Educate or adjudicate? Socio-economic heterogeneity and welfare

Arbeitspapier

This paper presents a model to explore the welfare effects of the government's choice over two types of public goods provision: domestic regulatory and security spending (adjudication) versus education. Output is a function of physical and social capital, both of which can be heterogeneous across the regions. Local social capital is exposed to spillover effects of other regions. Education spending increases social capital, whereas adjudication spending increases total factor productivity. The solution in an OLG framework indicates that the welfare maximizing ratio of education spending is negatively related with the past levels of social capital stock and the degree of social cohesion, but positively related with the current levels of aggregate income and the tax rate. Simulations of the model's temporal solution reveal the short-run and long-run difference, reversing the positive effects of the tax rate and the income level, which is a crucial point. Income and cultural homogeneity are associated positively with the level of aggregate income and social cohesion whereas the relationship between income distribution and social cohesion is non-linear in the short-run.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 1526

Classification and Topics

• Classification: Wirtschaft ; Institutions and the Macroeconomy ; Structure, Scope, and Performance of Government ; National Government Expenditures and Education ; Education and Inequality ; Education and Economic Development ; General Welfare; Well-Being ; Cultural Economics: Public Policy
• Subject: Economic Development ; Income Equality ; Public Spending ; Social Capital ; Social Cohesion

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Neyaptı, Bilin
• Event: Veröffentlichung
• (who): Koç University-TÜSİAD Economic Research Forum (ERF)
• (where): Istanbul
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/129363
• Last update: 10.03.2025, 11:42 AM CET