Inter-generational effect of parental time and its policy implications

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Zhu G., VURAL G.

JOURNAL OF ECONOMIC DYNAMICS & CONTROL, vol.37, no.9, pp.1833-1851, 2013 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 37 Issue: 9
  • Publication Date: 2013
  • Doi Number: 10.1016/j.jedc.2013.04.013
  • Title of Journal : JOURNAL OF ECONOMIC DYNAMICS & CONTROL
  • Page Numbers: pp.1833-1851

Abstract

Motivated by the empirical fact that parents with more human capital spend more time teaching and taking care of their children, we develop and estimate a theoretical model in which altruistic parents pass their human capital on in two ways: goods investment and time investment. Based on the estimated model, we quantitatively assess how the two types of investment affect wage inequality and inter-generational mobility. Using the model to study the impacts of a public policy that taxes income to finance public schooling, we find significantly different policy effects in our model than in a model where time investment does not respond endogenously to the policy. (C) 2013 Elsevier B.V. All rights reserved.