The Economic Growth Effects of Alternative Early Human Capital Investment Policies in the Turkish Economy

Date

2024-6

Author

Sağır, Serap

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The topic of early childhood development (ECD) and investment in ECD has come to the forefront recently, especially in the case of developing countries, and it is among the 2030 Sustainable Development Goals of the United Nations. Until recently, human capital has been associated with years of schooling. However, the latest studies show that brain development is fastest in the ECD period, which starts in the prenatal period and ends before formal schooling. Experience during this period and even maternal health before pregnancy have persistent effects on human capital of an individual. Investing in human capital during the ECD period is more effective than investing later in life. In this thesis, we develop a 9-period overlapping generations model examining the impact of parental human capital investment on economic growth, in a general equilibrium framework. Using a multiperiod human capital formation technology with parental human capital and physical input, we investigate the effects of alternative policies targeting the ECD period to reach the highest economic growth rate. We calibrate our model to 2019 Turkish data and find that mandatory and matching funds policy, which directly contribute to human capital, are more effective than income-increasing lump-sum subsidy policy. In the child tax credit policy, the decreasing amount of credit after a certain income level leads to lower economic growth than in the lump sum subsidy policy, in which the subsidy is given equally to all income levels. Also, ECD subsidies raise the investment made for the child in the schooling period.

Subject Keywords

early childhood development, human capital accumulation, overlapping generations modeling, general equilibrium, economic growth

URI

https://hdl.handle.net/11511/110061

Collections

Graduate School of Social Sciences, Thesis