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Public Education and Capital Accumulation

  • Michele Boldrin

    (J.L. Kellogg Graduate School of Management, Northwestern University)

I study an overlapping generations model where physical and human capitals are inputs of production that can be accumulated by witholding resources from current consumption. Human capital is the output of a schooling system which can be financed either by private expenditures or by taxes on current income or by a combination of both. In a political equilibrium with majority voting, public school financing appears as an instrument to solve a "free rider problem". By improving the skills of next period's workers it increases the expected return on capital, something which cannot be achieved by means of private school only. Public schools turn out to be an instrument for intergenerational income redistribution and they may be preferred to private schools just for this motive.

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Paper provided by Centro de Investigacion Economica, ITAM in its series Working Papers with number 9301.

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Length: 31 pages
Date of creation: Jan 1993
Date of revision:
Handle: RePEc:cie:wpaper:9301
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  12. Psacharopoulos, George, 1989. "Time trends of the returns to education: Cross-national evidence," Economics of Education Review, Elsevier, vol. 8(3), pages 225-231, June.
  13. Eckstein, Zvi & Zilcha, Itzhak, 1994. "The effects of compulsory schooling on growth, income distribution and welfare," Journal of Public Economics, Elsevier, vol. 54(3), pages 339-359, July.
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  15. Michele Boldrin & Larry E. Jones & Aubhik Khan, 2005. "Three Equations Generating an Industrial Revolution?," Levine's Bibliography 784828000000000385, UCLA Department of Economics.
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  30. West, Edwin G., 1991. "Public schools and excess burdens," Economics of Education Review, Elsevier, vol. 10(2), pages 159-169, June.
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