Public Policies and Education, Economic Growth and Income Distribution

Günther Rehme

No ECO 1999/14, Economics Working Papers from European University Institute

Abstract: This paper provides an analysis relating economic growth, human capital composition, income distribution and public education policies. In the model human capital is ‘lumpy’ and only the high skilled carry it. The government chooses capital taxes to finance education, which directly affects growth, the number of high skilled people and wages. Growth and income inequality depend positively on the productivity of the education sector. Analyzing various policies I show that e.g. the preferred policy of unskilled is growth maximizing, whereas that of skilled labour leads to less education, lower growth and more wage inequality. The paper’s public policy analysis provides and explanation for the recent observation of high growth and relatively low income inequality in some highly competitive economies.

Keywords: Growth; Distribution; Human Capital; Public Education; Public Policy (search for similar items in EconPapers)
JEL-codes: D3 D6 H2 I2 O41 (search for similar items in EconPapers)
Date: 1999
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Public Policies and Education, Economic Growth and Income Distribution (1999)
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