Why to Invest in your Neighbor? Social Contract on Educational Investment
AbstractIt may be in the interest of low-ability individuals to subsidize the education of high-ability individuals. Sufficient conditions are surprisingly mild: positive externalities in education and complementarity in production between human capital and labor supplied by the low-ability individuals. However, tax competition and the free mobility of the educated give rise to time-inconsistency and free-riding problems which render such a social contract infeasible and result in a suboptimally low investment in education.
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Bibliographic InfoPaper provided by Department of Economics in its series University of Helsinki, Department of Economics with number 462.
Length: 17 pages
Date of creation: 1999
Date of revision:
Contact details of provider:
Postal: University of Helsinki; Department of Economics, P.O.Box 54 (Unioninkatu 37) FIN-00014 Helsingin Yliopisto
Phone: +358 9 191 8897
Fax: +358 9 191 8877
Web page: http://www.helsinki.fi/politiikkajatalous/
More information through EDIRC
EDUCATION ; CONTRACTS ; SOCIETY ; TAXATION;
Other versions of this item:
- Panu Poutvaara & Vesa Kanniainen, 1999. "Why to Invest in your Neighbor? Social Contract on Educational Investment," CESifo Working Paper Series 202, CESifo Group Munich.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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