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Child allowances, educational subsidies and occupational choice

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  • Chen, Hung-Ju

Abstract

This paper examines the effects on occupational choice and capital accumulation attributable to government policies of child allowances and educational subsidies. We show that multiple steady states may arise under these two policies, with club convergence occurring, and the initial condition being of relevance, if the tax rate of labor income for skilled labor is fairly high. Under a policy of child allowances, an increase in the tax rate is found to raise the quantity of children, but lower the quality of adults; however, under a policy of educational subsidies, with an increase in the tax rate, corresponding increases are found in both the quantity of children and the quality of adults. For developed countries, introducing child allowances may improve or hurt the welfare while introducing educational subsidies is welfare improving.

Suggested Citation

  • Chen, Hung-Ju, 2015. "Child allowances, educational subsidies and occupational choice," Journal of Macroeconomics, Elsevier, vol. 44(C), pages 327-342.
  • Handle: RePEc:eee:jmacro:v:44:y:2015:i:c:p:327-342
    DOI: 10.1016/j.jmacro.2015.03.004
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    References listed on IDEAS

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    Cited by:

    1. Takaaki Morimoto & Ken Tabata, 2018. "Higher Education Subsidy Policy and R&D-based Growth," Discussion Paper Series 178, School of Economics, Kwansei Gakuin University, revised Feb 2018.
    2. Miyake, Atsushi & Yasuoka, Masaya, 2016. "Public Education and Child-Care Policies with Pay-As-You-Go Pension," MPRA Paper 75315, University Library of Munich, Germany.

    More about this item

    Keywords

    Child allowances; Fertility; OLG; Skill;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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