Interacciones entre la financiación de la educación y el proceso de acumulación de capital

This paper studies an overlapping generations model where physical and human capitals are inputs of production that can be accumulated by withholding resources from current consumption. Human capital is the output of a schooling system which can be financed either by private expenditures or by taxes or by a combination of both. In a political equilibrium with majority voting, public school financing appears as an instrument to solve a "free rider problem". By improving the skills of next period''''s workers it increases the expected return on capital, something which cannot be achieved by means of private school only. Public schools turn out to be an instrument for intergenerational income redistribution and they may be preferred to private schools just for this motive. The article concentrates on specific functional forms that allow for a closed form solution of the equilibrium dynamics, but all the important results can be replicated for a general class of utility and production functions.