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Demographic Structure and the Political Economy of Education Subsidies

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  • Kemnitz, Alexander

Abstract

This paper investigates the politico-economic impact of a society's age structure on the extent of public funding of education. Education subsidies serve to internalize positive spillovers of human capital investment, but redistribute resources from the working old to the non-working young, thus creating a conflict of interest between the two generations. The political process is characterized by a representative democracy. In the steady state, high rates of population growth lead to oversubsidization, while low rates lead to undersubsidization, relative to a lifetime income maximizing situation. Population aging leads to higher educational subsidies in the politico-economic equilibrium. Starting from a situation of undersubsidization, this raises lifetime incomes. Copyright 1999 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Public Choice.

Volume (Year): 101 (1999)
Issue (Month): 3-4 (December)
Pages: 235-49

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Handle: RePEc:kap:pubcho:v:101:y:1999:i:3-4:p:235-49

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Web page: http://www.springerlink.com/link.asp?id=100332

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Cited by:
  1. Haupt, Alexander, 2012. "The evolution of public spending on higher education in a democracy," European Journal of Political Economy, Elsevier, vol. 28(4), pages 557-573.
  2. Alejandra Cattaneo & Stefan C. Wolter, 2007. "Are the Elderly a Threat to Educational Expenditures?," CESifo Working Paper Series 2089, CESifo Group Munich.
  3. Ueli Grob & Stefan C. Wolter, 2006. "Demographic Change and Public Education Spending a Conflict between Young and Old?," Economics of Education Working Paper Series 0008, University of Zurich, Institute for Strategy and Business Economics (ISU).
  4. Yoshiaki Sugimoto & Masao Nakagawa, 2007. "From Duty to Right: The Role of Public Education in the Transition to Aging Societies," ISER Discussion Paper 0700, Institute of Social and Economic Research, Osaka University.
  5. Niklas Potrafke, 2006. "Parties Matter in Allocating Expenditures: Evidence from Germany," Discussion Papers of DIW Berlin 652, DIW Berlin, German Institute for Economic Research.
  6. Oberndorfer, Ulrich & Steiner, Viktor, 2006. "Intergenerational Conflict, Partisan Politics, and Public Higher Education Spending: Evidence from the German States," IZA Discussion Papers 2417, Institute for the Study of Labor (IZA).
  7. Alexander Kemnitz & Robert K. von Weizs├Ącker, 2003. "Bildungsreform in der Demokratie," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(2), pages 188-204.

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