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Government Bias in Education, Schooling Attainment, and Long‐Run Growth
Author(s) -
Basu Parantap,
Bhattarai Keshab
Publication year - 2012
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.4284/0038-4038-79.1.127
Subject(s) - stylized fact , economics , government (linguistics) , endogenous growth theory , per capita , educational attainment , government spending , growth model , labour economics , demographic economics , macroeconomics , economic growth , market economy , human capital , population , linguistics , philosophy , demography , sociology , welfare
A surprising cross‐country stylized fact is that higher public spending on education tends to lower the long‐run growth rate of per capita GDP and the returns to schooling. This is contrary to the conventional wisdom that education is a major driver of growth. In this article, we revisit this issue and try to understand these puzzling facts in terms of an endogenous growth model. Our cross‐country calibration of the growth model predicts that countries with a greater government involvement in education experience lower schooling efforts and lower growth.