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Targeted socialization and production

Author

Listed:
  • Albornoz, Facundo

    (University of Nottingham and CONICET)

  • Cabrales, Antonio

    (University College London)

  • Hauk, Esther

    (Instituto de Analisis Economico (IAE-CSIC) and Barcelona Graduate School of Economics)

Abstract

We study a model that integrates productive and socialization efforts with network choice and parental investments. We characterize the unique symmetric equilibrium of this game. Individuals underinvest in productive and social effort. However, solving only the investment problem can exacerbate the misallocations due to network choice, to the point that in the presence of congestion e ects the intervention may generate an even lower social welfare than no intervention at all. We also study the interaction of parental investment with network choice. In many scenarios, intergenerational transmission of abilities leads to a tendency towards to conformism, which aggravates potential problems of network overpopulation. We relate our equilibrium results with the existing evidence on parental occupational transmission.

Suggested Citation

  • Albornoz, Facundo & Cabrales, Antonio & Hauk, Esther, 2016. "Targeted socialization and production," CRETA Online Discussion Paper Series 23, Centre for Research in Economic Theory and its Applications CRETA.
    • Handle: RePEc:wrk:wcreta:23
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    peer effects ; network formation ; parental involvement ; intergenerational mobility ; cultural identity ; immigrant sorting. JEL classification numbers: D85 ; I20 ; I28 ; J15 ; J24 ; J61 ; J62;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • I20 - Health, Education, and Welfare - - Education - - - General
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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