This article suggests how state enterprises can be incorporated into the theoretical and empirical growth literature. Specifically, it shows that if state enterprises are less efficient than private firms, invest less, employ less skilled labor, and are less eager to adopt new technology, then a...

The allocation of resources between education and health is an important and puzzling decision for the governments in countries with high mortality rate. We build a three-period overlapping generation model with mortality risk and show that if public education expenditure exceeds a critical...

To understand the weak empirical relationship between human capital and macroeconomic performance, this paper presents a model in which human capital is allocated to three activities: production, tax collection (bureaucracy), and public education. The effective tax rate is low in poor countries...