Public and private education expenditures, variable elasticity of substitution and economic growth

Gamlath, Sharmila; Lahiri, Radhika

doi:10.1016/j.econmod.2017.10.007

Cited by 20 publications

(8 citation statements)

References 28 publications

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“…In addition, Bowles and Gintis (2002) and Goldthorpe and Jackson (2008) emphasize the impact of family models on the development of children's non-cognitive traits, such as risk aversion, extroversion, the willingness to work in team, and the sense of discipline or leadership. 5 On this point, Gamlath and Lahir (2018) demonstrated that reducing the importance of inherited human capital in the learning technology could facilitate smooth convergence to the long-run outcome. 6 On the role of family ties, see also Alesina andGiuliano (2014), Franzini et al (2013), and Coco and Lagravinese (2014).…”

Section: Related Literaturementioning

confidence: 99%

Individual preferences for public education spending: Does personal income matter?

2019

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Section: Related Literaturementioning

confidence: 99%

Individual preferences for public education spending: Does personal income matter?

2019

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“…Provision of subsidy to education is even more justified in the presence of externalities in education [Bishnu (2013)] or if education is believed to create a society of knowledgeable voters [Dee (2004)]. On the other hand, Beauchemin (2000), Blankenau and Simpson (2003), Tanaka (2003), Sano and Tomoda (2010), Fanti and Gori (2011) and Wealth distribution and skills generation Dissou et al (2016) deal with public education whilst Glomm and Ravikumar (1992), Boldrin (1993), , Garcia-Penalosa and Walde (2000), , Benos (2010), Ghate et al (2014), Tournemaine and Tsoukis (2015), Roemer and Unveren (2017) and Gamlath and Lahiri (2018) study both public and private educations. Tournemaine and Tsoukis (2015) study how the choice between public and private education interacts with the status-driven motivation of individuals.…”

Section: Introductionmentioning

confidence: 99%

“…In their paper, individuals are different in status consciousness but not initial wealth. Gamlath and Lahiri (2018) use a variable elasticity of substitution between public and private expenditure in an education production function to show that steady-state values of utility, human capital, physical capital increase with the degree of substitutability (similarity) between public and private expenditure. However, most of the works studying public vs private education do not consider wealth distribution.…”

Section: Introductionmentioning

confidence: 99%

Wealth distribution and skills generation under public and private education systems

Goswami

Chakraborty

2021

IGDR

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Purpose This paper aims to understand the differing impacts of wealth distribution on human capital accumulation and skilled-unskilled labour generation under three educational paradigms as follows: private, public and a system of mixed education. Design/methodology/approach The authors use an overlapping generations model. Findings The wealth dynamics show that both in the private education system and public education system, there are two possible outcomes- stagnation and steady growth depending on the efficiency of the education system, skill premium and other parameters. The choice of the education system through voting is discussed. It is found that skilled workers would always vote for private education whilst unskilled workers vote for private education if public education expenditure of the economy is low. Research limitations/implications The study is subject to several limitations. This paper considers the rate of interest and wage rate to be exogenously given, and thus ignores the general equilibrium effects. The authors do not consider the labour-leisure choice. The introduction of labour leisure choice in the model would alter many of the results. The authors do not consider heterogeneous ability across individuals. The analysis of the differential efficiency of the different education systems needs further, rigorous research. Also, this paper does not consider other occupations such as entrepreneurship and self-employment. This paper considers the labour demand function to be perfectly elastic, and hence, does not consider any demand constraint. What happens if bequests are taxed? What happens if parents are not altruistic? These questions may be addressed in future research. Social implications If the proportion of tax paying skilled labour is low in any country, pure public education may not be able to generate sustained human capital growth. For countries with a sufficiently large proportion of skilled labour, the public education system would be successful. On the other hand, if skill premium is low or the education system is poorly managed private education system may fail too. Originality/value Whilst investigating the effects of public vs private education on growth and development in the presence of unequal wealth distribution, The authors have tried to address a few questions. First, why the public education system has been successful in skill accumulation in developed countries whilst it has failed to do so in less developed countries? Second, why do some countries with mostly privately run educational institutions perform much better in human capital production whilst others do not? Third, in an economy with unequal wealth distribution, what are the factors that result in public or private education as a voting equilibrium outcome?

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“…NEYCHEVA A main obstacle being faced by the studies on human capital is its measurement. The most popular proxies comprise average years of schooling (Barro & Lee, 2013), enrolment rate (Mankiw et al, 1992), working-age population with a certain educational level completed (Neycheva, 2016), expenditure on education (Annabi, 2017;Blankenau & Simpson, 2000;Gamlath & Lahiri, 2018), scores from internationally recognized tests (Hanushek & Kimko, 2000;Hanushek & Woessman, 2008;Lynn & Vanhanen, 2002). Here, I focus on the population having completed tertiary education, that is, levels 5-8 according to the International Standard Classification of Education .…”

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confidence: 99%

How might the negative impact of higher education on growth be explained? The role of vertical qualification (mis)match in an MRW‐type model

Neycheva

2019

Econ of Transit and Inst Chang

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This study explores the impact of higher education on growth in 11 new EU members over the period 2000–2016 using an augmented MRW‐type model which takes into account the quality of education and vertical mismatch. More precisely, it tests whether the accelerating increase of college graduates causes an oversupply of educated labour which, in turn, extends the qualification mismatch and adversely affects growth of per capita income. We find that an increase of the most educated labour force does not per se lead to a higher growth rate. The impact of human capital becomes positive and statistically significant only if graduates with occupations requiring tertiary education are considered in the model. In addition, the econometric outcome implies that the extent of skill mismatch is determined primarily by the rising female population with college education and the gross value added of trade‐related services.

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Public and private education expenditures, variable elasticity of substitution and economic growth

Cited by 20 publications

References 28 publications

Individual preferences for public education spending: Does personal income matter?

Individual preferences for public education spending: Does personal income matter?

Wealth distribution and skills generation under public and private education systems

How might the negative impact of higher education on growth be explained? The role of vertical qualification (mis)match in an MRW‐type model

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