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Enhancing Growth and Welfare through debt-financed Education

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  • Stauvermann, Peter Josef
  • Kumar, Ronald

Abstract

Using an over-lapping generations (OLG) model, we show how small open economies can enhance their growth through educational subsidies financed via public debt and reduce their fertility rate. We show that subsidizing education through public debt leads to a Pareto improvement of all generations. Even if a country is a net borrower in the international capital market, we show that this subsidy-policy can help, under certain conditions, to improve its net borrowing position. Especially, our analysis can be applied to less-developed countries.

Suggested Citation

  • Stauvermann, Peter Josef & Kumar, Ronald, 2014. "Enhancing Growth and Welfare through debt-financed Education," MPRA Paper 59455, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:59455
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    Cited by:

    1. Peter J. Stauvermann & Ronald R. Kumar, 2018. "Adult Learning, Economic Growth and the Distribution of Income," Economies, MDPI, vol. 6(1), pages 1-12, February.
    2. Peter J. Stauvermann & Jin Hu, 2018. "What can China Expect from an Increase of the Mandatory Retirement Age?," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 229-246, May.
    3. Ronald R. Kumar & Peter J. Stauvermann, 2019. "The Effects of a Revenue-Neutral Child Subsidy Tax Mechanism on Growth and GHG Emissions," Sustainability, MDPI, vol. 11(9), pages 1-23, May.
    4. Fabienne Dascher-Preising & Alfred Greiner, 2024. "Human Capital Formation With Heterogeneous Agents, Sustainable Debt Policies and Growth: Who Benefits from Fiscal Policy Rules?," Annals of Economics and Finance, Society for AEF, vol. 25(1), pages 175-212, May.

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    More about this item

    Keywords

    fertility; human capital; education subsidy; government debt.;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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