Abstract

This paper, after presenting development of an endogenous fertility model with endogenous education investment, examines determination of the shares of households which select public education, income growth, income inequality, and fertility. Results demonstrate that a child allowance raises the share of households selecting public education. Furthermore, an increase in a subsidy for private education investment is not always sufficient to raise aggregate human capital accumulation, even if the share of households selecting private education is large. Furthermore, this paper presents an examination of how government spending on subsidy policies is determined as a result of a voting system. Numerical examples verify the result obtained using the theoretical model.

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