Availability of Higher Education and Long-Term Economic Growth

Akiomi Kitagawa (), Ryo Horii and Koichi Futagami

No 03-14, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper examines the relationship between the availability of higher education and an economy fs long-term growth rate in a simple endogenous growth model with overlapping generations. Under certain conditions, an increased availability of higher education narrows the rate-of-return difference between human and physical capital investments. This reduces the share of income received by the younger generation, negatively affecting aggregate savings in subsequent periods, and thereby causing a substantial slowdown in the long-term growth rate. Such a paradoxical slowdown is endemic to developed economies, where higher education plays a central role in accumulating human capital. Although the recovery from such a slowdown entails a major restructuring of educational institutions, the authority may not take preventative measures against it, being dazzled by a temporary boom during its early stages.

JEL-codes: I28 O41 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2003-11
New Economics Papers: this item is included in nep-dev, nep-edu and nep-sea
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Related works:
Journal Article: AVAILABILITY OF HIGHER EDUCATION AND LONG‐TERM ECONOMIC GROWTH* (2008)
Working Paper: Availability of Higher Education and Long-Term Economic Growth (2005)
Working Paper: Availability of Higher Education and Long-Term Economic Growth (2005)
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