Efficient subsidization of human capital accumulation with overlapping generations and endogenous growth
This paper studies second-best policies in an OLG model in which endogenous growth results from human capital accumulation. When young, individuals decide on education, saving, and nonqualified labour. When old, individuals supply qualified labour. Growth equilibria are inefficient in laissez-faire because of distortionary taxation. The inefficiency is exacerbated if selfish individuals externalize the positive effect of education on descendents' productivity. It is shown to be second best not to distort education if the human capital investment function is isoelastic. If the function is not isoelastic, a case is made for subsidizing education even relative to the first best.
Year of publication: |
2009
|
---|---|
Authors: | Richter, Wolfram F. ; Braun, Christoph |
Publisher: |
Bonn : Institute for the Study of Labor (IZA) |
Subject: | Bildungsinvestition | Bildungsverhalten | Sparen | Einkommensteuer | Optimale Besteuerung | Overlapping Generations | Neue Wachstumstheorie | Theorie | OLG model | endogenous growth | endogenous labour | education and saving | intergenerational externalities | optimal taxation |
Saved in:
freely available
Series: | IZA Discussion Papers ; 4629 |
---|---|
Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 61780205X [GVK] hdl:10419/35956 [Handle] |
Classification: | H21 - Efficiency; Optimal Taxation ; I28 - Government Policy ; J24 - Human Capital; Skills; Occupational Choice; Labor Productivity |
Source: |
Persistent link: https://www.econbiz.de/10010269470