This project is ongoing. Descriptions, methods and results may be updated after further validation.
Research question
How much does public spending on education return in output, wages and tax revenue over time?
Motivation
Education cuts are often defended as immediate fiscal adjustment, yet education spending builds human capital that raises wages and the tax base in the future. Measuring this dynamic return helps assess whether educational austerity pays for itself or costs more than it saves.
Data
- Panel of the 27 Brazilian states (education spending, regional wages and tax revenue)
- Parameters calibrated to the Brazilian economy in the DSGE model
Methodology
- Panel-data econometrics
- Fiscal DSGE model with human capital and simulation of spending shocks
Limitations
- The model relies on calibration; quantitative results are sensitive to the human-capital formation parameters.
Implications
- Assessment of fiscal rules and constitutional spending floors for education.
- Discussion of the appropriate time horizon to measure the return on education spending.
Planned applied products (possible outreach, subject to registration)
- Teaching material on fiscal policy and human capital for Economics courses