How policy can influence human capital accumulation and environment quality

This paper considers the implications of education and environment policy for growth in a model where the interactions between health, education, and the environment are taken into account. With respect to previous works, in which one of these three dimensions is omitted, we consider their combined effects, arriving to novel results in the literature. According to our model, higher taxes and environment spending share in total public spending do not affect welfare significantly, but they have an important positive impact on human capital and environment quality. Here, a positive relationship between public education spending and environment quality emerges as well as between environment maintenance expenditure and human capital. At the same time, countries with a high environmental quality should spend less on environment maintenance compared to heavily polluted countries. Finally, for countries with advanced abatement technologies, the relationship between human capital and environment is positive, which is compatible with the environmental Kuznets curve.