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Federalism, Education-Related Public Good and Growth when Agents are Heterogeneou

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Author Info
Floriana Cerniglia ()
Riccarda Longaretti
Abstract

In this paper we use an endogeneous-growth model with human capital and heterogeneous agents to analyse the relationship between fiscal federalism and economic growth. Results show that federalism, which allows education-related public good levels to be tailored on the human capital of heterogeneous agents, increases human capital accumulation. This in turn leads to higher rates of growth. The benefits of federalism are stronger the larger the intra-jurisdiction variance of agents’ human capital.

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File URL: http://dipeco.economia.unimib.it/repec/pdf/mibwpaper138.pdf
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File Function: First version, 2008
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Publisher Info
Paper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 138.

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Length: 18 pages
Date of creation: May 2008
Date of revision: May 2008
Handle: RePEc:mib:wpaper:138

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Related research
Keywords: Fiscal Federalism; Endogenous Economic Growth; Overlapping Generations; Heterogeneous Agents;

Find related papers by JEL classification:
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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  1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416. [Downloadable!] (restricted)
  2. Akai, Nobuo & Sakata, Masayo, 2002. "Fiscal decentralization contributes to economic growth: evidence from state-level cross-section data for the United States," Journal of Urban Economics, Elsevier, vol. 52(1), pages 93-108, July. [Downloadable!] (restricted)
  3. Koethenbuerger, Marko & Lockwood, Ben, 2007. "Does Tax Competition Really Promote Growth?," The Warwick Economics Research Paper Series (TWERPS) 810, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  4. Thornton, John, 2007. "Fiscal decentralization and economic growth reconsidered," Journal of Urban Economics, Elsevier, vol. 61(1), pages 64-70, January. [Downloadable!] (restricted)
  5. Xie, Danyang & Zou, Heng-fu & Davoodi, Hamid, 1999. "Fiscal Decentralization and Economic Growth in the United States," Journal of Urban Economics, Elsevier, vol. 45(2), pages 228-239, March. [Downloadable!] (restricted)
  6. Yakita, Akira, 2003. "Taxation and growth with overlapping generations," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 467-487, March. [Downloadable!] (restricted)
  7. Arjan Lejour & Harrie Verbon, 1997. "Tax Competition and Redistribution in a Two-Country Endogenous-Growth Model," International Tax and Public Finance, Springer, vol. 4(4), pages 485-497, November. [Downloadable!] (restricted)
  8. Brueckner, Jan K., 2006. "Fiscal federalism and economic growth," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2107-2120, November. [Downloadable!] (restricted)
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  9. Zhang, Tao & Zou, Heng-fu, 1998. "Fiscal decentralization, public spending, and economic growth in China," Journal of Public Economics, Elsevier, vol. 67(2), pages 221-240, February. [Downloadable!] (restricted)
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  10. Ulrich Thießen, 2003. "Fiscal Decentralisation and Economic Growth in High-Income OECD Countries," Fiscal Studies, Institute for Fiscal Studies, vol. 24(3), pages 237-274, September.
  11. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September. [Downloadable!] (restricted)
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