High inequality in human capital may result in appropriation. In anticipation, the rich may favor policies which induce a more equal distribution of human capital, such as income transfers and mandatory schooling. This paper compares several such alternatives. We find that mandatory schooling results in higher incomes for both the rich and the poor sons, and increases the welfare of all. Moreover, it is the optimal policy for the rich, even when schools are fully financed by the rich.
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Paper provided by California Irvine - School of Social Sciences in its series Papers with number
99-00-23.