Government Bias in Education, Schooling Attainment, and Long-Run Growth

Basu, Parantap; Bhattarai, Keshab
July 2012
Southern Economic Journal;Jul2012, Vol. 79 Issue 1, p127
Academic Journal
A surprising cross-country stylized fact is that higher public spending on education tends to lower the long-run growth rate of per capita GDP and the returns to schooling. This is contrary to the conventional wisdom that education is a major driver of growth. In this article, we revisit this issue and try to understand these puzzling facts in terms of an endogenous growth model. Our cross-country calibration of the growth model predicts that countries with a greater government involvement in education experience lower schooling efforts and lower growth.


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