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.
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