Hostname: page-component-78c5997874-dh8gc Total loading time: 0 Render date: 2024-11-11T07:34:17.630Z Has data issue: false hasContentIssue false
  • English
  • Français

PUBLIC INVESTMENT IN A HIERARCHICAL EDUCATIONAL SYSTEM WITH CAPITAL–SKILL COMPLEMENTARITY

Published online by Cambridge University Press:  18 October 2016

Assaf Sarid
Assaf Sarid*
Affiliation:
Tel Aviv University
*
Address correspondence to: Assaf Sarid, Department of Economics, University of Haifa, 199 Aba Khoushy Avenue, Mount Carmel, Haifa 3498838, Israel; e-mail: asarid@econ.haifa.ac.il.
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

In this study I bring together two different literatures: the hierarchical education literature and the skill-biased growth literature. In an overlapping-generations model I introduce capital–skill complementarity into a hierarchical education system. I obtain results that differ qualitatively from previous studies, among which are the following: (i) At earlier stages of development, basically educated labor contributes to growth more than highly educated labor. The opposite occurs at later stages. (ii) Even when all individuals acquire higher education, a growth-enhancing policy subsidizes higher education. (iii) In a growth-enhancing policy, the share of public resources allocated to basic education declines as the economy grows. (iv) The enrollment rate evolves in an S-shaped pattern, as occurred in several OECD countries.

Keywords

Education and DevelopmentGovernment Educational ExpendituresHuman CapitalLife-Cycle Models
Type
Articles
Information
Macroeconomic Dynamics , Volume 21 , Issue 3 , April 2017 , pp. 757 - 784
Copyright
Copyright © Cambridge University Press 2016 

Footnotes

I would like to thank two anonymous referees and an associate editor for their useful comments. I am thankful to Itzhak Zilcha, Joseph Zeira, Daniel Tsiddon, and participants of the seminar at the Department of Economics, University of Haifa for their helpful suggestions.

References

REFERENCES

Aghion, Philippe and Howitt, Peter (2007) Capital, innovation, and growth accounting. Oxford Review of Economic Policy 23 (1), 79–93.CrossRefGoogle Scholar
Arcalean, Calin and Schiopu, Ioana (2010) Public versus private investment and growth in a hierarchical education system. Journal of Economic Dynamics and Control 34 (4), 604–622.Google Scholar
Barro, Robert (1991) Economic growth in a cross section of countries. Quarterly Journal of Economics 106 (2), 407.Google Scholar
Blankenau, William (2005) Public schooling, college subsidies and growth. Journal of Economic Dynamics and Control 29 (3), 487–507.Google Scholar
Blankenau, William and Camera, Gabriele (2009) Public spending on education and the incentives for student achievement. Economica 76 (303), 505–527.Google Scholar
Blankenau, William, Cassou, Steven, and Ingram, Beth (2007) Allocating government education expenditures across K-12 and college education. Economic Theory 31 (1), 85–112.Google Scholar
Card, David and Krueger, Alan (1990) Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States. Working paper 3358, National Bureau of Economic Research.Google Scholar
Caucutt, Elizabeth and Kumar, Krishna (2003) Higher education subsidies and heterogeneity: A dynamic analysis. Journal of Economic Dynamics and Control 27 (8), 1459–1502.CrossRefGoogle Scholar
Driskill, Robert and Horowitz, Andrew (2002) Investment in hierarchical human capital. Review of Development Economics 6 (1), 48–58.Google Scholar
Driskill, Robert, Horowitz, Andrew W., and Endez, Fabio M. (2009) Hierarchical human capital and economic growth: Theory and evidence. Journal of Institutional and Theoretical Economics 165 (4), 723–743.CrossRefGoogle Scholar
Eckstein, Zvi and Zilcha, Itzhak (1994) The effects of compulsory schooling on growth, income distribution and welfare. Journal of Public Economics 54 (3), 339–359.Google Scholar
Galor, Oded and Moav, Omer (2004) From physical to human capital accumulation: Inequality and the process of development. Review of Economic Studies 71 (4), 1001–1026.CrossRefGoogle Scholar
Gemmell, Norman (1995) Endogenous growth, the Solow model and human capital. Economics of Planning 28 (2), 169–183.Google Scholar
Gemmell, Norman (1996) Evaluating the impacts of human capital stocks and accumulation on economic growth: Some new evidence†. Oxford Bulletin of Economics and Statistics 58 (1), 9–28.CrossRefGoogle ScholarPubMed
Goldin, Claudia and Katz, Lawrence (1998) The origins of technology–skill complementarity. Quarterly Journal of Economics 113 (3), 693–732.CrossRefGoogle Scholar
Griliches, Zvi (1969) Capital–skill complementarity. Review of Economics and Statistics 51 (4), 465–468.CrossRefGoogle Scholar
Laitner, John (1997) Intergenerational and interhousehold economic links. Handbook of Population and Family Economics 1, 189–238.Google Scholar
Maoz, Yishay and Moav, Omer (2004) Social stratification, capital–skill complementarity, and the nonmonotonic evolution of the education premium. Macroeconomic Dynamics 8 (3), 295–309.Google Scholar
National Center for Education Statistics, US Department of Education.Google Scholar
Patron, Rossana and Vaillant, Marcel (2012) Public expenditure on education and skill formation: Is there a simple rule to maximize skills? Oxford Development Studies 40 (2), 261–271.Google Scholar
Restuccia, Diego and Urrutia, Carlos (2004) Intergenerational persistence of earnings: The role of early and college education. American Economic Review 94 (5), 1354–1378.CrossRefGoogle Scholar
Su, Xuejuan (2004) The allocation of public funds in a hierarchical educational system. Journal of Economic Dynamics and Control 28 (12), 2485–2510.Google Scholar
Viaene, Jean-Marie and Zilcha, Itzhak (2013) Public funding of higher education. Journal of Public Economics 108 (0), 78–89.CrossRefGoogle Scholar
World Bank. Available at http://databank.worldbank.org/data/views/variableselection/selectvariables.aspx?source=education-statistics-~-all-indicators#.Google Scholar
Zilcha, Itzhak (2003) Intergenerational transfers, production and income distribution. Journal of Public Economics 87 (3–4), 489–513.Google Scholar