Quality of Schooling: Child Quantity-Quality Tradeoff, Technological Progress and Economic Growth

Swati Saini and Meeta Mehra ()

Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers from Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India

Abstract: An overlapping generations version of an R&D-based growth model ‘a la Diamond (1965) and Jones (1995) is built to examine how improvement in quality of schooling impact technical progress and long- run economic growth of an economy by influencing fertility and education decisions at household level. The results indicate that improvement in schooling quality triggers a child quantity-quality trade-off at household level when quality of schooling exceeds an endogenously determined threshold. At the household level, parents invest more in education of children and have lesser number of children in response to improvement in quality of schooling. This micro-level tradeoff has two opposing effects on aggregate human capital accumulation at macro level. Higher investment in education of a child stimulates the accumulation of human capital which fosters technical progress but the simultaneous decline in fertility rate reduces the total factor productivity growth and economic growth by contracting the pool of available researchers. The first effect prevails over latter only when quality of schooling is higher than the threshold.

Pages: 53 pages
New Economics Papers: this item is included in nep-dge and nep-gro
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Working Paper: Quality of Schooling: Child Quantity-Quality Tradeoff, Technological Progress and Economic Growth (2017)
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