Altruism, Education Subsidy and Growth
AbstractAn optimal education subsidy formula is derived using an overlapping generations model with parental altruism. The model predicts that public education subsidy is greater in economies with lesser parental altruism because a benevolent government has to compensate for the shortfall in private education spending of less altruistic parents with a finite life. On the other hand, growth is higher in economies with greater parental altruism. Cross-country regressions using the World Values Survey for altruism lend support to our model predictions. The model provides insights about the reasons for higher education subsidy in richer countries.
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Bibliographic InfoPaper provided by Economics and Econometrics Research Institute (EERI), Brussels in its series EERI Research Paper Series with number EERI_RP_2010_21.
Date of creation: 21 Aug 2010
Date of revision:
Altrusim; Education Subsidy; Human Capital; Growth.;
Other versions of this item:
- D9 - Microeconomics - - Intertemporal Choice
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-03 (All new papers)
- NEP-DEV-2010-09-03 (Development)
- NEP-DGE-2010-09-03 (Dynamic General Equilibrium)
- NEP-EDU-2010-09-03 (Education)
- NEP-FDG-2010-09-03 (Financial Development & Growth)
- NEP-HRM-2010-09-03 (Human Capital & Human Resource Management)
- NEP-LAB-2010-09-03 (Labour Economics)
- NEP-SOC-2010-09-03 (Social Norms & Social Capital)
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