Human capital accumulation, fiscal policy and endogenous growth

Mbaye Diene, CRES, University Cheikh Anta Diop, Dakar

We study an endogenous growth model where households provide skill and unskilled labour, also pay capital and wage taxes. The growth dynamics is guaranteed by the accumulation of human capital, which depends on public spending in education. The effects of fiscal policies on the long-term growth rate and welfare are analyzed, by highlighting the importance of parameters such as the elasticity of substitution between capital and labor and the intertemporal elasticity of consumption.

Key words : Endogenous growth ; Tax ; Skilled labour, Unskilled labour ; Public spending, Theil Inequality index.

JEL Classification: E62 ; H52

Date: 30 January 2009

Time: 12:30  CEST