Tuition Subsidies in a Model of Economic Growth

Author/Editor:

Philip R. Gerson

Publication Date:

September 1, 1994

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines a two-sector aggregative growth model with human capital and educated unemployment. In the model, a tuition subsidy may lead to a long-run decline in the educated fraction of the population, because it may decrease the long-run per capita stock of physical capital in the economy, tending to reduce the output of the education sector and the incentives for workers to enroll in school. Thus, cuts in education subsidies undertaken by countries in Africa for adjustment reasons may actually lead to long-run increases in the educational attainment of their populations.

Series:

Working Paper No. 1994/100

Subject:

Consumption Education Financial institutions Labor National accounts Population and demographics Stocks

English

Publication Date:

September 1, 1994

ISBN/ISSN:

9781451852332/1018-5941

Stock No:

WPIEA1001994

Pages:

24

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