Munich Personal RePEc Archive

Altrusim. Education Subsidy and Growth

Armellini, Mauricio and Basu, Parantap (2010): Altrusim. Education Subsidy and Growth.

[img]
Preview
PDF
MPRA_paper_23653.pdf

Download (341kB) | Preview

Abstract

An optimal education subsidy formula is derived using an overlapping generations model with parental altruism. The model predicts that public education subsidy is greater in economies with lesser parental altruism because a benevolent government has to compensate for the shortfall in private education spending of less altruistic parents with a finite life. On the other hand, growth is higher in economies with greater parental altruism. Cross-country regressions using the World Values Survey for altruism lend support to our model predictions. The model provides insights about the reasons for higher education subsidy in richer countries.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.