International Journal of Economic Behavior and Organization
Volume 3, Issue 2-1, April 2015, Pages: 46-51
Received: Mar. 3, 2015;
Accepted: Mar. 24, 2015;
Published: Mar. 30, 2015
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Keiko Nakayama, Faculty of Economics, Chukyo University, 101-2, Yagotohonmachi, Showa, Nagoya, 466-8666, Japan
Masatoshi Shirai, Faculty of Economics, Chukyo University, 101-2, Yagotohonmachi, Showa, Nagoya, 466-8666, Japan
This paper constructs an endogenous growth model where the educational sector (higher education) produces human capital and social knowledge by education and research activities. The steady state growth paths are studied for market economy where the educational sector is financed by the income tax imposed on household and the rent on use of social knowledge by firm. We show that the education-research allocation in the educational sector determines the income tax rate and also the growth rate for the market economy. We conclude that there exists a certain education-research allocation maximizing the steady state growth rate, and that the optimal income tax rate is not necessarily zero.
Education and Research in Public Policy, International Journal of Economic Behavior and Organization. Special Issue: Recent Developments of Economic Theory and Its Applications.
Vol. 3, No. 2-1,
2015, pp. 46-51.
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