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Skill formation under incomplete information

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  • Weinschenk, Philipp

Abstract

We model child development as a multi-stage investment problem, where the child's specific ability is unknown at the early stage of childhood and learnt at the late stage. We show that this form of incomplete information weakens the importance of early investments in children if inter-stage investments are easily substitutable, but strengthens their importance if substitution is difficult. The latter case is empirically relevant. We also derive interesting comparative statics and discuss the policy implications.

Suggested Citation

  • Weinschenk, Philipp, 2012. "Skill formation under incomplete information," Journal of Economic Behavior & Organization, Elsevier, vol. 83(2), pages 209-217.
    • Handle: RePEc:eee:jeborg:v:83:y:2012:i:2:p:209-217
    DOI: 10.1016/j.jebo.2012.04.018
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    References listed on IDEAS

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    Cited by:

    1. Dawid, Herbert & Muehlheusser, Gerd, 2015. "Repeated selection with heterogeneous individuals and relative age effects," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 387-406.

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    More about this item

    Keywords

    Skill formation; Education; Incomplete information;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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