initial average human capital owing to a coordination failure to benefit from potential human capital externalities and empirically plausible decreasing returns to scale in education. When the average human capital exceeds a threshold, balanced growth can arise from empirically established human capital externalities for increasing returns to scale in production. Compulsory public education or education subsidization can reach the threshold human capital and escape the poverty trap. Appropriate subsidies on schooling time and education spending financed by labor income taxes can fully internalize the externalities.

Keywords: Externalities; Poverty; Compulsory schooling; Education subsidies; Optimal growth (search for similar items in EconPapers)
JEL-codes: D6 D9 H2 O4 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999321003333
Full text for ScienceDirect subscribers only

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:eee:ecmode:v:108:y:2022:i:c:s0264999321003333

DOI: 10.1016/j.econmod.2021.105744

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().