Public Education Expenditures, Taxation, and Growth: Linking Data to Theory

Blankenau, William; Simpson, Nicole B.; Tomljanovich, Marc

doi:10.1257/aer.97.2.393

“…Glomm and Ravikumar, 1997;Docquier and Michel, 1999;Dhont and Heylen, 2009) and empirical work (e.g. Nijkamp and Poot, 2004;Blankenau et al, 2007). Finally, public investment in infrastructure has robust positive effects on aggregate productivity (e.g.…”

Section: Direct Effects Of Fiscal Policy On Tfpmentioning

confidence: 95%

Fiscal policy and TFP in the OECD: measuring direct and indirect effects

Everaert

¹

,

Heylen

²

,

Schoonackers

³

2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Statement of purpose:The purpose of these working papers is to promote the circulation of research results (Research Series) and analytical studies (Documents Series) made within the National Bank of Belgium or presented by external economists in seminars, conferences and conventions organised by the Bank. The aim is therefore to provide a platform for discussion. The opinions expressed are strictly those of the authors and do not necessarily reflect the views of the National Bank of Belgium. JEL classification: C31, C33, E62, O38 Orders

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“…This quote stresses the importance of including both sides of the government balance sheet when the effects of new policies are examined. This issue is also confirmed by studies dealing with the empirics of growth which show that the growth effects of public education spending are generally mixed except when the method of finance is properly accounted for in which case they are clearly positive (see, e.g., Bassanini and Scarpenta, 2001;Blankenau et al, 2007b).…”

Section: Introductionmentioning

confidence: 73%

Public funding of higher education

Viaene

¹

,

Zilcha

²

2013

Journal of Public Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Public Funding of Higher Education AbstractRecent criticism from different sides has expressed the view that, with scarce resources, there is little justification for massive public funding of higher education. Central to the debate is the conjecture that colleges and universities use their resources inefficiently and focus insufficiently on their mission to expand students' human potential. Our aim in this paper is to examine the theoretical premises of this conjecture in a small open economy and uncover the conditions under which public investment in higher education is efficient and desirable. We analyze non-stationary equilibria of an OLG economy, characterized by perfect capital mobility, intergenerational transfers and a hierarchical education system. The government uses income tax revenues to finance basic education and support higher education that generates skilled labor. Given this, the following issues are considered: (a) the impact of education and international markets on t he equilibrium number of low-skilled and skilled workers in each generation; (b) the economic efficiency of public subsidies to higher education in generating skilled human capital; (c) the endogenous support for a government's educational policies found in a political equilibrium.JEL-Code: D910, E250, H520.

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“…Our model identifies several forces which affect income inequality in opposite direcquality on students' achievement and earnings. 10 See for instance Easterly and Rebelo (1993), Levine and Renelt (1992) and Blankenau, Simpson, and Tomljanovich (2007).…”

Section: Figure 1: Public Education Expenditures and Inequalitymentioning

confidence: 99%

“…3 Blankenau, Simpson, and Tomljanovich (2007) find empirical evidence for a positive relationship between public education expenditures and economic growth.…”

Section: Introductionmentioning

confidence: 99%

Public Education Expenditures, Growth and Income Inequality

Artige

¹

,

Cavenaile

²

2016

SSRN Journal

0

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Public education expenditures are usually seen as having at least two desirable effects. On the one hand, it can foster economic growth through human capital accumulation. It can also decrease income inequality by offering every student the same learning opportunities. This paper studies both aspects of public education expenditures in a model of occupational choice with an endogenous supply of teachers. First, we show that the impact of public education expenditures on economic growth depends on the quality of teachers. The quality of the educational sector, in turn, depends on the level of public education expenditures as well as on the shape of the human capital distribution in the economy. In particular, we show that economies whose human capital distribution exhibits fatter tails can attract teachers of higher quality for the same level of public education spending. This implies that empirical studies aiming at identifying the role of public education expenditures should control for higher-order (beyond the mean) of the human capital distribution. Second, this paper documents a U-shaped relationship between public education spending and income inequality for a cross-section of countries as well as across US states. In our model of occupational choice, managers and workers are imperfect substitutes in production. Increasing public education expenditures * We are grateful to Jess Benhabib, Jaroslav Borovicka, William Easterly, Boyan Jovanovic, Bernard Lejeune, Simon Mongey, Klaus Prettner, Pau Roldan, Edouard Schaal, Alfonso Sousa-Poza and participants at the Economics seminar of the University Hohenheim for helpful comments and discussions.(through increased taxation) modifies occupational choice, supply and demand of workers. Whereas an increase in public education spending benefits all through an improvement of production efficiency, relative income gains at the top and bottom of the distribution depends on the reallocation of labor across occupations and changes in human capital distribution. The general equilibrium interaction between these different forces can result in a U-shaped relationship between the level of public education spending and income inequality. We calibrate our model on data from 8 OECD countries and show that some countries, among which the U.S., could spend more on public education to yield more income growth and less income inequality.

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Public Education Expenditures, Taxation, and Growth: Linking Data to Theory

Cited by 139 publications

References 27 publications

Fiscal policy and TFP in the OECD: measuring direct and indirect effects

Fiscal policy and TFP in the OECD: measuring direct and indirect effects

Public funding of higher education

Public Education Expenditures, Growth and Income Inequality

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