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Fertility, growth and the financing of public education and health

Listed author(s):
  • Theodore Palivos


    (Tilburg University, The Netherlands, and Louisiana State University, Department of Economics, Louisiana State University, Baton Rouge, LA 70803, USA)

  • Carol A. Scotese

    (Department of Business Economics and Public Policy, Graduate School of Business, Indiana University, Bloomington, IN 47405-1701, USA)

This paper considers the implications of the financing of government services to children when fertility decisions are endogenously determined. In particular, it is shown that when the services are financed by taxation, the equilibrium outcome is biased away from the socially preferred result. The bias results in higher fertility rates and lower economic growth rates than the efficient social optimum. This arises because each household internalizes the benefits, but not the costs of the tax-financed services. We consider alternative methods of financing the public provision of services and find that a combination of taxation and vouchers can eliminate the bias in the equilibrium outcome. JEL classification: H42, J13, O11

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Article provided by Springer & European Society for Population Economics in its journal Journal of Population Economics.

Volume (Year): 9 (1996)
Issue (Month): 4 ()
Pages: 415-428

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Handle: RePEc:spr:jopoec:v:9:y:1996:i:4:p:415-428
Note: Received October 24, 1995 / Accepted May 31, 1996
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