Economic Policy in a Growth Model with Human Capital, Heterogenous Agents and Unemployment (original) (raw)
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Human Capital accumulation, policy and growth
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Fiscal policy in an endogenous growth model with human capital and heterogenous agents
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This paper studies effects of fiscal policy in an endogenous growth model with human capital and heterogenous agents. Two types of households are considered. One household acquires human capital or skills through education while the other household remains unskilled. Sustained growth is the result of human capital accumulation which is a function of the existing human capital employed in the educational sector and of public spending for education. Aggregate production is given by a function with physical capital and labor as input factors, where total labor input is modelled by a CES function with skilled and unskilled labor as arguments. The paper studies effects of fiscal policy as concerns long-run growth and the distribution of income as well as concerns welfare of the two households.
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Optimal accumulation in an endogenous growth setting with human capital
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This paper considers a three-overlapping-generations model of endogenous growth wherein human capital is the engine of growth. It first contrasts the laissez-faire and the optimal solutions. Three possible accumulation regimes are distinguished. Then it discusses a standard set of tax-transfer instruments that allow for decentralization of the social optimum.
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With this paper our objective is to study the effects of different deficit policies in an endogenous growth model with publicly funded human capital accumulation and public debt, where we allow for heterogeneous households. Two types of households are considered. One household acquires human capital or skills through education while the other household remains low-skilled. Aggregate production is given by function with physical capital and labor as input factors, where total labor input is modeled by a CES function with high-skilled labor as arguments. The government can run into debt, but, the primary surplus is a positive function of public debt which guarantees that public debt is sustainable. We study the characteristics and stability of the steady state and we investigate the effects of fiscal policy with regard to long-run growth and the distribution of welfare of the two households. Further, we analyze growth and welfare effects of switching from a balanced government budget ...
This paper presents a three-sector model of endogenous growth with physical and human capital accumulation. We integrated the two extreme approaches used in the preceding literature to design the process of human capital accumulation. In this paper, the accumulation of human capital is a home production in which individuals combines their non-working time with market educational goods. This new characterization of human capital accumulation provides a framework that permits a complete fiscal policy analysis. Unlike the preceding literature, we can analyze how fiscal policy affects to all individuals' margins of decision regarding to human capital accumulation. We obtain that the way in which individuals combine educational goods and schooling time determines the impact that fiscal policy has in both the stability property of the equilibrium and in the long-run growth rate.
Specific and General Human Capital in an Endogenous Growth Model
SSRN Electronic Journal, 2000
In this paper, we define specific (general) human capital in terms of the occupations whose use is spread in a limited (wide) set of industries. We analyze the growth impact of an economy's composition of specific and general human capital, in a model where education and R&D are costly and complementary activities. The model suggests that a declining share of specific human capital, as observed in the Czech Republic, can be associated with a lower rate of long run growth. We also discuss optimal educational policies in the presence of market frictions.
Education policy, growth and welfare
Education Economics, 2008
This paper studies the general equilibrium implications of two types of education policy in an overlapping generations model. We examine vouchers, which augment inherited private education spending, and public investment on economy-wide human capital, that provides externalities to individual human capital accumulation. The government determines jointly the tax rate and the allocation of tax revenues among the two types of education policy. The optimal division of public spending between the education policy instruments and the associated tax rate depend on the elasticities of human capital accumulation with regard to vouchers and public investment on economy-wide human capital.
Human capital and economic growth in an overlapping generations model
Journal of Economics, 1995
The paper describes an aggregative optimal growth model, the essential features of which are that individuals are mortal and obtain their labor skill through educational training. The process of human capital formation is described by an education function which relates the pass rate to the educational expenditure per student. Two alternative scenarios, private and public education regimes, are separately investigated. Under the decentralized education regime, risk-neutral individuals borrow to finance their education when young. Under the centralized education regime, the cost of education is financed by taxes imposed on the workers in the economy, and the central government maximizes a long-term social target function. The equilibria of both regimes are analyzed and various comparative static results derived. It is shown that educational investment in a decentralized equilibrium is higher than that in the centralized steady state. We also establish that there exists a time discount rate at which or above which the decentralized per capita consumption exceeds that of the centralized steady state whereas for time rates of discount sufficiently near the population growth rate, the above result will be reversed.
Review of Keynesian Economics, 2021
This paper incorporates human capital accumulation through provision of universal public education by a balanced-budget government to a demand-driven analytical framework of functional distribution and growth of income. Human capital accumulation positively impacts on workers’ productivity in production and their bargaining power in wage negotiations. In the long-run equilibrium, a rise in the tax rate (which also denotes the share of output spent in human capital formation) lowers the pre- and after-tax wage share and physical capital utilization, and thus raises (lowers) the output growth rate when the latter is profit-led (wage-led). The impact of a higher tax rate on the employment rate (which also measures human capital utilization) in the long-run equilibrium is negative (ambiguous) when output growth is wage-led (profit-led). In any case, the supply of higher-skilled workers does not automatically create its own demand.