In this paper, we present an overlapping-generations model, where individuals accumulate human capital through formal schooling. We model the role of the public sector in schooling as one of collecting taxes from households and providing inputs to the learning technology. Public expenditures on schools are determined endogenously. Under plausible restrictions, our model's predictions qualitatively match the observations on schooling, pub-lic expenditures on education, and student-teacher ratios.
ASJC Scopus subject areas
- Economics and Econometrics