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Optimal accumulation in an endogenous growth setting with human capital

  • Frederic, DOCQUIER

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

  • Oliver, Paddison
  • Pierre PESTIEAU

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE))

This paper considers a three-overlapping-generations model of endogeneous growth wherein human capital is the engine of growth. It first contrasts the ‘laissez-faire’ and the optimal solutions. Three possible accumulation regimes are distinguished. Then it discusses a standard set of tax-transfer instruments that allow for decentralization of the social optimum. Within the limits of our model, the rationale for the standard pattern of intergenerational transfers (the working-aged financing the education of the young and the pension of the old) is seriously questioned. On pure efficiency grounds, the case for generous public pensions is rather weak.

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Paper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2006022.

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Length: 26
Date of creation: 01 May 2006
Date of revision:
Handle: RePEc:ctl:louvec:2006022
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  1. Daniel Cohen & Marcelo Soto, 2007. "Growth and human capital: good data, good results," Journal of Economic Growth, Springer, vol. 12(1), pages 51-76, March.
  2. Robert J. Barro & N. Gregory Mankiw & Xavier Sala-i-Martin, 1994. "Capital mobility in Neoclassical models of growth," Economics Working Papers 82, Department of Economics and Business, Universitat Pompeu Fabra.
  3. Jie Zhang & Junsen Zhang, 2004. "How does social security affect economic growth? Evidence from cross-country data," Journal of Population Economics, Springer, vol. 17(3), pages 473-500, 08.
  4. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  5. Glomm, G. & Kaganovich, M., 1999. "Income Distribution Effects of Public Education and Social Security in a Growing Economy," Papers 9901, Michigan State - Econometrics and Economic Theory.
  6. de la Fuente, Angel & Doménech, Rafael, 2000. "Human Capital In Growth Regressions: How Much Difference Does Data Quality Make?," CEPR Discussion Papers 2466, C.E.P.R. Discussion Papers.
  7. Docquier, Frederic & Michel, Philippe, 1999. " Education Subsidies, Social Security and Growth: The Implications of a Demographic Shock," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(3), pages 425-40, September.
  8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  9. Michele Boldrin & Ana Montes, 2004. "The intergenerational state: education and pensions," Staff Report 336, Federal Reserve Bank of Minneapolis.
  10. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
  11. Docquier, Frederic & Paddison, Oliver, 2003. "Social security benefit rules, growth and inequality," Journal of Macroeconomics, Elsevier, vol. 25(1), pages 47-71, March.
  12. Zhang, Jie, 1995. "Social security and endogenous growth," Journal of Public Economics, Elsevier, vol. 58(2), pages 185-213, October.
  13. Michele Boldrin & Ana Montes, 2009. "Assessing the efficiency of public education and pensions," Journal of Population Economics, Springer, vol. 22(2), pages 285-309, April.
  14. Serge Coulombe & Jean-François Tremblay, 2004. "Literacy, Human Capital and Growth," Working Papers 0407E, University of Ottawa, Department of Economics.
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