Educational System, Altruism and Inequality in the Distribution of Income
AbstractThis paper studies the impact of public provision of education on the distribution of income in a framework where parents are altruistic toward children. Any child receives two transfers, one as a non-human transfer and the other as a human capital transfer. Under different education regimes, non-human transfers offset the low realization of innate ability, which despite the human capital transfer implies a low level of earnings. Then the questions that will arise are, first, to what extent skill-compensating investments are important as ex-ante income inequality reduction mechanisms in the private provision system, and secondly, how public education can affect this reduction mechanism. I show that tax policy may have unexpected effects on the compensatory effect, that is, on the income gap. The result is that the distribution of income induced by the public provision system is not more equally distributed. Moreover, the fraction of population that does not improve is just at the bottom of the income distribution. I also explore some possibilities to avoid this negative effect and preserve public education as an essential public service.
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Bibliographic InfoPaper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/46.
Length: 40 pages
Date of creation: 2004
Date of revision:
Altruism; human capital and non-human capital transfers; systems of education; inequality;
Find related papers by JEL classification:
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- I2 - Health, Education, and Welfare - - Education
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-13 (All new papers)
- NEP-EDU-2004-06-13 (Education)
- NEP-LAB-2004-06-13 (Labour Economics)
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