Human capital, social capital, and public schooling

Public education contributes to growth not only by building human capital b ut also by instilling common norms that increase social cohesion. This is m odeled in the context of a political economy framework in which social cohe sion reduces wasteful rent seeking, and thus strengthens incentives for inv estment in human captial. The political decisions that determine whether di fferent social groups retain separate schooling systems, or adopt atl integ rated system, weigh these material advantages against the psychic cost to p arents of alienating their children from traditional values. This aspect of public education helps explain why, commonly, education is publicly admini stered as well as publicly financed. (C) 2000 Elsevier Science B,V. All rig hts reserved. JEL classification: I21; H42; O15; D72.