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Education, Rent Seeking and Growth

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  • Berdugo, Binyamin
  • Meir, Uri

Abstract

This paper studies the role of education as a way of reducing private rent seeking activities and increasing output. In many underdeveloped economies, for most individuals, there is no private return to education. Nonetheless, according to this paper, governments are better off by investing in public education. We view education as a means to build personal character, thereby affecting macroeconomic long run equilibrium by reducing the number of individuals who are engaged in private rentseeking activities. We show that education is more efficient than ordinary law enforcement because it has a long-run effect. The policy implication of this result is that even when education does not increase human capital, compulsory schooling will be beneficial in pulling underdeveloped economies out of poverty.

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File URL: http://mpra.ub.uni-muenchen.de/18369/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18369.

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Date of creation: 31 Oct 2009
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Handle: RePEc:pra:mprapa:18369

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Keywords: Rent Seeking; Decency; Education; Growth;

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  1. Rohini Pande & Christopher Udry, 2005. "Institutions and Development:A View from Below," Working Papers 928, Economic Growth Center, Yale University.
  2. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472 Elsevier.
  3. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
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  7. Besley, Timothy & Ghatak, Maitreesh, 2010. "Property Rights and Economic Development," Handbook of Development Economics, Elsevier.
  8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  9. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  10. Paolo Buonanno & Leone Leonida, 2006. "Education and crime: evidence from Italian regions," Applied Economics Letters, Taylor & Francis Journals, vol. 13(11), pages 709-713.
  11. A. Chong & C. Calderón, 2000. "Causality and Feedback Between Institutional Measures and Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 69-81, 03.
  12. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  13. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. "Why Is Rent-Seeking So Costly to Growth?," American Economic Review, American Economic Association, vol. 83(2), pages 409-14, May.
  14. Francesco Caselli, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
  15. Joseph Zeira, 2009. "Why and How Education Affects Economic Growth," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 602-614, 08.
  16. Daron Acemoglu & Joshua Angrist, 2001. "How Large are Human-Capital Externalities? Evidence from Compulsory-Schooling Laws," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 9-74 National Bureau of Economic Research, Inc.
  17. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
  18. Isaac Ehrlich, 1975. "On the Relation between Education and Crime," NBER Chapters, in: Education, Income, and Human Behavior, pages 313-338 National Bureau of Economic Research, Inc.
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