Human capital, economic growth, and public expenditure

Arbeitspapier

To understand the weak empirical relationship between human capital and macroeconomic performance, this paper presents a model in which human capital is allocated to three activities: production, tax collection (bureaucracy), and public education. The effective tax rate is low in poor countries because tax collection requires human capital, which is scarce. Throughout the transition, the effective tax rate rises, which involves a diversion of human capital from production to bureaucracy and public education. Consequently, human capital has a weak effect on production, even when human capital is efficiently allocated. Differences in institutional quality may involve a spurious negative correlation between gross domestic product and human capital.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADBI Working Paper Series ; No. 1066

Classification and Topics

• Classification: Wirtschaft ; Monetary Growth Models ; Economic Development: Human Resources; Human Development; Income Distribution; Migration ; Bureaucracy; Administrative Processes in Public Organizations; Corruption
• Subject: economic growth ; human capital ; bureaucracy ; public education

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bethencourt, Carlos ; Perera-Tallo, Fernando
• Event: Veröffentlichung
• (who): Asian Development Bank Institute (ADBI)
• (where): Tokyo
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/222833
• Last update: 24.03.20232023, 1:41 AM CET