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Demographic Structure and the Political Economy of Education Subsidies

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  • Kemnitz, Alexander

Abstract

This paper investigates the politico-economic impact of a society's age structure on the extent of public funding of education. Education subsidies serve to internalize positive spillovers of human capital investment, but redistribute resources from the working old to the non-working young, thus creating a conflict of interest between the two generations. The political process is characterized by a representative democracy. In the steady state, high rates of population growth lead to oversubsidization, while low rates lead to undersubsidization, relative to a lifetime income maximizing situation. Population aging leads to higher educational subsidies in the politico-economic equilibrium. Starting from a situation of undersubsidization, this raises lifetime incomes. Copyright 1999 by Kluwer Academic Publishers

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  • Kemnitz, Alexander, 1999. "Demographic Structure and the Political Economy of Education Subsidies," Public Choice, Springer, vol. 101(3-4), pages 235-249, December.
    • Handle: RePEc:kap:pubcho:v:101:y:1999:i:3-4:p:235-49
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    Citations

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    Cited by:

    1. Mira Fischer & Patrick Kampkötter, 2017. "Effects of German Universities' Excellence Initiative on Ability Sorting of Students and Perceptions of Educational Quality," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 173(4), pages 662-687, December.
    2. Sugimoto, Yoshiaki & Nakagawa, Masao, 2010. "From duty to right: The role of public education in the transition to aging societies," Journal of Development Economics, Elsevier, vol. 91(1), pages 140-154, January.
    3. Casamatta, G. & Batté, L., 2016. "The Political Economy of Population Aging," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 381-444, Elsevier.
    4. Haupt, Alexander, 2012. "The evolution of public spending on higher education in a democracy," European Journal of Political Economy, Elsevier, vol. 28(4), pages 557-573.
    5. Cattaneo, M. Alejandra & Wolter, Stefan C., 2009. "Are the elderly a threat to educational expenditures?," European Journal of Political Economy, Elsevier, vol. 25(2), pages 225-236, June.
    6. Georges Casamatta & L. Batté, 2016. "The Political Economy of Population Aging," Post-Print hal-02520521, HAL.
    7. Niklas Potrafke, 2006. "Parties Matter in Allocating Expenditures: Evidence from Germany," Discussion Papers of DIW Berlin 652, DIW Berlin, German Institute for Economic Research.
    8. Ueli Grob & Stefan C. Wolter, 2007. "Demographic Change and Public Education Spending: A Conflict between Young and Old?," Education Economics, Taylor & Francis Journals, vol. 15(3), pages 277-292.
    9. Oberndorfer, Ulrich & Steiner, Viktor, 2006. "Intergenerational Conflict, Partisan Politics, and Public Higher Education Spending: Evidence from the German States," IZA Discussion Papers 2417, Institute of Labor Economics (IZA).
    10. Alexander Kemnitz & Robert K. von Weizsäcker, 2003. "Bildungsreform in der Demokratie," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(2), pages 188-204.

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