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Working Papers

Public spending on education and the incentives to student achievement.

Industrial dynamics, Schumpeter, and the neoclassical growth model.

 

 

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Public spending on education and the incentives to student achievement.

With Gabriele Camera.

Abstract: We build a model where homogenous workers can accumulate human capital by investing in education. Schools combine public resources and individual effort to generate productive skills. If skills are imperfectly compensated, then in equilibrium students may under-invest in effort. We examine the effect on human capital accumulation of three basic education finance policies. Increased tuition subsidies may not be beneficial: they increase enrollment but may lower the incentives to student achievement, hence the skill level. Policies directed at enhancing the productivity of education or making degrees more informative are more successful at improving educational outcomes.