The paper considers a model of an economy with after-effects: any production activity generates some subsequent expenses, like compensation of residual damages. Internalizing the after-effects in production costs at the time they are generated proves to substantially change the shape of...

We study how the allocation of government expenditures between two major outlays-education and pay-as-you-go social security-affects human capital distribution in an economy with heterogeneous agents. We consider an overlapping generations economy where the government maintains both programs,...

The intertemporal decentralization literature scrutinizes the ability of markets to achieve dynamically optimal allocation of resources. Put differently, it examines the possibility of designing a mechanism enabling short-lived agents to make independent decisions compatible with long-run...

This paper analyzes the impact of college enrollment expansion on student academic achievements and labor market outcomes in the context of competition among colleges. When public policies promote “access” to college education, colleges adjust their curricula: Less selective public colleges...

This paper analyzes the impact of college enrollment expansion on student academic achievements and labor market outcomes. When public policies promote “access” to college education, colleges adjust their curricula: Non-elite public colleges adopt a less demanding curriculum to accommodate...

We consider a small open economy in which the level of public education funding is determined by popular vote. We show that growth can be enhanced by the introduction of pay-as-you-go pensions even if the growth rate of aggregate wages falls short of the interest rate. The reason is that the...

The paper addresses the two-fold rise in teacher–student ratio in the American K-12 school system in the post-World War II period accompanied by the evidence of a decline in the relative quality of teachers. We develop a dynamic general equilibrium framework for analyzing the teacher...

We study the dynamics of the quantity and quality of teachers in the framework of dynamic general equilibrium OLG model. The quantity and quality are jointly set by a government agency wishing to maximize the quality of basic education per student while being bound by teachers’ collective...