Investments into education - Doing as the parents did
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Investments into education - Doing as the parents did. / Kirchsteiger, Georg; Sebald, Alexander Christopher.
In: European Economic Review, Vol. 54, No. 4, 2010, p. 501-516.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Investments into education - Doing as the parents did
AU - Kirchsteiger, Georg
AU - Sebald, Alexander Christopher
N1 - JEL classification: H23, H52, I2
PY - 2010
Y1 - 2010
N2 - 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.
AB - 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.
KW - Faculty of Social Sciences
KW - Human capital formation
KW - Education subsidy
KW - Compulsory schooling
KW - Illiterateness trap
U2 - 10.1016/j.euroecorev.2009.09.004
DO - 10.1016/j.euroecorev.2009.09.004
M3 - Journal article
VL - 54
SP - 501
EP - 516
JO - European Economic Review
JF - European Economic Review
SN - 0014-2921
IS - 4
ER -
ID: 21521483