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Education and Growth: A Simple Model with Complicated Dynamics

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Abstract

We construct a simple model of education and growth in which young adults (children) spend a fraction of their time and old adults (parents) spend a fraction of their income on education. Both a strategic complementarity and an intergener- ational externality in the creation of human capital are present. The interactions between each pair of consecutive generations lead to rich dynamics. We show that multiple growth equilibria arise, some of them periodic and some aperiodic. We also ?nd a negative correlation between volatility and growth, without a one-way causal relationship between the two being, necessarily, present. Rather this negative correlation is driven by the structural characteristics of the economy.

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  • Theodore Palivos & Dimitrios Varvarigos, 2009. "Education and Growth: A Simple Model with Complicated Dynamics," Discussion Paper Series 2009_08, Department of Economics, University of Macedonia, revised Apr 2009.
    • Handle: RePEc:mcd:mcddps:2009_08
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    Cited by:

    1. Litina, Anastasia & Palivos, Theodore, 2016. "Corruption, tax evasion and social values," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 164-177.
    2. Theodore Palivos & Dimitrios Varvarigos, 2009. "Intergenerational Complementarities in Education and the Relationship between Growth and Volatility," Discussion Papers in Economics 09/8, Division of Economics, School of Business, University of Leicester.
    3. Palivos, Theodore & Varvarigos, Dimitrios, 2017. "Pollution Abatement As A Source Of Stabilization And Long-Run Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 21(3), pages 644-676, April.
    4. Theodore Palivos & Dimitrios Varvarigos, 2013. "Intergenerational Complementarities in Education, Endogenous Public Policy, and the Relation Between Growth and Volatility," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(2), pages 249-272, April.
    5. Miyazawa, Kazutoshi, 2016. "Grandparental child care, child allowances, and fertility," The Journal of the Economics of Ageing, Elsevier, vol. 7(C), pages 53-60.
    6. Anastasia Litina & Theodore Palivos, 2015. "Corruption and Tax Evasion: Reflections on Greek Tragedy," Working Papers 193, Bank of Greece.

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    More about this item

    Keywords

    Education; Human Capital; Economic Growth.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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