Abstract
We develop a model of voting to show how credit constraints affect a society’s demand for government spending on human capital policies, namely, policies that increase the returns to human capital investments. The main result of the model is that a reduction in credit constraints can increase the share of government spending on such policies, with a greater increase in poorer societies. We also provide suggestive cross-country evidence in support of our model by showing that the share of government spending on public education and health is negatively related to measures of credit constraints, with a stronger negative relation in poorer societies.