IDEAS home Printed from https://ideas.repec.org/h/aec/ieed09/09-45.html
   My bibliography  Save this book chapter

On the institutional limits to human capital

In: Investigaciones de Economía de la Educación 9

Author

Listed:
  • Rossana Patron

    () (Universidad de la Republica/University of Nottingham)

Abstract

Education as an investment has competitive investment assets to which is compared usually by the respective return rates, that crucially depend on institutional quality. High returns to education depend on education quality whereas returns to rent seeking are basically determined by the quality of economic institutions. To analyse the implications of these settings an extension of standard OLG models is designed to allow for rent seeking activities (when institutions are weak) as an alternative to invest in human capital, affecting long term growth. The analysis shows that in the long term the individual welfare maximising behaviour leads to stationary equilibrium where human capital accumulation stops: when rent seeking is present and/or individuals are impatience it is reached a long term equilibrium with lower levels of human capital. Then, the pursuit of individuals’ profits leads in the long term to an impoverished situation to individuals due to output level stagnation; from this, an immediate implication is that reducing incentives to rent seeking by enhancing institutional settings, becomes a close substitute to allocate more resources to education investment in the short term, an a more effective option in the long term.

Suggested Citation

  • Rossana Patron, 2014. "On the institutional limits to human capital," Investigaciones de Economía de la Educación volume 9,in: Adela García Aracil & Isabel Neira Gómez (ed.), Investigaciones de Economía de la Educación 9, edition 1, volume 9, chapter 45, pages 867-878 Asociación de Economía de la Educación.
  • Handle: RePEc:aec:ieed09:09-45
    as

    Download full text from publisher

    File URL: http://repec.economicsofeducation.com/2014valencia/09-45.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    2. Stephen Machin & Olivier Marie & Sunčica Vujić, 2011. "The Crime Reducing Effect of Education," Economic Journal, Royal Economic Society, vol. 121(552), pages 463-484, May.
    3. Mehlum, Halvor & Moene, Karl & Torvik, Ragnar, 2005. "Crime induced poverty traps," Journal of Development Economics, Elsevier, vol. 77(2), pages 325-340, August.
    4. John Bishop & Ludger Wossmann, 2004. "Institutional Effects in a Simple Model of Educational Production," Education Economics, Taylor & Francis Journals, vol. 12(1), pages 17-38.
    5. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    6. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    7. Lance Lochner, 2004. "Education, Work, And Crime: A Human Capital Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(3), pages 811-843, August.
    8. Altonji, Joseph G & Dunn, Thomas A, 1996. "Using Siblings to Estimate the Effect of School Quality on Wages," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 665-671, November.
    9. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
    10. Paolo Buonanno & Leone Leonida, 2006. "Education and crime: evidence from Italian regions," Applied Economics Letters, Taylor & Francis Journals, vol. 13(11), pages 709-713.
    11. Barham, Vicky & Boadway, Robin & Marchand, Maurice & Pestieau, Pierre, 1995. "Education and the poverty trap," European Economic Review, Elsevier, vol. 39(7), pages 1257-1275, August.
    12. Ceroni, Carlotta Berti, 2001. "Poverty Traps and Human Capital Accumulation," Economica, London School of Economics and Political Science, vol. 68(270), pages 203-219, May.
    13. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    14. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    15. Wilson, Kathryn, 2002. "The effects of school quality on income," Economics of Education Review, Elsevier, vol. 21(6), pages 579-588, December.
    16. Maria Emma Santos, 2011. "Human Capital and the Quality of Education in a Poverty Trap Model," Oxford Development Studies, Taylor & Francis Journals, vol. 39(1), pages 25-47.
    17. repec:kap:iaecre:v:17:y:2011:i:2:p:224-235 is not listed on IDEAS
    18. Luciano Mauro & Gaetano Carmeci, 2007. "A Poverty Trap of Crime and Unemployment," Review of Development Economics, Wiley Blackwell, vol. 11(3), pages 450-462, August.
    19. Dias, Joilson & Tebaldi, Edinaldo, 2012. "Institutions, human capital, and growth: The institutional mechanism," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 300-312.
    Full references (including those not matched with items on IDEAS)

    Citations

    More about this item

    Keywords

    institutions; human capital; development;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aec:ieed09:09-45. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Domingo P. Ximénez-de-Embún). General contact details of provider: http://edirc.repec.org/data/aedeeea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.