Borrowing Constraints, Parental Altruism and Human Capital Accumulation
AbstractThis paper investigates the impact of borrowing constraints on human capital accumulation and welfare. In a standard overlapping-generations model where parental altruism results in transfers that children allocate to consumption and education, the average level of welfare is higher when children cannot borrow against future income. The imposition of borrowing constraints increases parental transfers and raises childrenâ€™s welfare. Additionally, the ability to borrow helps children fund higher levels of education therefore increasing the aggregate level of human capital while borrowing constraints raise aggregate savings and, hence, physical capital. The latter effect dominates and, when prices are flexible, it augments the positive welfare impact of the credit constraint
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 516.
Date of creation: 03 Dec 2006
Date of revision:
Contact details of provider:
Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC
Borrowing Constraints; Altruism; Welfare;
Find related papers by JEL classification:
- E19 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Other
- I10 - Health, Education, and Welfare - - Health - - - General
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann).
If references are entirely missing, you can add them using this form.