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Investments into education--Doing as the parents did

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  • Kirchsteiger, Georg
  • Sebald, Alexander

Abstract

Empirical evidence suggests that parents with higher levels of education generally attach a higher importance to the education of their children. This implies an intergenerational chain transmitting the attitude towards the formation of human capital from one generation to the next. We incorporate this intergenerational chain into an OLG-model with endogenous human capital formation. In absence of any state intervention such an economy might be characterized by multiple steady states with low or high human capital levels. There are also steady states where the population is permanently divided into different groups with differing human capital and welfare levels. Compulsory schooling is needed to overcome steady states with low human capital and welfare levels. Tax financed education subsidies can lead to further pareto-improvements.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 54 (2010)
Issue (Month): 4 (May)
Pages: 501-516

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Handle: RePEc:eee:eecrev:v:54:y:2010:i:4:p:501-516

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Keywords: Human capital formation Illiterateness trap Compulsory schooling Education subsidy;

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References

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  1. Luc Champarnaud & Victor Ginsburgh & Philippe Michel, 2008. "Can public arts education replace arts subsidization?," Journal of Cultural Economics, Springer, vol. 32(2), pages 109-126, June.
  2. Galor, O. & Tsiddon, D., 1996. "Technological Progress, Mobility and Economic Growth," Papers 13-96, Tel Aviv.
  3. M. Rabin, 2001. "Incorporating Fairness into Game Theory and Economics," Levine's Working Paper Archive 511, David K. Levine.
  4. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July.
  5. Zvi Eckstein & Itzhak Zilcha, 1991. "The Effects of Compulsory Schooling on Growth, Income Distribution and Welfare," Boston University - Institute for Economic Development 20, Boston University, Institute for Economic Development.
  6. Engelmann, Dirk & Fischbacher, Urs, 2009. "Indirect reciprocity and strategic reputation building in an experimental helping game," Games and Economic Behavior, Elsevier, vol. 67(2), pages 399-407, November.
  7. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1985. "The Strategic Bequest Motive," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1045-76, December.
  8. Arrondel, Luc & Masson, Andre, 2001. " Family Transfers Involving Three Generations," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(3), pages 415-43, September.
  9. Galor, Oded & Tsiddon, Daniel, 1997. " The Distribution of Human Capital and Economic Growth," Journal of Economic Growth, Springer, vol. 2(1), pages 93-124, March.
  10. Bruce Sacerdote, 2000. "The Nature and Nurture of Economic Outcomes," NBER Working Papers 7949, National Bureau of Economic Research, Inc.
  11. Gary S. Becker & Nigel Tomes, 1976. "Child Endowments, and the Quantity and Quality of Children," NBER Working Papers 0123, National Bureau of Economic Research, Inc.
  12. Margin Dufwenberg & Georg Kirchsteiger, 2001. "A Theory of Sequential Reciprocity," Levine's Working Paper Archive 563824000000000090, David K. Levine.
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Cited by:
  1. Bonein, Aurélie & Serra, Daniel, 2007. "Another experimental look at reciprocal behavior: indirect reciprocity," MPRA Paper 3257, University Library of Munich, Germany, revised Mar 2007.
  2. Lars Kunze, 2012. "Like Father, Like Son: Inheriting and Bequeathing," Ruhr Economic Papers 0318, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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