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Self-Enforcing Intergenerational Transfers and the Provision of Education

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  • Anderberg, Dan
  • Balestrino, Alessandro

Abstract

Due to the presence of borrowing constraints in the market, the cost of educating the young members of a family is often borne by the adults. We consider intrafamily financing of human capital under the assumptions that individuals are selfish and binding contracts are not feasible. Cooperation among family members is possible through a family norm (a family ?social capital?) which prescribes the obligations to be met at each stage in life and sanctions for those who deviate. We note that it is crucial that transfers to education are combined with intrafamily transfers to old-family members. We characterise the set of self-enforcing transfers and show that there is a downward bias in the family provision of education. This gives a rationale for public action as a remedy to the lack of commitment between selfish family members. The analysis also points to a number of potential effects of education policy and public pensions on human capital formation.

Suggested Citation

  • Anderberg, Dan & Balestrino, Alessandro, 2001. "Self-Enforcing Intergenerational Transfers and the Provision of Education," CEPR Discussion Papers 3107, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3107
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    Cited by:

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    2. Alessandro Balestrino & Lisa Grazzini & Annalisa Luporini, 2017. "A normative justification of compulsory education," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(2), pages 537-567, April.
    3. Wolff, Francois-Charles & Laferrere, Anne, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 13, pages 889-969, Elsevier.
    4. Xu, Zeyu, 2007. "A survey on intra-household models and evidence," MPRA Paper 3763, University Library of Munich, Germany.
    5. Gradstein, Mark, 2010. "Social Insurance, Education, and Work Ethics," CEPR Discussion Papers 7838, C.E.P.R. Discussion Papers.
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    Keywords

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    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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