ENDOGENOUS GROWTH, HUMAN-CAPITAL, AND BEQUESTS IN A LIFE-CYCLE MODEL

This paper investigates the relationship between growth and efficiency in an overlapping generations economy in which altruistic parents end ow their children with human capital (education) and leave physical be quests. We give conditions under which the physical bequest motive is not operative in a balanced equilibrium when human capital exhibits ex ternalities. We also show that the efficient rate of growth is lower t han the competitive one if the economy is bequest-constrained and exte rnalities from education are not very strong. Finally, some fiscal pol icy experiments are performed for both bequest-constrained economies a nd unconstrained ones.