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Demographic Structure and the Political Economy of Education Subsidies

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  • Kemnitz, Alexander

Abstract

This paper investigates the politico-economic impact of a society's age structure on the extent of public funding of education. Education subsidies serve to internalize positive spillovers of human capital investment, but redistribute resources from the working old to the non-working young, thus creating a conflict of interest between the two generations. The political process is characterized by a representative democracy. In the steady state, high rates of population growth lead to oversubsidization, while low rates lead to undersubsidization, relative to a lifetime income maximizing situation. Population aging leads to higher educational subsidies in the politico-economic equilibrium. Starting from a situation of undersubsidization, this raises lifetime incomes. Copyright 1999 by Kluwer Academic Publishers

Suggested Citation

  • Kemnitz, Alexander, 1999. "Demographic Structure and the Political Economy of Education Subsidies," Public Choice, Springer, vol. 101(3-4), pages 235-249, December.
  • Handle: RePEc:kap:pubcho:v:101:y:1999:i:3-4:p:235-49
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    Cited by:

    1. Cattaneo, M. Alejandra & Wolter, Stefan C., 2009. "Are the elderly a threat to educational expenditures?," European Journal of Political Economy, Elsevier, vol. 25(2), pages 225-236, June.
    2. Mira Fischer & Patrick Kampkoetter, 2014. "Effects of the German Universities' Excellence Initiative on Ability Sorting of Students and Perceptions of Educational Quality," Cologne Graduate School Working Paper Series 05-01, Cologne Graduate School in Management, Economics and Social Sciences, revised 25 Jun 2016.
    3. Ueli Grob & Stefan C. Wolter, 2007. "Demographic Change and Public Education Spending: A Conflict between Young and Old?," Education Economics, Taylor & Francis Journals, vol. 15(3), pages 277-292.
    4. Sugimoto, Yoshiaki & Nakagawa, Masao, 2010. "From duty to right: The role of public education in the transition to aging societies," Journal of Development Economics, Elsevier, vol. 91(1), pages 140-154, January.
    5. Haupt, Alexander, 2012. "The evolution of public spending on higher education in a democracy," European Journal of Political Economy, Elsevier, vol. 28(4), pages 557-573.
    6. Oberndorfer, Ulrich & Steiner, Viktor, 2006. "Intergenerational Conflict, Partisan Politics, and Public Higher Education Spending: Evidence from the German States," IZA Discussion Papers 2417, Institute for the Study of Labor (IZA).
    7. Alexander Kemnitz & Robert K. von Weizs├Ącker, 2003. "Bildungsreform in der Demokratie," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(2), pages 188-204.
    8. repec:eee:hapoch:v1_381 is not listed on IDEAS
    9. Niklas Potrafke, 2006. "Parties Matter in Allocating Expenditures: Evidence from Germany," Discussion Papers of DIW Berlin 652, DIW Berlin, German Institute for Economic Research.

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