Modelling Social Infrastructure and Growth
AbstractThis paper examines the impact of social infrastructure on economic growth by endogenously modelling its provision by a public sector in the context of a multi-sector growth model. Our model shows that not only is social infrastructure positively correlated with output per worker, countries that are more efficient in providing the infrastructure are able to limit the level of diversion while those that are not are unable to do so. Next, we augment the model with human capital which is endogenously determined by the education sector. The extended model indicates a positive link between the education and public sectors such that a shock to one of these sectors affects not only the immediate sector but the other as well. We also show that favourable social infrastructure can have positive long-term growth effects when the Lucas (1988) specification for the accumulation of human capital is adopted. Our results suggest that emphasis should be placed on raising the efficiency level of the public sector and productivity level of the education sector. Finally, the best way of combating diversion is to encourage individuals to adopt a higher degree of aversion to it.
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Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 839.
Length: 34 pages
Date of creation: 2002
Date of revision:
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Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
Phone: +61 3 8344 5289
Fax: +61 3 8344 6899
Web page: http://www.economics.unimelb.edu.au
More information through EDIRC
Economic Growth; Human Capital; Social Infrastrncture;
Find related papers by JEL classification:
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
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.:
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