Altruism, Education Subsidy and Growth

Mauricio Armellini and Parantap Basu
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Mauricio Armellini: Durham Business School

No 2011_07, Department of Economics Working Papers from Durham University, Department of Economics

Abstract: An optimal education subsidy formula is derived using an overlapping generations model with parental altruism. The model predicts that public education subsidy is greater in economies with lesser parental altruism because a benevolent government has to compensate for the shortfall in private education spending of less altruistic parents with a finite life. On the other hand, growth is higher in economies with greater parental altruism. Cross-country regressions using the World Values Survey for altruism lend support to our model predictions. The model provides insights about the reasons for higher education subsidy in richer countries.

Date: 2011-01-01
New Economics Papers: this item is included in nep-dge, nep-edu, nep-fdg, nep-lab and nep-soc
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Related works:
Working Paper: Altruism, Education Subsidy and Growth (2010)
Working Paper: Altrusim. Education Subsidy and Growth (2010)
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