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Public investment in basic education and economic growth

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Author Info

  • Vladimir Kuhl Teles
  • Joaquim Andrade

Abstract

Purpose – The main purpose of this paper is to visualize the relation between government spending on basic education and the human capital accumulation process, observing the impacts of this spending on individual investments in higher education, and on economic growth. Design/methodology/approach – The paper uses an overlapping-generations model where the government tax the adult generation and spent it in basic education of the next generations. Findings – It was demonstrated that the magnitude of the marginal effect of government spending in basic education on growth crucially depends on public budget constrains. Originality/value – The paper explains why some countries with a lot of public investment in basic education growth at low rates. In that sense if a country has only a lot of public investment in basic education without investment in higher education it may growth at low rates because the taxation can cause distortions in the agents incentives to invest in higher education.

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Bibliographic Info

Article provided by Emerald Group Publishing in its journal Journal of Economic Studies.

Volume (Year): 35 (2008)
Issue (Month): 4 (July)
Pages: 352-364

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Handle: RePEc:eme:jespps:v:35:y:2008:i:4:p:352-364

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Related research

Keywords: Economic growth; Education; Expenditure; Government; Human capital;

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References

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  1. Gerhard Glomm & B. Ravikumar, 1998. "Flat-Rate Taxes, Government Spending on Education, and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 306-325, January.
  2. Kaganovich, Michael & Zilcha, Itzhak, 1999. "Education, social security, and growth," Journal of Public Economics, Elsevier, vol. 71(2), pages 289-309, February.
  3. Eckstein, Zvi & Zilcha, Itzhak, 1994. "The effects of compulsory schooling on growth, income distribution and welfare," Journal of Public Economics, Elsevier, vol. 54(3), pages 339-359, July.
  4. Milesi-Ferretti, Gian Maria & Roubini, Nouriel, 1998. "On the taxation of human and physical capital in models of endogenous growth," Journal of Public Economics, Elsevier, vol. 70(2), pages 237-254, November.
  5. Zhang, Jie, 1996. " Optimal Public Investments in Education and Endogenous Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(3), pages 387-404.
  6. Su, Xuejuan, 2004. "The allocation of public funds in a hierarchical educational system," Journal of Economic Dynamics and Control, Elsevier, vol. 28(12), pages 2485-2510, December.
  7. Braeuninger, M. & Vidal, J.-P., 1999. "Private Versus Public Financing of Education and Endogenous Growth," G.R.E.Q.A.M. 99a11, Universite Aix-Marseille III.
  8. Glomm, Gerhard & Ravikumar, B., 1997. "Productive government expenditures and long-run growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 183-204, January.
  9. Hendricks, Lutz A., 1999. "Taxation and Long-Run Growth," Staff General Research Papers 11933, Iowa State University, Department of Economics.
  10. Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
  11. William E. Cullison, 1993. "Public investment and economic growth," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 19-34.
  12. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
  13. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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Cited by:
  1. Bashir, Saima & Herath, Janaranjana & Gebremedhin, Tesfa G., 2012. "An Empirical Analysis of Higher Education and Economic Growth in West Virginia," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124829, Agricultural and Applied Economics Association.

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