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Education Policies, Human Capital Accumulation, and Economic Growth

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  • Kei Murata

    (Shizuoka University)

Abstract

This study employs an overlapping-generations model featuring public and private education to analyze whether providing child allowances and free high school education influences economic growth. Earlier studies that analyze public and private education (Glomm and Ravikumar, 1992; Cardak, 2004) do not consider models in which fertility is endogenous and individuals can simultaneously choose both public and private education. Earlier studies that consider the effect of child allowances on fertility (Groezen, Leers, and Mejidam, 2003) disregard human capital accumulation. This study assumes people can choose both public and private education simultaneously in a model in which both fertility and human capital accumulation are endogenous. It introduces both child allowances and investment in public education financed by income taxes. It further considers how raising child allowances or investing in public education affects fertility, human capital accumulation, and economic growth. This study is motivated by evidence that the burden of meeting children’s educational expenses is one reason for Japan’s declining birthrate. It analyzes whether child allowances or free high school education can increase the birthrate and promote human capital formation. We find that such policies are unlikely to promote economic growth if they are financed by income taxes that cannot be increased indefinitely.

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  • Kei Murata, 2017. "Education Policies, Human Capital Accumulation, and Economic Growth," International Journal of Economic Policy Studies, Springer, vol. 12(1), pages 96-106, January.
    • Handle: RePEc:spr:ijoeps:v:12:y:2017:i:1:d:10.1007_bf03405770
    DOI: 10.1007/BF03405770
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    References listed on IDEAS

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    1. Kaganovich, Michael & Zilcha, Itzhak, 1999. "Education, social security, and growth," Journal of Public Economics, Elsevier, vol. 71(2), pages 289-309, February.
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    3. Saint-Paul, Gilles & Verdier, Thierry, 1993. "Education, democracy and growth," Journal of Development Economics, Elsevier, vol. 42(2), pages 399-407, December.
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    5. Eckstein, Zvi & Zilcha, Itzhak, 1994. "The effects of compulsory schooling on growth, income distribution and welfare," Journal of Public Economics, Elsevier, vol. 54(3), pages 339-359, July.
    6. Gradstein, Mark & Justman, Moshe, 1997. "Democratic Choice of an Education System: Implications for Growth and Income Distribution," Journal of Economic Growth, Springer, vol. 2(2), pages 169-183, July.
    7. Eckstein, Zvi & Wolpin, Kenneth I., 1985. "Endogenous fertility and optimal population size," Journal of Public Economics, Elsevier, vol. 27(1), pages 93-106, June.
    8. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-834, August.
    9. 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.
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    Cited by:

    1. Koji Yasuda & Tomoko Kinugasa & Shigeyuki Hamori & Kazufumi Yugami & Kouhei Masumoto, 2024. "Empirical study about the effect of parental and child longevity on child education under COVID-19," International Journal of Economic Policy Studies, Springer, vol. 18(2), pages 341-356, August.

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