Efficient Subsidization of Human Capital Accumulation with Overlapping Generations and Endogenous Growth

This paper studies second best policies for education, saving, and labour in an OLG model in which endogenous growth results from human capital accumulation. Government expenditures have to be financed by linear instruments so that growth equilibria are inefficient. The inefficiency is exacerbated if selfish individuals externalize the positive effect of education on descendents' productivity. It is shown to be second best to subsidize education even relative to the first best if the elasticity of the human capital investment function is strictly increasing. JEL-Code: H21, I28, J24.

• Publication year

  2010

• Venue

  Social Science Research Network

• Publication date

  2010-03-01

• Fields of study

  Economics

• Identifiers
  DOI 10.2139/ssrn.1571061
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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