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Education Systems, Growth and Welfare

  • Nikos Benos

This paper focuses on the implications of Decentralized Education (DE) and Centralized Public Education (CPE) for growth and welfare in an overlapping generations model. Individuals choose learning time, consumption and human capital. Under DE, there is no government intervention, while in CPE, human capital is augmented by public education expenditures financed by a distortionary income tax, where the latter is chosen by a benevolent fiscal authority. CPE is welfare superior to DE for moderate/strong preferences over human capital bequests and medium/high elacticities of human capital with respect to average public education spending, average and parental human capital. So, even if we abstract from equity considerations, education policy may be supported on welfare grounds

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Paper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 5-2005.

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Length: 30 pages
Date of creation: Sep 2005
Date of revision:
Handle: RePEc:ucy:cypeua:5-2005
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