Optimal accumulation in an endogenous growth setting with human capital

Docquier, Frédéric;Paddison, Olivier;Pestieau, Pierre
(2006)

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Authors
  • Docquier, Frédéric
    Author
  • Paddison, Olivier
    Author
  • Pestieau, PierreUCLouvain
    Author
Abstract
This paper considers a three-overlapping-generations model of endogeneous growth wherein human capital is the engine of growth. It first contrasts the laissez-faire and the optimal solutions. Three possible accumulation regimes are distinguished. Then it discusses a standard set of tax-transfer instruments that allow for decentralization of the social optimum. Within the limits of our model, the rationale for the standard pattern of intergenerational transfers (the working-aged financing the education of the young and the pension of the old) is seriously questioned. On pure e¢ciency grounds, the case for generous public pensions is rather weak.
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Docquier, F., Paddison, O., & Pestieau, P. (2006). Optimal accumulation in an endogenous growth setting with human capital (ECON Working Papers 2006/22). https://hdl.handle.net/2078.5/39950