Optimal Policy Towards Families with Di¤erent Amounts of Social Capital, in the Presence of Asymmetric Information and Stochastic Fertility
We examine the effects of di¤erences in social capital on first and second best transfers to families with children, in an asym- metric information context where the number of births, and the future earning capacity of each child that is born, are random variables. The probability that a couple has children is con- ditional on the level of reproductive activity undertaken. The probability that a child will have high earning ability is positively conditioned not only by the level of educational investment un- dertaken by the child's parents, but also by the social capital of the latter. The optimal policy includes two transfers, one con- ditional on number of births, the other on the children's earning ability.
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| Length: | 24 pages |
| Date of creation: | Jan 2006 |
| Handle: | RePEc:wpc:wplist:wp03_06 |
| Contact details of provider: | Postal: Via Po 53 10124 Turin Phone: 39-011=6702726 Fax: 39-011-6702762 Web page: http://www.carloalberto.org/child-collegiocarloalberto/ Email: More information through EDIRC
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