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Preferences for Educational Status, Human Capital Accumulation, and Growth

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Abstract

Using an overlapping generations model in which human capital accumulation has positive external effects on the production of the human capital of future generations, this paper analyzes implications of agents’ having preferences for educational status, represented by human capital holdings relative to the social average. Examining the value and sign of the optimal distortionary tax in the optimal taxation scheme, we analyze the efficiency of the level of human capital accumulation in a decentralized economy. The desire for educational status can compensate for insufficient accumulation of human capital stemming from human capital externalities directed toward future generations.

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Authors and Affiliations

  1. Graduate School of Economics, Osaka University, 1-7 Machikaneyama, Toyonaka, Osaka, 560-0043, Japan

    Koichi Kawamoto

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  1. Koichi Kawamoto
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Correspondence to Koichi Kawamoto.

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Kawamoto, K. Preferences for Educational Status, Human Capital Accumulation, and Growth. J Econ 91, 41–67 (2007). https://doi.org/10.1007/s00712-006-0244-0

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  • DOI: https://doi.org/10.1007/s00712-006-0244-0

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