On the Relationship Between Education and Growth

We examine an economy where human capital is the cause of growth. Individuals are altruistic and give their offspring education and bequests. We study the incidence of three education systems on the human capital of the offspring. We show that the effects of an education subsidy on growth are different depending on the education system. We also examine the efficient subsidy if an externality exists. We show that an unfunded social security system may be good for growth.