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Public versus Private Investment in Human Capital: Endogenous Growth and Income Inequality
Gerhard Glomm and B. Ravikumar
Journal of Political Economy
Vol. 100, No. 4 (Aug., 1992), pp. 818-834
Published by: The University of Chicago Press
Stable URL: http://www.jstor.org/stable/2138689
Page Count: 17
You can always find the topics here!Topics: Economic growth models, Income inequality, Public education, Long run economic growth, Human capital, Political economy, Private education, Income distribution, Public economics
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In this paper, we present an overlapping generations model with heterogeneous agents in which human capital investment through formal schooling is the engine of growth. We use simple functional forms for preferences, technologies, and income distribution to highlight the distinction between economies with public education and those with private education. We find that income inequality declines more quickly under public education. On the other hand, private education yields greater per capita incomes unless the initial income inequality is sufficiently high. We also find that societies will choose public education if a majority of agents have incomes below average.
Journal of Political Economy © 1992 The University of Chicago Press