School Loans, Subsidies, and Economic Growth

Akira Yakita

FinanzArchiv: Public Finance Analysis, 2004, vol. 60, issue 2, 262-276

Abstract: This paper examines the effects of government educational subsidies on economic growth and welfare. In an overlapping-generations model with human-capital accumulation, it is shown that, even when human-capital externalities are large, an increase in government subsidies to private-education debt may have a negative effect on the long-run economic growth rate through the general-equilibrium effects of factor-price changes, thereby making future generations worse off. We also show that subsidy policy does not necessarily result in a Pareto improvement even when there are positive effects on growth.

Keywords: student financial aid; human capital; economic growth (search for similar items in EconPapers)
JEL-codes: H52 I22 J24 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (5)

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