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Altrusim. Education Subsidy and Growth

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  • Armellini, Mauricio
  • Basu, Parantap

Abstract

An optimal education subsidy formula is derived using an overlapping generations model with parental altruism. The model predicts that public education subsidy is greater in economies with lesser parental altruism because a benevolent government has to compensate for the shortfall in private education spending of less altruistic parents with a finite life. On the other hand, growth is higher in economies with greater parental altruism. Cross-country regressions using the World Values Survey for altruism lend support to our model predictions. The model provides insights about the reasons for higher education subsidy in richer countries.

Suggested Citation

  • Armellini, Mauricio & Basu, Parantap, 2010. "Altrusim. Education Subsidy and Growth," MPRA Paper 23653, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:23653
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    More about this item

    Keywords

    Human Capital; Altrusim; Education Subsidy;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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