Learning or Doing?

Bruno Decreuse, J.-P. Vidal and Alice Fabre

G.R.E.Q.A.M. from Universite Aix-Marseille III

Abstract: We consider a two-period overlapping generations economy in which individuals work in both periods and acquire skills when young through both learning-by-doing and formal education. We characterise the unique saddle-path stable steady state of this economy and show that individuals spend too much (too little) time in formal education when the economy is dynamically inefficient (efficient). Overeducation is, therefore, linked to overaccumulation of physical capital. Finally, we show that the social planner can decentralise the golden rule by issuing public debt when the laissez-faire economy is dynamically inefficient; there is no room for education policy in the absence of social externalities in the process of skill acquisition.

Keywords: EDUCATION; LEARNING; GENERATIONS; EXTERNALITIES (search for similar items in EconPapers)
JEL-codes: D90 I29 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:fth:aixmeq:00a08

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