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Fertility, growth and the financing of public education and health

Theodore Palivos and Carol Scotese ()

Journal of Population Economics, 1996, vol. 9, issue 4, 415-428

Abstract: This paper considers the implications of the financing of government services to children when fertility decisions are endogenously determined. In particular, it is shown that when the services are financed by taxation, the equilibrium outcome is biased away from the socially preferred result. The bias results in higher fertility rates and lower economic growth rates than the efficient social optimum. This arises because each household internalizes the benefits, but not the costs of the tax-financed services. We consider alternative methods of financing the public provision of services and find that a combination of taxation and vouchers can eliminate the bias in the equilibrium outcome. JEL classification: H42, J13, O11

Keywords: Fertility; ·; growth; ·; public; education; and; health (search for similar items in EconPapers)
JEL-codes: H42 J13 O11 (search for similar items in EconPapers)
Date: 1996
Note: Received October 24, 1995 / Accepted May 31, 1996
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Handle: RePEc:spr:jopoec:v:9:y:1996:i:4:p:415-428