Fiscal Policy and Educational Attainment in the United States - A Generational Accounting Perspective

Xavier Chojnicki and Frédéric Docquier

Public Economics from University Library of Munich, Germany

Abstract: In this paper, we investigate the consequences of the rise in educational attainment on the US generational accounts. We build on the 1995 accounts of Gokhale and al. (1999) and disaggregate them per schooling level. We show that low skill newborns are characterized by a negative generational account (-15.4% of their lifetime labor income) whilst medium and high skill newborns have positive accounts (26.8% and 32.3% of their lifetime labor income). Compared to Gokhale et al., our baseline forecast is more optimistic. Nevertheless, the rise in educational attainment is not strong enough to restore the generational balance. The current fiscal policy generates a long-run deficit. Balancing the budget requires increasing taxes (by about 1.2%) or reducing transfers (by about 2.7%). These results are rather robust to growth and discounting assumptions as well as to the treatment of education spending. They are sensitive to assumptions about the schooling level of future generations.

Keywords: Generational; accounting; Human; capital; Fiscal; policy (search for similar items in EconPapers)
JEL-codes: E62 H6 J24 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2003-03-10, Revised 2004-03-18
New Economics Papers: this item is included in nep-mac
Note: Type of Document - Acrobat PDF; prepared on PC; to print on A4; pages: 25 ; figures: included
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https://econwpa.ub.uni-muenchen.de/econ-wp/pe/papers/0303/0303002.pdf (application/pdf)

Related works:
Journal Article: Fiscal Policy and Educational Attainment in the United States: A Generational Accounting Perspective (2007)
Working Paper: Fiscal Policy and Educational Attainment in the United States – A Generational Accounting Perspective (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwppe:0303002

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