Why Invest in Your Neighbor? Social Contract on Educational Investment

Panu Poutvaara and Vesa Kanniainen

International Tax and Public Finance, 2000, vol. 7, issue 4, 547-562

Abstract: It may be in the interestof low-ability individuals to subsidize the education of high-abilityindividuals. The sufficient conditions are surprisingly mild:positive externalities in education and complementarity in productionbetween human capital and labor supplied by the low-ability individuals.However, tax competition and the free mobility of the educatedgive rise to time-inconsistency and free-riding problems whichrender such a social contract infeasible and result in a suboptimallylow investment in education. Copyright Kluwer Academic Publishers 2000

Keywords: externalities in education; complementarity; social contract; tax competition (search for similar items in EconPapers)
Date: 2000
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Working Paper: Why invest in your neighbor? Social contract on educational investment (2000)
Working Paper: Why to Invest in your Neighbor? Social Contract on Educational Investment (1999)
Working Paper: Why to Invest in your Neighbor? Social Contract on Educational Investment (1999)
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DOI: 10.1023/A:1008745708377

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