Intergenerational interactions in human capital accumulation
Łukasz Woźny and
Jakub Growiec ()
MPRA Paper from University Library of Munich, Germany
We analyze an economy populated by a sequence of generations who decide over their consumption levels and the levels of investment in human capital of their immediate descendants. The objective of the paper is to identify the impact of strategic interactions between consecutive generations on the time path of human capital accumulation. To this end, we characterize the Markov perfect equilibrium (MPE) in such an economy and derive the sufficient conditions for its existence and uniqueness. The equilibrium path is computed using a novel constructive approach: extending Reffett and Woźny (2008), we put forward an iterative procedure which converges to the MPE as its limit. To benchmark our results, we also calculate the optimal human capital accumulation paths for (i) a Ramsey-type model with dynastic optimization, and (ii) a model with joy-of-giving altruism. We prove analytically that human capital accumulation is unambiguously lower in the "strategic" model than in the Ramsey-type dynastic model. We complement our results with a series of numerical exercises.
Keywords: human capital; intergenerational interactions; Markov perfect equilibrium; stochastic transition; constructive approach (search for similar items in EconPapers)
JEL-codes: I20 J22 C73 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-edu and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/10308/1/MPRA_paper_10308.pdf original version (application/pdf)
Journal Article: Intergenerational Interactions in Human Capital Accumulation (2012)
Working Paper: Intergenerational interactions in human capital accumulation (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:10308
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().