IDEAS home Printed from https://ideas.repec.org/p/bol/bodewp/589.html
   My bibliography  Save this paper

Optimal Fiscal Policy with Private and Public Investment in Education

Author

Listed:
  • L. Marattin

Abstract

This paper develops a three periods OLG growth model where agents accumulate human capital in the first period (benefiting from grandfathers savings, public expenditure in education, and human capital level of their parents), work and save in the second period (earning a salary proportional to the human capital level accumulated), and retire in the thid period, leaving bequest on for the young generation. Government raises taxes on labour and capital in order to finance public expenditure in education. We derive conditions for equilibrium and for the rate of growth, and then carry out welfare analysis in order to determine optimal taxation in a Nash policy setting.

Suggested Citation

  • L. Marattin, 2007. "Optimal Fiscal Policy with Private and Public Investment in Education," Working Papers 589, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:589
    as

    Download full text from publisher

    File URL: http://amsacta.unibo.it/4695/1/589.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Galor, Oded & Moav, Omer & Vollrath, Dietrich, 2003. "Land Inequality and the Origin of Divergence and Overtaking in the Growth Process: Theory and Evidence," CEPR Discussion Papers 3817, C.E.P.R. Discussion Papers.
    2. Jean-Pierre Vidal & Michael Bräuninger, 2000. "Private versus public financing of education and endogenous growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(3), pages 387-401.
    3. Oded Galor & Omer Moav, 2004. "From Physical to Human Capital Accumulation: Inequality and the Process of Development," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(4), pages 1001-1026.
    4. Nicholas Bull, 1993. "When all the optimal dynamic taxes are zero," Working Paper Series / Economic Activity Section 137, Board of Governors of the Federal Reserve System (U.S.).
    5. Oded Galor & Omer Moav & Dietrich Vollrath, 2004. "Land Inequality and the Origin of Divergence and Overtaking in the Growth Process," GE, Growth, Math methods 0410004, University Library of Munich, Germany.
    6. Glomm, Gerhard & Ravikumar, B., 2003. "Public education and income inequality," European Journal of Political Economy, Elsevier, vol. 19(2), pages 289-300, June.
    7. Jones, Larry E. & Manuelli, Rodolfo E. & Rossi, Peter E., 1997. "On the Optimal Taxation of Capital Income," Journal of Economic Theory, Elsevier, vol. 73(1), pages 93-117, March.
    8. Gerhard Glomm & Michael Kaganovich, 2003. "Distributional Effects of Public Education in an Economy with Public Pensions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 917-937, August.
    9. Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-622, May.
    10. 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 818-834, August.
    11. Blankenau, William F. & Simpson, Nicole B., 2004. "Public education expenditures and growth," Journal of Development Economics, Elsevier, vol. 73(2), pages 583-605, April.
    12. Oded Galor & Omer Moav, 2006. "Das Human-Kapital: A Theory of the Demise of the Class Structure," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(1), pages 85-117.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nikos Benos, 2010. "Education policy, growth and welfare," Education Economics, Taylor & Francis Journals, vol. 18(1), pages 33-47.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gerhard Glomm & Juergen Jung, 2013. "The Timing of Redistribution," Southern Economic Journal, John Wiley & Sons, vol. 80(1), pages 50-80, July.
    2. Nakajima, Tetsuya & Nakamura, Hideki, 2009. "The price of education and inequality," Economics Letters, Elsevier, vol. 105(2), pages 183-185, November.
    3. Pierre-Richard Agénor, 2012. "Infrastructure, Public Education And Growth With Congestion Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 64(4), pages 449-469, October.
    4. C. Fan & Jie Zhang, 2013. "Differential fertility and intergenerational mobility under private versus public education," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 907-941, July.
    5. Nakajima, Tetsuya & Nakamura, Hideki, 2012. "How Do Elementary And Higher Education Affect Human Capital Accumulation And Inequality? A Note," Macroeconomic Dynamics, Cambridge University Press, vol. 16(1), pages 151-158, February.
    6. Chia-Hui Lu, 2020. "Child labor and compulsory education: the effects of government education policy on economic growth and welfare," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(3), pages 637-666, April.
    7. Gerhard Glomm & Juergen Jung, 2013. "The Timing of Redistribution," Southern Economic Journal, Southern Economic Association, vol. 80(1), pages 50-80, July.
    8. Ono, Tetsuo & Uchida, Yuki, 2018. "Human capital, public debt, and economic growth: A political economy analysis," Journal of Macroeconomics, Elsevier, vol. 57(C), pages 1-14.
    9. Christoph Braun, 2010. "Taxing Human Capital: A Good Idea," Ruhr Economic Papers 0202, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    10. Gian Maria Milesi-Ferretti & Nouriel Roubini, 1995. "Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis," Working Papers 95-18, New York University, Leonard N. Stern School of Business, Department of Economics.
    11. Gomez, Manuel A., 2007. "Optimal tax structure in a two-sector model of endogenous growth," Journal of Macroeconomics, Elsevier, vol. 29(2), pages 305-325, June.
    12. Glomm, Gerhard & Kaganovich, Michael, 2008. "Social security, public education and the growth-inequality relationship," European Economic Review, Elsevier, vol. 52(6), pages 1009-1034, August.
    13. Nils-Petter Lagerlof, 2002. "Sex, Equality, and Growth (in that order)," GE, Growth, Math methods 0212001, University Library of Munich, Germany.
    14. Volker Grossmann & Panu Poutvaara, 2009. "Pareto-improving bequest taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(5), pages 647-669, October.
    15. Rafael Di Tella & Robert MacCulloch, 2009. "Why Doesn't Capitalism Flow to Poor Countries?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 285-332.
    16. Arcalean, Calin & Schiopu, Ioana, 2010. "Public versus private investment and growth in a hierarchical education system," Journal of Economic Dynamics and Control, Elsevier, vol. 34(4), pages 604-622, April.
    17. Kammas, Pantelis & Litina, Anastasia & Palivos, Theodore, 2013. "The Quality of Public Education in Unequal Societies: The Role of Tax Institutions," MPRA Paper 52193, University Library of Munich, Germany.
    18. David De La Croix & Matthias Doepke, 2009. "To Segregate or to Integrate: Education Politics and Democracy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(2), pages 597-628.
    19. Joël Hellier & Stéphane Lambrecht, 2013. "Inequality, Growth and Welfare: The Main Links," Palgrave Macmillan Books, in: Joël Hellier & Nathalie Chusseau (ed.), Growing Income Inequalities, chapter 9, pages 274-311, Palgrave Macmillan.
    20. Getachew, Yoseph Yilma, 2010. "Public capital and distributional dynamics in a two-sector growth model," Journal of Macroeconomics, Elsevier, vol. 32(2), pages 606-616, June.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:bol:bodewp:589. See general information about how to correct material in RePEc.

    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 bibliographic 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dipartimento Scienze Economiche, Universita' di Bologna (email available below). General contact details of provider: https://edirc.repec.org/data/sebolit.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.