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An Analysis Of Education Externalities With Applications To Development In The Deep South

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  • WALTER W MCMAHON

Abstract

A simplified, medium‐term dynamic model of endogenous growth is used to analyze education externalities. Returns include not only direct effects but also indirect effects from education on growth and development. Indirect effects are externalities because they arise as the result of the education of others and prior generations. The existing growth literature often discounts these, although they are shown to be larger than short‐term effects. Simulations for the U.S. Deep South indicate larger medium‐term net education impacts on growth, infant mortality, longevity, and democratization, so policies do matter. These are reasons why micro rate of return estimates are larger than education effects in growth equations. (JEL I21, O40, O10, H23)

Suggested Citation

  • Walter W Mcmahon, 2007. "An Analysis Of Education Externalities With Applications To Development In The Deep South," Contemporary Economic Policy, Western Economic Association International, vol. 25(3), pages 459-482, July.
    • Handle: RePEc:bla:coecpo:v:25:y:2007:i:3:p:459-482
    DOI: 10.1111/j.1465-7287.2007.00041.x
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    Cited by:

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    2. Justina Prakapavičiūtė & Renata Korsakienė & Renata Korsakienė, 2016. "The investigation of human capital and investments into human capital: Lithuania in the context of the EU," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 3(4), pages 350-367, June.
    3. Konstantinos Angelopoulos & Jim Malley & Apostolis Philippopoulos, 2008. "Welfare implications of public education spending rules," Working Papers 2008_37, Business School - Economics, University of Glasgow.
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    5. Losina Purnastuti & Ruhul Salim, 2015. "Externalities and the Social Return to Education in Indonesia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 18(1), pages 53-74.
    6. McMahon, Walter W., 2018. "The total return to higher education: Is there underinvestment for economic growth and development?," The Quarterly Review of Economics and Finance, Elsevier, vol. 70(C), pages 90-111.

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    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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