Endogenous Growth with Public Factors and Heterogeneous Human Capital Producers

Thomas, Ziesemer (1994): Endogenous Growth with Public Factors and Heterogeneous Human Capital Producers. Published in:

Abstract

If government revenues from a flat-rate income tax are spent on public factors and public factors are used for human capital production and human capital is used for the production of technical progress, then a higher rate of taxation will lead to a higher rate of technical progress if steady states are not unstable. If human capital producing households have different abilities they will have different desired (Lindahl) tax rates and a golden rule is no longer an acceptable welfare function. Therefore tax policy determines the rate of technical progress without a generally accepted welfare function. People with lower abilities want lower tax rates at least in the short run. When the rate of time preference is larger than the rate of technical progress people with greater abilities want higher levels of public factors and taxes also in the long run if indirect marginal utility is inelastic with respect to net income. The outcome of this political decision will determine the rate of technical progress.

• Item Type: MPRA Paper
• Language: English
• Keywords: Endogenous growth, human capital, heterogeneous abilities, public factors, taxation, technical progress.
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities ; Redistributive Effects ; Environmental Taxes and Subsidies; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies; H - Public Economics > H4 - Publicly Provided Goods; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods; H - Public Economics > H5 - National Government Expenditures and Related Policies; H - Public Economics > H5 - National Government Expenditures and Related Policies > H52 - Government Expenditures and Education; H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures ; Other Public Investment and Capital Stock; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I22 - Educational Finance ; Financial Aid; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I24 - Education and Inequality; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I25 - Education and Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O38 - Government Policy; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth

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