Does Public Education Expansion Lead to Trickle-Down Growth?

Konferenzbeitrag

The paper revisits the debate on trickle-down growth in view of the widely discussed evolution of the earnings and income distribution that followed a massive expansion of higher education. We propose a dynamic general equilibrium model to dynamically evaluate whether economic growth triggered by an increase in public education expenditure on behalf of those with high learning ability eventually trickles down to low-ability workers and serves them better than redistributive transfers. Our results suggest that, in the shorter run, low-skilled workers lose. They are better off from promoting equally sized redistributive transfers. In the longer run, however, low-skilled workers eventually benefit more from the education policy. Interestingly, although the expansion of education leads to sustained increases in the skill premium, income inequality follows an inverted U-shaped evolution.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Public Economics - Theory I ; No. B14-V3

Classification and Topics

• Classification: Wirtschaft ; Taxation, Subsidies, and Revenue: General ; Wage Level and Structure; Wage Differentials ; Innovation; Research and Development; Technological Change; Intellectual Property Rights: General

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Böhm, Sebastian ; Grossmann, Volker ; Steger, Thomas
• Event: Veröffentlichung
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/113220
• Last update: 10.03.2025, 11:44 AM CET