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Journal of Economics

, Volume 109, Issue 3, pp 271–301 | Cite as

Federalism, education-related public good and growth when agents are heterogeneous

  • Floriana CernigliaEmail author
  • Riccarda Longaretti
Article

Abstract

In this paper we use an endogenous-growth model with human capital and heterogeneous agents to analyse the relationship between fiscal federalism and economic growth. The results show that federalism, which allows education-related public good levels to be tailored to the local distribution of human capital, increases human capital accumulation. This in turn leads to higher rates of growth. The benefits of federalism are stronger, the larger the intra-jurisdiction variance of agents’ human capital.

Keywords

Fiscal federalism Endogenous economic growth Overlapping generations Heterogeneous agents 

JEL Classification

H77 O41 

Notes

Acknowledgments

We are grateful to Massimo Bordignon, Claudio Borroni, Jan Brueckner, Domenico Delli Gatti, Ben Lockwood and two anonymous referees, for their helpful comments.

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Copyright information

© Springer-Verlag 2012

Authors and Affiliations

  1. 1.University of Milan - BicoccaMilanItaly

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