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Public expenditures on education, human capital and growth in Canada: An OLG model analysis

  • Annabi, Nabil
  • Harvey, Simon
  • Lan, Yu

Much of the current debate in ageing countries focuses on whether governments should increase investments in human capital. We address this issue by simulating the effects of additional education spending using an overlapping-generations model applied to Canada. In the context of population ageing, the results indicate that how the policy is funded has powerful impacts on the targeted outcomes. Higher education incentives may increase the rate of human capital accumulation and mitigate the negative effects of slowing labour force growth. However, the impact depends on the distortions implied by alternative tax instruments and the efficiency of public expenditures on education.

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Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 33 (2011)
Issue (Month): 6 ()
Pages: 852-865

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Handle: RePEc:eee:jpolmo:v:33:y:2011:i:6:p:852-865
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505735

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  1. Greiner, Alfred, 2008. "Fiscal policy in an endogenous growth model with human capital and heterogenous agents," Economic Modelling, Elsevier, vol. 25(4), pages 643-657, July.
  2. Jérôme Vandenbussche & Philippe Aghion & Costas Meghir, 2006. "Growth, distance to frontier and composition of human capital," Journal of Economic Growth, Springer, vol. 11(2), pages 97-127, June.
  3. Audra J. Bowlus & Chris Robinson, 2005. "The Contribution of Post-Secondary Education to Human Capital Stocks in Canada and the United States," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20051, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  4. Gerhard Glomm & B. Ravikumar, 1998. "Flat-Rate Taxes, Government Spending on Education, and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 306-325, January.
  5. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  6. Vandenbussche, Jérôme & Aghion, Philippe & Meghir, Costas, 2006. "Growth, distance to frontier and composition of human capital," Scholarly Articles 12490648, Harvard University Department of Economics.
  7. Nabil Annabi & Maxime Fougère & Simon Harvey, 2009. "Inter-temporal and Inter-industry Effects of Population Ageing: A General Equilibrium Assessment for Canada," LABOUR, CEIS, vol. 23(4), pages 609-651, December.
  8. Blankenau, William F. & Simpson, Nicole B., 2004. "Public education expenditures and growth," Journal of Development Economics, Elsevier, vol. 73(2), pages 583-605, April.
  9. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents," NBER Working Papers 6384, National Bureau of Economic Research, Inc.
  10. Jonathan Temple, 2000. "Growth Effects of Education and Social Capital in the OECD Countries," OECD Economics Department Working Papers 263, OECD Publishing.
  11. William F. Blankenau & Nicole B. Simpson & Marc Tomljanovich, 2007. "Public Education Expenditures, Taxation, and Growth: Linking Data to Theory," American Economic Review, American Economic Association, vol. 97(2), pages 393-397, May.
  12. James Davies & John Whalley, 1989. "Taxes and Capital Formation: How Important is Human Capital?," NBER Working Papers 2899, National Bureau of Economic Research, Inc.
  13. Fougère, Maxime & Harvey, Simon & Mercenier, Jean & Mérette, Marcel, 2009. "Population ageing, time allocation and human capital: A general equilibrium analysis for Canada," Economic Modelling, Elsevier, vol. 26(1), pages 30-39, January.
  14. 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 818-34, August.
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