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Altruistic Overlapping Generations of Households and the Contribution of Human Capital to Economic Growth

Delali Accolley

MPRA Paper from University Library of Munich, Germany

Abstract: I developed a dynamic deterministic general equilibrium model accounting for human capital accumulation through both home education and schooling. The model is characterized by an altruistic link between households of succeeding generations in the sense parents, caring about their children’s welfare, freely impart them some knowledge at home in addition to helping them financially when they are schooling. The education regime is private and features distinguishing my model from related works are: (1) young households are economically active and work part-time while schooling, (2) allocating time to schooling or labor entails disutility, (3) tuition is proportional to the time allocated to schooling. I calibrated the model to some balanced growth facts observed between 1981 and 2013 in the Province of Quebec. The model is then used to investigate the contribution of human capital to economic growth. To do that, I simulate it assuming in turn a permanent rise in the tuition rate and the household’s ability to learn. Each of these two shocks reveals a positive correlation between education, human capital, and output. The predictions of the model are then used to shed a light on the student crisis Quebec witnessed in 2012 following our former Liberal government’s decision to increase tuition. I predict that raising tuition will neither harm education nor negatively impact on students’ ability to pay.

Keywords: Education; economic growth; human capital; overlapping generations (search for similar items in EconPapers)
JEL-codes: J24 O4 (search for similar items in EconPapers)
Date: 2015-01-25
New Economics Papers: this item is included in nep-dge and nep-edu
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