Fiscal Policy and Educational Attainment in the United States: A Generational Accounting Perspective

22 Pages Posted: 11 Apr 2007

See all articles by Xavier Chojnicki

Xavier Chojnicki

University of Lille

Frédéric Docquier

Université catholique de Louvain; CREAM, Centre for Research on Environmental Appraisal & Management, UK; IZA Institute of Labor Economics

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Abstract

In this paper we investigate the consequences of the rise in educational attainment on US generational accounts. We build on the 1995 existing accounts and disaggregate them per schooling level. Contrary to medium- and high-skill newborns, we show that low-skill newborns are characterized by negative generational accounts. Compared to the results obtained with the traditional methodology, our baseline forecast is more optimistic. Nevertheless, the rise in educational attainment is not strong enough to restore the generational balance. Balancing the budget requires increasing taxes by 1.2% or reducing transfers by 2.7%. Our results are robust to the main assumptions.

Suggested Citation

Chojnicki, Xavier and Docquier, Frédéric, Fiscal Policy and Educational Attainment in the United States: A Generational Accounting Perspective. Economica, Vol. 74, No. 294, pp. 329-350, May 2007. Available at SSRN: https://ssrn.com/abstract=978554 or http://dx.doi.org/10.1111/j.1468-0335.2006.00546.x

Frédéric Docquier

Université catholique de Louvain ( email )

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

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

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

University of Newcastle
NE1 7RU Newcastle Upon Tyne
United States

IZA Institute of Labor Economics

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Bonn, D-53072
Germany

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