American Journal of Applied Sciences

Publicly Funded Education and Human Capital in the Presence of a Convex-Concave Education Function

Binh Tran-Nam and Công Nghê Truong

DOI : 10.3844/ajassp.2005.19.26

American Journal of Applied Sciences

Volume 2, Issue 13

Pages 19-26


This study investigates an aggregative optimal growth model in which short-lived individuals obtain their labour skill through education. The process of human capital formation is described by an increasing, convex-concave education function relating the success rate to the educational expenditure per student. The cost of education is publicly funded by an income tax imposed on adult workers. Despite the apparent regularity and rationality of this idealized economy, it is shown that the existence of the steady state of the model is not guaranteed. In fact, the steady state only exists for carefully chosen social time rates of preference. However, the steady state, if it exists, is unique and in terms of local stability, a saddle point.


© 2005 Binh Tran-Nam and Công Nghê Truong. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.