Public Education Expenditures, Growth and Income Inequality

Artige, Lionel; Cavenaile, Laurent

doi:10.1016/j.jet.2023.105622

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Public Education Expenditures, Growth and Income Inequality

Artige, Lionel; Cavenaile, Laurent

2023 • In Journal of Economic Theory, 209

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https://hdl.handle.net/2268/299820

DOI
10.1016/j.jet.2023.105622

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Keywords :

Endogenous growth; human capital; inequality; occupational choice; public education

Abstract :

[en] This paper analyzes the relationship between public education spending, long-run growth and income inequality. We propose an endogenous growth model with occupational choice and an endogenous supply of teachers and education quality. We show that endogenous school quality alters the shape of those relationships in a way that has new policy implications. First, growth depends on the level of public education expenditures and on the shape of the human capital distribution. Second, the relationship between public education and inequality can be either positive or negative. Calibrating our model to US state data, we find that a significant share of states faces a trade-off between increasing growth and decreasing inequality through public education spending. We find that this trade-off is overall more likely in states with higher public education expenditures, teacher employment share and relative wage, and intergenerational mobility. Finally, the existence of such a trade-off depends on how public education spending is financed.

Disciplines :

Macroeconomics & monetary economics

Author, co-author :

Artige, Lionel ; Université de Liège - ULiège > HEC Liège : UER > UER Economie : Macroéconomie

Cavenaile, Laurent ; U of T - University of Toronto [CA]

Language :

English

Title :

Public Education Expenditures, Growth and Income Inequality

Publication date :

April 2023

Journal title :

Journal of Economic Theory

ISSN :

0022-0531

eISSN :

1095-7235

Publisher :

Elsevier, Atlanta, United States - California

Volume :

209

Peer reviewed :

Peer Reviewed verified by ORBi

Additional URL :

https://www.sciencedirect.com/science/article/pii/S0022053123000182?via%3Dihub

Available on ORBi :

since 07 February 2023

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