IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Financing human capital development via government debt: a small country case using overlapping generations framework

  • Stauvermann, Peter Josef
  • Kumar, Ronald

Using an over-lapping generations (OLG) model, we show how small open economies can enhance their growth through educational subsidies financed via government debt. In our model, we endogenize human capital and fertility without the strong assumptions of altruism or positive spill over effects from human capital accumulation. We show that subsidizing education through government debt leads to a Pareto improvement of all generations. Even if a country is a net borrower in the international capital market, we show that this subsidy-policy can help, under certain conditions, to improve its net borrowing position. Especially, our analysis can be applied to less developed countries, which are locked in a low development trap. A further desirable outcome of our analysis is that fertility rates decline for the small and less developed countries.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://mpra.ub.uni-muenchen.de/47453/1/MPRA_paper_47453.pdf
File Function: original version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 47453.

as
in new window

Length:
Date of creation: Apr 2013
Date of revision:
Handle: RePEc:pra:mprapa:47453
Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: https://mpra.ub.uni-muenchen.de

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Gary S. Becker & Kevin M. Murphy & Robert Tamura, . "Human Capital, Fertility, and Economic Growth," University of Chicago - Population Research Center 90-5a, Chicago - Population Research Center.
  2. Zhang, Jie, 2006. "Second-best public debt with human capital externalities," Journal of Economic Dynamics and Control, Elsevier, vol. 30(2), pages 347-360, February.
  3. Hongbin Li & Junsen Zhang & Yi Zhu, 2008. "The quantity-Quality trade-Off of children In a developing country: Identification using chinese twins," Demography, Springer, vol. 45(1), pages 223-243, February.
  4. L. K. Raut, . "Effects of Social Security on Fertility and Saving: An Overlapping Generations Model," University of Chicago - Population Research Center 87-13, Chicago - Population Research Center.
  5. Zhang, Jie, 2003. "Optimal debt, endogenous fertility, and human capital externalities in a model with altruistic bequests," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1825-1835, August.
  6. David de la Croix & Matthias Doepke, 2001. "Inequality and Growth: Why Differential Fertility Matters," UCLA Economics Working Papers 803, UCLA Department of Economics.
  7. Fenge, Robert & Meier, Volker, 2005. "Pensions and Fertility Incentives," Munich Reprints in Economics 20343, University of Munich, Department of Economics.
  8. Luca Gori & Luciano Fanti, 2008. "Child quality choice and fertility disincentives," Economics Bulletin, AccessEcon, vol. 10(7), pages 1-6.
  9. Luca Gori & Luciano Fanti, 2008. "Human capital, income, fertility and child policy," Economics Bulletin, AccessEcon, vol. 9(7), pages 1-7.
  10. repec:ebl:ecbull:v:10:y:2008:i:7:p:1-6 is not listed on IDEAS
  11. Bental, Benjamin, 1989. "The Old Age Security Hypothesis and Optimal Population Growth," Journal of Population Economics, Springer, vol. 1(4), pages 285-301.
  12. Becker, Gary S & Lewis, H Gregg, 1973. "On the Interaction between the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages S279-88, Part II, .
  13. Becker, Gary S & Tomes, Nigel, 1976. "Child Endowments and the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S143-62, August.
  14. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
  15. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
  16. Martin Kolmar, 1997. "Intergenerational redistribution in a small open economy with endogenous fertility," Journal of Population Economics, Springer, vol. 10(3), pages 335-356.
  17. Zhang, Junsen & Nishimura, Kazuo, 1993. "The old-age security hypothesis revisited," Journal of Development Economics, Elsevier, vol. 41(1), pages 191-202, June.
  18. repec:ebl:ecbull:v:9:y:2008:i:7:p:1-7 is not listed on IDEAS
  19. Fenge, Robert & Meier, Volker, 2009. "Are family allowances and fertility-related pensions perfect substitutes?," Munich Reprints in Economics 20340, University of Munich, Department of Economics.
  20. Zhang, Junxi, 1995. "Does unfunded social security also depress output growth?," Economics Letters, Elsevier, vol. 49(3), pages 307-312, September.
  21. Zhang, Jie, 1995. "Social security and endogenous growth," Journal of Public Economics, Elsevier, vol. 58(2), pages 185-213, October.
  22. van Groezen, Bas & Leers, Theo & Meijdam, Lex, 2003. "Social security and endogenous fertility: pensions and child allowances as siamese twins," Journal of Public Economics, Elsevier, vol. 87(2), pages 233-251, February.
  23. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:47453. 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: (Ekkehart Schlicht)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.