Efficient investment in children

S. Rao Aiyagari, Jeremy Greenwood () and Anath Seshardi

No 105, Working Paper from Federal Reserve Bank of Cleveland

Abstract: If children are society’s most precious resource, as many would argue, how should we invest in them? To gain insight into this question, the authors develop a dynamic, general-equilibrium model in which children differ by ability. Parents invest time and money in their offspring, depending on their altruism, to help them grow into more productive adults. The authors characterize the efficient allocation, then compare it with the outcome that arises when financial markets are incomplete. They also examine the situation where childcare markets are lacking and analyze the consequences of impure altruism.

New Economics Papers: this item is included in nep-dge and nep-mic
Date: 2001
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Related works:
Working Paper: Efficient investment in children (1999)
Working Paper: Efficient Investment in Children (2001)
Journal Article: Efficient Investment in Children (2002)
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