Investments into Education - Doing as the Parents Did

Georg Kirchsteiger and Alexander Sebald ()

No 5686, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Empirical evidence suggests that parents with higher levels of education generally also 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. A temporary public investment into human capital formation is then needed for a transition from a steady state with low human capital levels to one with a higher human capital level. Furthermore, it can be shown that even the best steady state is suboptimal when the human capital is privately provided. This inefficiency can be overcome by a permanent public subsidy for education.

Keywords: Education subsidy; Human capital formation; Indirect reciprocity (search for similar items in EconPapers)
JEL-codes: H23 H52 I2 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-dge, nep-hrm and nep-pbe
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://cepr.org/publications/DP5686 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Investments into education--Doing as the parents did (2010)
Working Paper: Investments into Education - Doing as the Parents Did (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:5686

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5686

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().