Jean-Pierre Vidal () (GREQAM, Centre National de la Recherche Scientifique, 2 rue de la Charité, 13002 Marseille, France) Michael Bräuninger () (Department of Economics, Universität der Bundeswehr Hamburg, Holstenhofweg 85, 22043 Hamburg, Germany)
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This paper examines interactions between education policy and growth. The analysis is carried out in an OLG model with two types of individuals: skilled and unskilled. An increase in public education reduces private costs of education, increases the proportion of skilled individuals, and tends to promote growth. On the other hand, education spending crowds out physical capital and reduces learning-by-doing. A marginal increase in the education subsidy can lower growth. It is yet shown that pure public education maximizes the long-run growth rate. Importantly, a partial subsidy to education can result in lower growth than pure private education.
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Find related papers by JEL classification: E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
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