Human Capital Investments in a Democracy

17 Pages Posted: 4 Apr 2022 Last revised: 29 Oct 2024

Date Written: October 29, 2024

Abstract

A public and a private investment in human capital, plus intrinsic skills, contribute to each household's human capital.
The public investment is decided by the winner of a democratic election between two office-motivated candidates. We show that households with too low or too high human capital are less likely to vote for the candidate that supports the larger public investment, as opposed to households with moderate human capital.
Moreover, the property of single-peaked preferences is violated.
Despite the absence of well-behaved preferences, we identify sufficient conditions for the existence, uniqueness and efficiency of an equilibrium public investment in human capital.

Keywords: human capital, democracy, differentiated candidates

JEL Classification: D72, H52

Suggested Citation

Papageorgiou, Stylianos and Xefteris, Dimitrios, Human Capital Investments in a Democracy (October 29, 2024). Available at SSRN: https://ssrn.com/abstract=4052553 or http://dx.doi.org/10.2139/ssrn.4052553

Stylianos Papageorgiou (Contact Author)

University of Cyprus ( email )

Cyprus

Dimitrios Xefteris

University of Cyprus ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus

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