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Optimal accumulation in an endogenous growth setting with human capital

Author

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  • DOCQUIER, Frédéric
  • PADDISON, Oliver
  • PESTIEAU, Pierre

Abstract

This paper considers a three-overlapping-generations model of endogeneous growth wherein human capital is the engine of growth. It first contrasts the ‘laissez-faire’ and the optimal solutions. Three possible accumulation regimes are distinguished. Then it discusses a standard set of tax-transfer instruments that allow for decentralization of the social optimum. Within the limits of our model, the rationale for the standard pattern of intergenerational transfers (the working-aged financing the education of the young and the pension of the old) is seriously questioned. On pure efficiency grounds, the case for generous public pensions is rather weak.
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Suggested Citation

  • DOCQUIER, Frédéric & PADDISON, Oliver & PESTIEAU, Pierre, 2009. "Optimal accumulation in an endogenous growth setting with human capital," LIDAM Reprints CORE 2021, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2021
    DOI: 10.1016/j.jet.2006.03.008
    Note: In : Journal of Economic Theory, 1-18, 2008
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    References listed on IDEAS

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    1. Michele Boldrin & Ana Montes, 2005. "The Intergenerational State Education and Pensions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(3), pages 651-664.
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    More about this item

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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