Education funding and regional convergence

Abstract

The aim of this paper is to discuss the process of regional convergence within the framework of an overlapping generations model in which the engine of growth is the accumulation of human capital. In particular, we consider di erent education funding systems and compare their performance in terms of growth rates and pace of convergence between two heterogeneous regions. The analysis suggests that the choice of a particular education system incorporates a possible trade-o between long run growth rate and short run convergence. In such c hoice, the initial capital stock and the extent of regional human capital discrepancy appear as central variables. JEL Classi cation numbers: O41, F22.

Economic convergence in ageing Europe

“…While labour force participation usually decreases with age (Bloom et al, 2015;Lee and Mason, 2011), and thus ageing of the working age population has a negative impact on total labour force participation, the effect on productivity is more complex. Some researchers find evidence in support of the human capital theory, showing a positive effect of labor force ageing on GDP through the growth in productivity (de la Croix and Monfort, 2000;Futagami and Nakajima, 2001;Gómez and De Cos, 2008;Malmberg, 1999, 2009;Rauhut, 2012). Other researchers show a negative effect (Bloom and Williamson, 1998;Bloom et al, 2010;Crespo Cuaresma et al, 2016;Teixeira et al, 2016).…”

Federalism, Fertility, and Growth

“…However, the important point is that central finance leads to a more equal distribution of education quality than local finance, which is easy to reconcile with empirical evidence. De la Croix and Montfort (2000) and Tamura (2001), among others, also make the same assumptions.…”

“…For α < 1, there are interregional spillovers, in that the human capital in region j affects the next period's human capital in region i ≠ j as well. There are many potential reasons for this: for example, teacher mobility (Tamura, 2001) or knowledge spillovers through personal contacts as in de la Croix and Montfort (2000). It is clear that the degree of spillovers will affect convergence between regions: when α = 1, there is maximum divergence between regions, while there may be convergence across regions in the case of positive spillovers.…”

“…A similar approach with different results is followed by Bearse et al (2001). De la Croix and Montfort (2000) and Tamura (2001) study growth and convergence with local education policies. They show that regions may converge if there are local human capital spillovers or if the human capital of teachers is the same in rich and poor districts.…”

Fiscal decentralization, migration and economic growth

“…Many of the studies, however, are based on the microeconomics framework, and examine the problem from the static point of view. Recently, attempts (though not many) have been made to extend to a dynamic or economic growth model, by Brueckner (2006), De la Croix and Monfort (2000), Madiès and Ventelou (2005), and Ogawa and Yakita (2009).…”