Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/38941
Authors: 
Richter, Wolfram F.
Braun, Christoph
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper Public Finance 2982
Abstract: 
This paper studies second best policies for education, saving, and labour in an OLG model in which endogenous growth results from human capital accumulation. Government expenditures have to be financed by linear instruments so that growth equilibria are inefficient. The inefficiency is exacerbated if selfish individuals externalize the positive effect of education on descendents' productivity. It is shown to be second best to subsidize education even relative to the first best if the elasticity of the human capital investment function is strictly increasing.
Subjects: 
OLG mode l
endogenous growth
endogenous labour
education
and saving
intergenerational externalities
optimal taxation
JEL: 
H21
I28
J24
Document Type: 
Working Paper

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