Child Allowance, Public Investment in Education, and Economic Growth
Kei Murata  1@  
1 : Shizuoka University
836 Ohya Suruga-ku Shizuoka 422-8529 Japan -  Japan

This study employs an overlapping-generations model featuring public and private education to analyze whether providing child allowances and free high school education influence economic growth. Earlier studies that analyze public and private education (Glomm and Ravikumar, 1992; Cardak, 2004) do not consider endogenous fertility and whether individuals simultaneously choose public and private education. Earlier studies that consider endogenous fertility and child allowances (Groezen, Leers, and Mejidam, 2003) disregard human capital accumulation. This study assumes people can choose both public and private education simultaneously and considers endogenous fertility and human capital accumulation. It introduces both child allowances and investment in public education financed by income taxes. If further considers how raising child allowances or investing in public education affects endogenous fertility, human capital accumulation, and economic growth. This study is motivated by evidence that the burden of meeting children's educational expenses is partly responsible for Japan's declining birthrate. It analyzes whether child allowances and free high school education can improve them. We find it unlikely such policies promote economic growth if they are financed by income taxes that cannot increased indefinitely.


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