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Education policy in a general equilibrium model with heterogeneous agents


  • Stephane Ciriani

    () (Paris 2 Pantheon Assas University, Ermes Cnrs fre 2887)


This paper studies the impact of public intervention on educationfinance and economic growth in general equilibrium. I use a 3period overlapping generations model where human capitalinvestment is risky and individuals are heterogeneous with respectto their learning abilities. I show that subsidization of privatespending on education leads to a higher economic growth than purepublic education in the short run if initial inequality issufficiently low and in the long run if the dispersion of learningabilities is sufficiently low. The determination of the politicalequilibrium shows that there can exist a conflict betweendemocracy and economic growth.

Suggested Citation

  • Stephane Ciriani, 2007. "Education policy in a general equilibrium model with heterogeneous agents," Economics Bulletin, AccessEcon, vol. 9(1), pages 1-7.
  • Handle: RePEc:ebl:ecbull:eb-05i20029

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    References listed on IDEAS

    1. Zhang, Jie, 1996. " Optimal Public Investments in Education and Endogenous Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(3), pages 387-404.
    2. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    3. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
    4. Jean-Pierre Vidal & Michael Bräuninger, 2000. "Private versus public financing of education and endogenous growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(3), pages 387-401.
    5. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-834, August.
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    Cited by:

    1. Marconi, G. & de Grip, A., 2014. "Education and growth with learning by doing," ROA Research Memorandum 010, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    2. Accolley, Delali, 2015. "A Review of Some Postwar Economic Growth Theories and Empirics," MPRA Paper 69860, University Library of Munich, Germany.

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    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development


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