Edited by Neri Salvadori and Arrigo Opocher
Chapter 6: Education and Endogenous Growth in the Neoclassical Tradition
Mario Pomini 6.1. INTRODUCTION The literature of the 1960s assigned a significant role to education as a means to promote economic growth and improve the skills of the labour force. Indeed, various economists from the classical era onwards reflected on the benefits of investment in education for economic growth (Blaug, 1978), but only the economists of that period were able to bring this element into the context of a formal model of economic growth, beginning with Uzawa’s contribution (1965). In recent years, the relation between education and growth has received renewed attention within the New Growth Theory (Aghion and Howitt, 1988, ch. 10). Economists have begun to study the influence of education spending on consumption-saving decisions in models that allow for the possibility of persistent growth, starting from the seminal study by Lucas (1988). To the extent that formal schooling is a significant component of human capital investment, educational institutions are important for economic growth (Glomm and Ravikumar 1992, 1997). The aim of this chapter is to analyse the evolution of the relationship between education spending and economic growth within the neoclassical framework. In this regard we may distinguish two phases: the one that developed during the 1960s, and the current phase, which has arisen from the theory of endogenous growth. As will be seen, the novelty of the ideas advanced by endogenous growth theory (EGT) is considerably reduced when the first generation of growth models is considered. On the other hand, the fundamental difference between them consists in the...
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