Parents’ Investments and Education Returns

Francesc Dilme

Cuadernos de Economía - Spanish Journal of Economics and Finance, 2009, vol. 32, issue 89, 039-058

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. (search for similar items in EconPapers)
JEL-codes: E24 I22 I28 I32 J26 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:cud:journl:v:32:y:2009:i:89:p:039-058

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