Raising Juveniles

Clive Bell, Hans Gersbach and Maik Schneider

No 5036, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates how families make decisions about the education of juveniles. The decision problem is analyzed in three variations: a 'decentralized' scheme, in which the parents control the purse-strings, but the children dispose of their time as they see fit; a 'hierarchical' scheme, in which the parents can enforce a particular level of schooling by employing a monitoring technology; and the cooperative solution, in which the threat point is one of the two noncooperative outcomes. Adults choose which game is played. While the subgame perfect equilibrium of the overall game is Pareto-efficient when viewed statically, it may yield less education than the hierarchical scheme. Regulation in the form of restrictions on child labor and compulsory schooling generally affects both the threat point and the feasible set of bargaining outcomes, and families may choose more schooling than the minimum required by law.

Keywords: human capital; youth; family decision-making; bargaining (search for similar items in EconPapers)
JEL-codes: D13 J13 J22 J24 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Games and Economic Behavior, 2012, 74 (1), 32-51

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Journal Article: Raising juveniles (2012)
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