Public Expenditures, Growth and Distribution in a Mixed Regime of Education with a Status Motive

TOURNEMAINE, FREDERIC; TSOUKIS, CHRISTOPHER

Abstract

This paper tackles the issue of growth, distribution, and the provision of public services in a growth model with human capital accumulation where heterogeneous individuals decide whether to attend a publicly funded education regime or a privately funded one. Heterogeneity of individuals is introduced via their status-motivation which is shown to affect their choice of education. In such a framework, we obtain an inverted-U shaped relationship between growth and the size of the public education sector. In contrast with the general wisdom, we show that a larger public education sector is compatible with both a reduction of inequalities and an increase of long-term growth. Although we demonstrate that in a majoritarian system all individuals agree on a lower size of the public education regime than that which maximizes growth, our analysis also highlights the tension between the direct beneficiaries and nonbeneficiaries from the public regime.

Citation

TOURNEMAINE, F., & TSOUKIS, C. (2015). Public Expenditures, Growth and Distribution in a Mixed Regime of Education with a Status Motive. Journal of Public Economic Theory, 17(5), https://doi.org/10.1111/jpet.12099

• Journal Article Type: Article
• Online Publication Date: Dec 5, 2013
• Publication Date: 2015-10
• Journal: Journal of Public Economic Theory
• Print ISSN: 1097-3923
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 17
• Issue: 5
• DOI: https://doi.org/10.1111/jpet.12099