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Investments in the Human Capital of the Socially Disadvantaged Children - Effects on Redistribution

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  • Lohse, Tim
  • Lutz, Peter F.
  • Thomann, Christian

Abstract

Recently, early investments in the human capital of children from socially disadvantaged environments have attracted a great deal of attention. In a discrete version of the Mirrlees model with a parents' and a children's generation we show the intra-generational and the inter-generational redistributional consequences of such intervention programs. It turns out that the parents' generation always loses when such intervention programs are implemented. Among the children's generation it is the rich who always benefit. Despite the expectation that early intervention puts the poor descendants in a better position, our analysis reveals that the poor among the children's generation may even be worse off if the effect of early intervention on their productivity is not large enough.

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Paper provided by Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Hannover Economic Papers (HEP) with number dp-484.

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Length: 22 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:han:dpaper:dp-484

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Keywords: Early Intervention; Welfare; Redistribution; Taxation;

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