Public education spending, sectoral taxation and growth

Marion Davin ()

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Abstract: This paper examines the interplay between public education expenditure and economic growth in a two-sector model with manufactured goods and services. When public education is financed by sectoral taxes, the education policy maximizing the growth rate differs from that obtained by the standard unisectoral tax. The reasons for this are twofold. First, because agents' preferences for services, human capital and savings become a major determinant of the relationship between growth and public education expenditure. Second, because education spending is a service and hence sectoral taxation creates a distortion by affecting its relative price. Finally, we reveal that a sectoral tax may perform better than a standard aggregate production tax in terms of long-term growth.

Keywords: Economie; quantitative (search for similar items in EconPapers)
Date: 2014
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Published in Revue d'économie politique, 2014, 124 (4), pp.553--570. ⟨10.3917/redp.244.0553⟩

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Related works:
Journal Article: Public Education Spending, Sectoral Taxation, and Growth (2014)
Working Paper: Public Education Spending, Sectoral Taxation and Growth (2013)
Working Paper: Public Education Spending, Sectoral Taxation and Growth (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01474256

DOI: 10.3917/redp.244.0553

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