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Optimal Accumulation in an Endogenous Growth Setting with Human Capital

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Author Info
Frédéric Docquier () (FNRS, IRES, Catholic University of Louvain and IZA Bonn)
Oliver Paddison () (ECLAC, United Nations Economic Commission for Latin America and the Caribbean)
Pierre Pestieau () (CREPP, University of Liège, CORE, PSE and CEPR)

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Abstract

This paper considers a three-overlapping-generations model of endogenous growth wherein human capital is the engine of growth. It first contrasts the laissez-faire and the optimal solutions. Three possible accumulation regimes are distinguished. Then it discusses a standard set of tax-transfer instruments that allow for decentralization of the social optimum. Within the limits of our model, the rationale for the standard pattern of intergenerational transfers (the working-aged financing the education of the young and the pension of the old) is seriously questioned. On pure efficiency grounds, the case for generous public pensions is rather weak.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2081.

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Length: 24 pages
Date of creation: Apr 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2081

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Related research
Keywords: endogenous growth; human capital; intergenerational transfers;

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Find related papers by JEL classification:
D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Robert J. Barro & N. Gregory Mankiw & Xavier Sala-i-Martin, 1995. "Capital Mobility in Neoclassical Models of Growth," NBER Working Papers 4206, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Michele Boldrin & Ana Montes, 2005. "The Intergenerational State Education and Pensions," Review of Economic Studies, Blackwell Publishing, vol. 72(3), pages 651-664, 07. [Downloadable!] (restricted)
    Other versions:
  3. Glomm, G. & Kaganovich, M., 1999. "Income Distribution Effects of Public Education and Social Security in a Growing Economy," Papers 9901, Michigan State - Econometrics and Economic Theory.
    Other versions:
  4. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May. [Downloadable!] (restricted)
  5. Jie Zhang & Junsen Zhang, 2004. "How does social security affect economic growth? Evidence from cross-country data," Journal of Population Economics, Springer, vol. 17(3), pages 473-500, 08. [Downloadable!] (restricted)
  6. Docquier, Frederic & Paddison, Oliver, 2003. "Social security benefit rules, growth and inequality," Journal of Macroeconomics, Elsevier, vol. 25(1), pages 47-71, March. [Downloadable!] (restricted)
  7. ?gel de la Fuente & Rafael Dom?ech, . "Human Capital In Growth Regressions: How Much Difference Does Data Quality Make?," UFAE and IAE Working Papers 446.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
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  8. Michele Boldrin & Ana Montes, 2009. "Assessing the efficiency of public education and pensions," Journal of Population Economics, Springer, vol. 22(2), pages 285-309, April. [Downloadable!] (restricted)
  9. Docquier, Frederic & Michel, Philippe, 1999. " Education Subsidies, Social Security and Growth: The Implications of a Demographic Shock," Scandinavian Journal of Economics, Blackwell Publishing, vol. 101(3), pages 425-40, September. [Downloadable!] (restricted)
  10. Zhang, Jie, 1995. "Social security and endogenous growth," Journal of Public Economics, Elsevier, vol. 58(2), pages 185-213, October. [Downloadable!] (restricted)
  11. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Giam Pietro Cipriani & Miltiadis Makris, 2009. "PAYG Pensions and Human Capital Accumulation: Some Unpleasant Arithmetic," CHILD Working Papers wp19_09, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY. [Downloadable!]
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