Can Education Policy Promote Environmental Quality: An Overlapping Generations Model

Education is a crucial aspect of the worldwide reaction to climate change. It aids younger generation realize and approach the effect of global warming, inspires changes in their points of view and comportment and aids them adjust to climate change-similar tendency. This paper develops a two-period overlapping-generations model featuring taxing revenues to finance education and environmental externalities, and studies how an uniform tax rate on both labour income and interests on savings, a?ects the capital accumulation and the quality of the environment. How does public spending on education affect the environment? We analyze this question by studying the comparative static analysis at the stable steady state equilibrium. Under this framework, results show that public spending on education leads from one hand to capital decreasing and from the other hand has an effect on the environmental quality and this effect depends on the share of human capital in production. In particular, there is a critical proportion of the share of human capital equal to 0,14 above which public spending on education influence negatively the environment, and below which the tax rate reacts inversely with a positive impact on the quality of the environment.