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Optimal educational choice and redistribution when parental education matters

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  • DEL REY, Elena
  • RACIONERO, Maria del Mar

Abstract

Higher education plays an important role in determining lifetime earnings. In turn, the decision to become educated depends to a large extent on family characteristics, such as wealth and education. In this paper, we focus on the interaction between fiscal policies and educational choices when parental education matters. We derive optimality conditions for a linear income tax and a lump-sum subsidy for education in a dynamic framework in which generations are linked by educational background. The factors that determine their sign and magnitude include concerns for redistribution, efficiency, and the educational externality on future generations. Copyright 2002, Oxford University Press.
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Suggested Citation

  • DEL REY, Elena & RACIONERO, Maria del Mar, 2002. "Optimal educational choice and redistribution when parental education matters," LIDAM Reprints CORE 1582, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1582
    DOI: 10.1093/oep/54.3.435
    Note: In : Oxford Economic Papers, 54, 435-448, 2002
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    Cited by:

    1. Elena del Rey & María Racionero, 2008. "An efficiency argument for affirmative action in higher education," Hacienda Pública Española / Review of Public Economics, IEF, vol. 187(4), pages 41-48, December.
    2. Mihails Hazans & Ija Trapeznikova, 2006. "Access to Secondary Education in Albania: Incentives, Obstacles, and Policy Spillovers," SSE Riga/BICEPS Research Papers 2006-1, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
    3. Mihails Hazans & Ija Trapeznikova & Olga Rastrigina, 2008. "Ethnic and parental effects on schooling outcomes before and during the transition: evidence from the Baltic countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(3), pages 719-749, July.
    4. Pestieau, Pierre & Racionero, Maria, 2023. "Education, mobility and redistribution," LIDAM Discussion Papers CORE 2023024, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Richter, Wolfram F. & Braun, Christoph, 2009. "Efficient Subsidization of Human Capital Accumulation with Overlapping Generations and Endogenous Growth," IZA Discussion Papers 4629, Institute of Labor Economics (IZA).

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