Working Paper: NBER ID: w31029
Authors: Junichi Fujimoto; David Lagakos; Mitchell Van Vuren
Abstract: This paper studies the macroeconomic effects of publicly funded (‘free’) secondary schooling in the developing world. Our analysis is based on an over-lapping generations model of human capital accumulation that we estimate to match experimental evidence on the effects of scholarships for poor but talented students in Ghana. The model predicts that nationwide free secondary schooling increases average education levels but reduces GDP per capita in the long run. The human capital gains from free schooling in the model are offset by lost income during schooling years, negative selection of new students, and reductions in fertility by high-ability households.
Keywords: Free Secondary Schooling; Macroeconomic Effects; Human Capital; Developing Countries
JEL Codes: E24; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| opportunity cost of schooling (I21) | GDP per capita (O49) |
| negative selection of new students (Y40) | GDP per capita (O49) |
| reductions in fertility rates among high-ability households (J13) | GDP per capita (O49) |
| eliminating opportunity cost of schooling (I21) | GDP per capita (O49) |
| shutting down negative channels (G33) | GDP per capita (O49) |
| free secondary schooling (I23) | average education levels (I24) |
| free secondary schooling (I23) | GDP per capita (O49) |