Availability of Higher Education and Long-Term Economic Growth
Osaka University Discussion Papers in Economics and Business Working Paper No. 03-14-Rev
37 Pages Posted: 3 Aug 2004
Date Written: September 2005
This paper examines the economic growth effects of limited availability of higher education in a simple endogenous growth model with overlapping generations. With limited availability, the scarcity of human capital keeps its price high and distributes a larger share of the aggregate output to young households. Under certain conditions, it leads to greater aggregate savings in each period, thereby enabling the economy to grow faster than without any limitation. In such cases, an excessive expansion in the availability causes a temporary boom followed by a serious deficiency in investible funds, resulting in a substantial slowdown in economic growth.
Keywords: Endogenous Growth; Human Capital; Slowdown; Intergenerational Income Distribution
JEL Classification: O41
Suggested Citation: Suggested Citation