Journal of Population Economics

, Volume 9, Issue 4, pp 415–428 | Cite as

Fertility, growth and the financing of public education and health

  • Theodore Palivos
  • Carol A. Scotese


This paper considers the implications of the financing of government services to children when fertility decisions are endogenously determined. In particular, it is shown that when the services are financed by taxation, the equilibrium outcome is biased away from the socially preferred result. The bias results in higher fertility rates and lower economic growth rates than the efficient social optimum. This arises because each household internalizes the benefits, but not the costs of the tax-financed services. We consider alternative methods of financing the public provision of services and find that a combination of taxation and vouchers can eliminate the bias in the equilibrium outcome.

JEL classification

H42 J 13 O 11 

Key words

Fertility growth public education and health 


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Copyright information

© Springer-Verlag 1996

Authors and Affiliations

  • Theodore Palivos
    • 1
    • 2
  • Carol A. Scotese
    • 1
  1. 1.Tilburg UniversityThe Netherlands
  2. 2.EconomicsLouisiana State UniversityBaton RougeUSA

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