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Investments into Education - Doing as the Parents Did

  • Georg Kirchsteiger
  • Alexander Sebald

Empirical evidence suggests that parents with higher levels of education generally attach a higher importance to the education of their children. This implies an intergenerational chain transmitting the attitude towards the formation of human capital from one generation to the next. We incorporate this intergenerational chain into an OLG-model with endogenous human capital formation. In absence of any state intervention such an economy might be characterized by multiple steady states with low or high human capital levels. There are also steady states where the population is permanently divided into different groups with differing human capital and welfare levels. Compulsory schooling is needed to overcome steady states with low human capital and welfare levels. Tax financed education subsidies can lead to further pareto-improvements.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/149588.

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Date of creation: May 2010
Date of revision:
Publication status: Published in: European economic review (2010) v.54 n° 4,p.502-16
Handle: RePEc:ulb:ulbeco:2013/149588
Contact details of provider: Postal: CP135, 50, avenue F.D. Roosevelt, 1050 Bruxelles
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  12. Victor Ginsburgh & Luc Champarnaud & Philippe Michel, 2008. "Can public arts education replace arts subsidization?," ULB Institutional Repository 2013/13396, ULB -- Universite Libre de Bruxelles.
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