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Optimal educational choice and redistribution when parental education matters

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  • Elena Del Rey
  • MarÌa del Mar Racionero

Abstract

Higher education plays an important role in determining lifetime earnings. In turn, the decision to become educated depends to a large extent on family characteristics, such as wealth and education. In this paper, we focus on the interaction between fiscal policies and educational choices when parental education matters. We derive optimality conditions for a linear income tax and a lump-sum subsidy for education in a dynamic framework in which generations are linked by educational background. The factors that determine their sign and magnitude include concerns for redistribution, efficiency, and the educational externality on future generations. Copyright 2002, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 54 (2002)
Issue (Month): 3 (July)
Pages: 435-448

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Handle: RePEc:oup:oxecpp:v:54:y:2002:i:3:p:435-448

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Cited by:
  1. Elena Del Rey & Maria Racionero, 2004. "An efficiency argument for affirmative action in higher education," ANU Working Papers in Economics and Econometrics 2005-447, Australian National University, College of Business and Economics, School of Economics.
  2. Wolfram F. Richter & Christoph Braun, 2010. "Efficient Subsidization of Human Capital Accumulation with Overlapping Generations and Endogenous Growth," CESifo Working Paper Series 2982, CESifo Group Munich.
  3. Mihails Hazans & Ija Trapeznikova & Olga Rastrigina, 2008. "Ethnic and parental effects on schooling outcomes before and during the transition: evidence from the Baltic countries," Journal of Population Economics, Springer, vol. 21(3), pages 719-749, July.
  4. Mihails Hazans & Ija Trapeznikova, 2006. "Access to Secondary Education in Albania: Incentives, Obstacles, and Policy Spillovers," SSE Riga/BICEPS Research Papers 2006-1, Baltic International Centre for Economic Policy Studies (BICEPS) and Stockholm School of Economics in Riga (SSE Riga).

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