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How to Model a Child in School? A Dynamic Macrosimulation Study for T anzania
Author(s) -
SchuerenbergFrosch Hannah
Publication year - 2015
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12042
Subject(s) - human capital , economics , welfare , labour supply , labour economics , investment (military) , time allocation , child labour , poverty , subsistence agriculture , agriculture , economic growth , market economy , politics , political science , law , gold mining , biology , ecology , chemistry , management
Universal primary education is regarded as one of the key pillars of sustainable development. The positive influence of education on growth is supported by many empirical studies. However, the effects of education on labour supply, poverty reduction and welfare as well as subsistence agriculture are hardly traceable in an econometric set‐up, given the complex interactions and the long‐term nature of education. An economy‐wide dynamic simulation model provides a well‐suited toolkit to analyse the effects of increased school provision in these aspects and provides insights into the intertemporal aspects of the schooling decision of children. We develop a macroeconomic model that explicitly includes education and human capital allocation, and takes into account that the possibility of child labour increases the opportunity costs of human capital formation. In an application for T anzania, we find that a large‐scale investment programme in education might have a negative effect on both gross domestic product ( GDP ) growth and high‐skilled labour supply in the short term but leads to higher GDP and welfare as well as significantly reduced child labour supply in the medium to long term.