An Investment Rule for public Education: Its Theoretical and Practical Grounds in Iran

In this paper, some aspects of education as public expenditure and investment are investigated, applying the framework of a life-cycle model as by Pestieau (1977) and Okuno and Yakita(1983). An economy is considered which consists of two generations, working and retired. Assuming that there are two types of taxes, income tax and interest income tax, optimal investment rules for investment in public education and optimal taxes used to finance the cost, are analysed. The purpose of this paper is to extend Ritzen's (1977)Model so as to examine an optimal investment rule for public education in the presence of taxes. The remainder of the paper is organized as follows. In section 2, Shirai 's Model and assumptions are presented. In section 3, the government's behavior is formulated and optimal taxes and investment in public education analyzed. The concluding remarks in section 4 are showing that the rule of educational investment is to equate the social margin al rate of return to education to the discount rate of government. 
This article has been written by Dr. Masatoahi shirai, department of econ omics, Chukyo University Japan and it was published by the Journal of Economic Education Review Vol. 9, No.I, 1990.