Abstract
ABSTRACT We employ a research and development (R&D) based growth overlapping-generations model with endogenous education decision-making and the government’s education policy to examine how education policy and human capital accumulation influence R&D activities. According to our study, an increase in the government’s public education expenditure has an inverted U-shaped effect on the steady-state growth rate. Moreover, a tax rate level that maximizes the steady-state growth rate exists. At this tax rate level, the steady-state welfare level is also maximized.
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