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Public Subsidy on Education and Welfare in Small OECD Countries: A Theoretical and Empirical Reconciliation

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  • Chaudhuri, Sarbajit
  • Biswas, Anindya

Abstract

As per the conventional wisdom there should be provision for public assistance for skill acquirement for achieving higher economic growth in the future. However, empirical observations on small OECD countries over the period 2001-2011 tell somewhat a different story. This study makes an attempt in explaining those atypical findings, first theoretically by means of a simple dynamic two-sector, specific factor general equilibrium framework with endogenous skill formation and provision for public subsidy on education and then empirically with the help of conventional unbalanced panel data models. The analysis questions the desirability of the public subsidy policy on education in improving intertemporal social welfare in a small open developed economy.

Suggested Citation

  • Chaudhuri, Sarbajit & Biswas, Anindya, 2015. "Public Subsidy on Education and Welfare in Small OECD Countries: A Theoretical and Empirical Reconciliation," MPRA Paper 61593, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:61593
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    References listed on IDEAS

    as
    1. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," The World Bank Economic Review, World Bank, vol. 11(1), pages 33-57, January.
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    3. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June.
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    5. World Bank, 2014. "World Development Indicators 2014," World Bank Publications - Books, The World Bank Group, number 18237, December.
    6. Chaudhuri, Sarbajit & Mukhopadhyay, Ujjaini, 2009. "Revisiting the Informal Sector: A General Equilibrium Approach," MPRA Paper 52135, University Library of Munich, Germany.
    7. Brown, Phillip & Green, Andy & Lauder, Hugh, 2001. "High Skills: Globalization, Competitiveness, and Skill Formation," OUP Catalogue, Oxford University Press, number 9780199244201.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Skill formation; Education Subsidy; Intertemporal Social Welfare; General Equilibrium; Unbalanced Panel Data;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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