Parental nurturing and adverse effects of redistribution

Bandyopadhyay, Debasis and Tang, Xueli 2011, Parental nurturing and adverse effects of redistribution, Journal of economic growth, vol. 16, no. 1, pp. 71-98, doi: 10.1007/s10887-011-9062-5.

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Title Parental nurturing and adverse effects of redistribution
Author(s) Bandyopadhyay, Debasis
Tang, XueliORCID iD for Tang, Xueli
Journal name Journal of economic growth
Volume number 16
Issue number 1
Start page 71
End page 98
Total pages 28
Publisher Springer
Place of publication Secaucus, N.J.
Publication date 2011-03
ISSN 1381-4338
Keyword(s) Heterogeneous ability
Parental input in education
Endogenous growth
Dynamic efficiency
Progressive income tax
Progressive education subsidy
Summary This paper suggests that if parental nurturing is a dominating force in human capital formation then income redistribution may not promote economic growth. In particular, if, consistently with empirical evidence, parental human capital complements investment in a child’s education and yields increasing returns in the intergenerational production of human capital, income redistribution may have an adverse impact on the growth rate of average human capital. Redistribution shifts resources towards the less educationally-productive families and thus in the presence of credit markets imperfections and increasing returns, it reduces the aggregate level of investment in human capital. Moreover, if the degree of increasing returns is sufficiently large to produce sustained growth, this adverse effect on human capital formation may outweigh the conventional beneficial effects of redistribution that arises from the interaction between a production technology exhibiting diminishing returns and credit market imperfections.
Language eng
DOI 10.1007/s10887-011-9062-5
Field of Research 140102 Macroeconomic Theory
Socio Economic Objective 910199 Macroeconomics not elsewhere classified
HERDC Research category C1 Refereed article in a scholarly journal
HERDC collection year 2011
Copyright notice ©2011, Springer Science+Business Media, LLC 2011h
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