آموزش عمومی تحت تحرک پذیری سرمایه
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|27720||2002||32 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Economic Dynamics and Control, Volume 26, Issue 12, October 2002, Pages 2005–2036
The paper considers a two-country model of overlapping generations economies with intergenerational transfers motivated by altruism and investment in human capital. We examine in a non-stationary competitive equilibrium the optimal provision of education with and without capital market integration. First, we explore how regimes of education provision—public, private or mixed—arise and how they affect the dynamics of autarkic economies. Second, we study the effects of capital market integration, in equilibrium, on the optimal provision of education. Third, we show that capital market integration enhances government intervention in the provision of public education (to improve the welfare of its constituents) and consider various solutions to such a competition.
Trends manifested during the 1990s suggest a worldwide acceleration in the flows of foreign direct and portfolio investments. International production has become a significant element in the world economy and substantial flows of foreign investments to emerging markets is a recent phenomenon dating only from the beginning of last decade. This would not have been possible if it were not for the ongoing integration of international capital markets (see, e.g., UNCTAD, 1997). The increased mobility of capital coincided with the growing recognition that economies have come to revolve around the production and the use of knowledge. With the continuous upskilling of jobs, investment in education has become a high priority of many developed and developing countries. But does capital mobility enhance public investment in education? This paper seeks to study how international capital market integration (CMI) affects investment in education by households and government. This paper integrates few main features in the recent literature on endogenous growth. Investments in human capital are used as an engine for growth (see, e.g., Lucas, 1988; Azariadis and Drazen, 1990; van Marrewijk, 1999). Public education is provided by governments, although private provision of education exists, in order to foster growth (see, e.g., Glomm and Ravikumar, 1992; Eckstein and Zilcha, 1994). Various aspects of the role of capital market integration in enhancing economic activity have been studied (see, e.g., Barro et al., 1995; Buiter, 1981; Dellas and de Vries, 1995; Leiderman and Razin, 1994; Rivera-Batiz and Romer, 1991; Ruffin and Yoon, 1993; Ruffin, 1985; Stokey, 1996). Our model in a steady state can be viewed as an AK-type endogenous growth model where A is proportional to the long-run capital–labor ratio. However, we shall consider mainly the transition path and non-stationary competitive equilibria. The theoretical literature in public economics and international trade has devoted a significant amount of attention to issues concerning tax competition between governments and the provision of public goods. In a model with international capital mobility, Buiter and Kletzer (1995) study the issue of education and domestic capital market imperfection. In a closed economy, Lin (1998) examines an OLG model in which the young generations invest in their own education. Gradstein and Justman (1995) consider an economy where individuals (over-) invest in their own human capital accumulation for the purpose of attracting foreign capital. In a trade model, Wilson (1987) obtains that a tax on mobile capital can cause an inefficient distribution of public goods across regions because of the positive and negative externalities linked to investment inflows and outflows. In our framework, local governments finance public education by taxing labor earnings, the immobile factor, and therefore allow for the implementation of an efficient zoning policy. Also, individuals do not invest in their own human capital. With compulsory schooling in mind, it seems that the acts of training and the allocation of resources are not fully decided by the young generations. The specific model we analyze is as follows. We consider a two-country economy with overlapping generations, identical households (in each generation) in both countries. Parents care about their offspring's income, hence we observe intergenerational resource transfers to the young (gift-bequest motive) and investment in her/his human capital. Education to the young generation is provided by both public schooling and parents. Governments tax labor income to finance the costs of public education, while parents may use some of their free time to enhance their child's human capital. As capital market integration affects wages and interest rates differently in different countries, the bequest transfers and the relative size of investments in education are expected to change across countries. Equilibrium levels of physical capital, effective labor and output will, therefore, differ between the integrated economies. Our model allows us to deal with several important issues. First, though policy-makers wish to contain overall public spending, they make sure that ‘sufficient’ resources are devoted to education. In this regard, it is important to determine the ‘optimal’ level of real resources put into public education subject to government budget balance.1 Second, any increase in a country's investment in education raises this country's marginal return to physical capital, and thus attracts capital inflows. Capital market integration enhances government intervention in the provision of public education in order to improve the welfare of its current population (or voters). Therefore, the question how capital market integration affects the education policy, or coordination, between governments assumes importance. While we are aware of previous research on international tax competition (see, e.g., Mendoza and Tesar, 1998) we have not seen any discussion in the literature of such a conflict between governments. We consider first the endogenous growth process in an autarkic competitive equilibrium under various regimes of education provision. The effects of capital market integration on the ‘optimal provision’ of public education for the capital-exporting country (‘domestic’) and the capital-importing country (‘foreign’) are then studied. We find that, following CMI, the allocation of output between the two countries (in each date) depends upon the relative stocks of human capital. Each government has therefore an incentive to enhance the formation of human capital in order to increase the well-being of its constituents. The only tool it can use in this competition is the level of public education. We consider a two-stage game in which governments first select levels of public education and then, after the formation of human capital in each country, the two integrated economies follow a competitive equilibrium path. Various solutions to such a competition are considered. We show that the ‘optimal’ public education is the same in the case where governments agree on a cooperative solution or a Nash bargaining solution. Moreover, this Pareto optimal provision is the same as that in the autarky case. In contrast, in the Nash equilibrium between the two governments, we obtain a non-Pareto optimal level. This implies that international coordination might be necessary to avoid inefficiencies that arise from overinvestment, or underinvestment, in public education. 2 The remainder of the paper is organized as follows. Section 2 presents the OLG model with altruistic representative agents and characterizes the autarky equilibria. Section 3 studies the effects of capital market integration on the optimal provision of education in a two-country model. It also examines the education provision competition between governments in the integrated economy. Section 4 discusses the robustness of the results and concludes the paper. Most proofs are relegated to the appendix to facilitate the reading.