covid
Buscar en
Cuadernos de Economía
Toda la web
Inicio Cuadernos de Economía Parents’ Investments and Education Returns
Journal Information
Vol. 32. Issue 89.
Pages 39-58 (May - August 2009)
Share
Share
Download PDF
More article options
Vol. 32. Issue 89.
Pages 39-58 (May - August 2009)
Full text access
Parents’ Investments and Education Returns
Visits
2640
Francesc Dilmé
Department of Economics, University of Pennsylvania, 160 McNeil Building, 3718 Locust Walk Philadelphia, Pennsylvania 19104-6297
This item has received
Article information
Abstract

This paper analyses the relation between parents’ earnings and their children's education. In a context of perfect altruism, the model describes parents’ decisions on how much to consume and how much to invest in their children's education. The model predicts that returns on education in terms of wages should be linear. Using this model in a competitive economy, we show how the outcome depends on government subsidies or taxes on education. The usual tradeoff equality-efficiency arises in this context. Finally, the model provides some insights into the relation between education and productivity.

Keywords:
Intergenerational altruism
education returns
Full text is only aviable in PDF
References
[1]
R.J. Barro.
Are Government Bonds Net Wealth?.
The Journal of Political Economy, 82 (1974), pp. 1095-1117
[2]
R.J. Barro.
Economic Growth in a Cross Section of Countries.
The Quarterly Journal of Economics, 106 (1991), pp. 407-443
[3]
G. Becker.
Investment in human capital: a theoretical analysis.
Economic Journal, vol. 75 (1962), pp. 493-513
[4]
G.S. Becker, N. Tomes.
An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility.
The Journal of Political Economy, 87 (1979), pp. 1153-1189
[5]
B.D. Bernheim, A. Shleiferand, L.H. Summers.
The Strategic Bequest Motive.
The Journal of Political Economy, pp. 1045-1076
[6]
J.B. Burbidge.
Government Debtinan Overlapping-Generations Model with Bequests and Gifts.
The American Economic Review, 73 (1983), pp. 222-227
[7]
K.K. Charles, E. Hurst.
The Correlation of Wealth across Generations.
The Journal of Political Economy, 111 (2003), pp. 1155-1182
[8]
P.A. Diamond.
National Debt in a Neoclassical Growth Model.
The American Economic Review, 55 (1965), pp. 1126-1150
[9]
S.N. Durlauf.
A theory of persistent income inequality.
Journal of Economic Growth, (1996),
[10]
L.G. Epstein, S.E. Zin.
Substitution, Risk Aversion, and the Tem-poral Behavior of Consumption and Asset Returns: An Empirical Analysis.
The Journal of Political Economy, vol 99 (1991), pp. 263-286
[11]
D.S. Hamermesh.
Labordemand, Princeton University Press, (1993),
[12]
L.F. Katz, K.M. Murphy.
Changes in Relative Wages, 1963–1987: Supply and Demand Factors.
The Quarterly Journal of Economics, 107 (1992), pp. 35-78
[13]
L.F. Katz, D.H. Autor.
Changes in the Wage Structure and Earnings Inequality.
pp. 1463-1555
[14]
Kendrick, J.W., The formation and stocks of total capital, New York, Columbia University for NBER.
[15]
L.J. Kotlikoff, L.H. Summers.
The Role of Intergenerational Transfersin Aggregate Capital Accumulation.
The Journal of Political Economy, 89 (1981), pp. 706-732
[16]
J. Laitner, F.T. Juster.
New Evidence on Altruism: A Study of TIAA-CREFRetirees.
The American Economic Review, 86 (1996), pp. 893-908
[17]
G.C. Loury.
Intergenerational Transfers and the Distribution of Earnings.
Econometrica, 49 (1981), pp. 843-867
[18]
N.G. Mankiw, D. Romer, D.N. Weil.
A Contribution to the Empirics of Economic Growth.
The Quarterly Journal of Economics, 107 (1992), pp. 407-437
[19]
J. Mincer.
Investment in Human Capital and Personal Income Distribution.
The Journal of Political Economy, 66 (1958), pp. 281-302
[20]
H.A. Patrinos, G. Psacharopoulos.
Returns to investment in education: a further update.
Education Economics, 12 (2004), pp. 111-134
[21]
F. Ramsey.
A Mathematical Theory of Saving.
Economic Journal, 38 (1928), pp. 543-559
[22]
T.W. Schultz.
Economic Value of Education, Columbia University Press, (1963),
[23]
G. Solon.
Intergenerational Income Mobility in the United States.
The American Economic Review, 82 (1992), pp. 393-408
[24]
M. Spence.
Job market signalling.
The Quarterly Journal of Economics, 87 (1973), pp. 355-374
[25]
M. Spence.
Signalling screening and information.
Studies in Labor Markets,

I am very grateful to Marta Garriga-Massoni for her useful comments and suggestions. I am also very grateful to Generalitat de Catalunya for its financial support to my research in the first semester of 2008 and to Banco de España for its financial support during the second semester of 2008 and first semester of 2009.

Copyright © 2009. Asociación Cuadernos de Economía
Download PDF
Article options