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Intergenerational human capital evolution, local public good preferences, and stratification

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  • Chen, Been-Lon
  • Peng, Shin-Kun
  • Wang, Ping

Abstract

This paper considers heterogeneities in preferences over the local public good, human capital formation, and residential locations as primary underlying forces of economic stratification in an endogenously growing economy. We construct a two-period overlapping-generations model with two regions and various forms of human capital externalities where altruistic agents determine intertemporal allocation of time, investment in a child's education and residential location. We fully characterize a balanced growth equilibrium with no migration across generations to elaborate on how changes in preference, human capital accumulation, production, and interregional commuting parameters may affect the equilibrium stratification outcome in the long run.

Suggested Citation

  • Chen, Been-Lon & Peng, Shin-Kun & Wang, Ping, 2009. "Intergenerational human capital evolution, local public good preferences, and stratification," Journal of Economic Dynamics and Control, Elsevier, vol. 33(3), pages 745-757, March.
    • Handle: RePEc:eee:dyncon:v:33:y:2009:i:3:p:745-757
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    Cited by:

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    2. John P. Conley & Robert Driskill & Ping Wang, 2019. "Capitalization, decentralization, and intergenerational spillovers in a Tiebout economy with a durable public good," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 67(1), pages 1-27, February.
    3. Alfredo Omar Palafox-Roca & Francisco Venegas-martínez, 2014. "Average consumer decisions in an economy with heterogeneous subjective discount rates and risk aversion coefficients: the finite horizon case," Economics Bulletin, AccessEcon, vol. 34(2), pages 842-849.
    4. Fu-Chuan Lai, 2019. "Special feature in honor of Shin-Kun Peng," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 757-759, October.

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