Optimal Accumulation in an Endogenous Growth Setting with Human Capital

24 Pages Posted: 25 Apr 2006

See all articles by Frédéric Docquier

Frédéric Docquier

Luxembourg Institute of Socio-Economic Research (LISER); Université catholique de Louvain; Luxembourg Institute of Socio-Economic Research (LISER); CREAM, Centre for Research on Environmental Appraisal & Management, UK; IZA Institute of Labor Economics

Oliver Paddison

United Nations - Economic Commission for Latin American and the Caribbean (ECLAC)

Pierre Pestieau

University of Liège - Research Center on Public and Population Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Date Written: April 2006

Abstract

This paper considers a three-overlapping-generations model of endogenous growth wherein human capital is the engine of growth. It first contrasts the laissez-faire and the optimal solutions. Three possible accumulation regimes are distinguished. Then it discusses a standard set of tax-transfer instruments that allow for decentralization of the social optimum. Within the limits of our model, the rationale for the standard pattern of intergenerational transfers (the working-aged financing the education of the young and the pension of the old) is seriously questioned. On pure efficiency grounds, the case for generous public pensions is rather weak.

Keywords: endogenous growth, human capital, intergenerational transfers

JEL Classification: D90, H21, H52

Suggested Citation

Docquier, Frédéric and Docquier, Frédéric and Paddison, Oliver and Pestieau, Pierre, Optimal Accumulation in an Endogenous Growth Setting with Human Capital (April 2006). IZA Discussion Paper No. 2081, Available at SSRN: https://ssrn.com/abstract=898583 or http://dx.doi.org/10.2139/ssrn.898583

Frédéric Docquier (Contact Author)

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

11, Porte des Sciences
Campus Belval – Maison des Sciences Humaines
Esch-sur-Alzette, L-4366
Luxembourg

Université catholique de Louvain ( email )

IRES
Place Montesquieu 3
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://https://perso.uclouvain.be/frederic.docquier/

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

11, Porte des Sciences
Campus Belval – Maison des Sciences Humaines
Esch-sur-Alzette, L-4366
Luxembourg

CREAM, Centre for Research on Environmental Appraisal & Management, UK

University of Newcastle
NE1 7RU Newcastle Upon Tyne
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Oliver Paddison

United Nations - Economic Commission for Latin American and the Caribbean (ECLAC) ( email )

Santiago
Chile

Pierre Pestieau

University of Liège - Research Center on Public and Population Economics ( email )

Boulevard du Rectorat, 7, Batiment 31
Sart-Tilman
B-4000 Liege, 4000
Belgium
+32 4 366 3108 (Phone)
+32 4 366 3106 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Vopie Roman Pays
Louvain la Neuve
Belgium

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