Macrodynamic Implications of Income-Transfer Policies for Human Capital Investment and School Effort

摘要: The distortion in educational investment poorer childrenis often attributed to credit market imperfections and henceto the unequal access of children opportunity.However, might also be attributable disincentiveeffects that cause make inefficient use educationalopportunities. This possibility is demonstrated for an overlappinggenerations economy with multiple family dynasties which childrenhave random unobservable abilities base their school efforton parents‘ after-tax returns schooling. Income redistributioncan result suboptimal effort choices offset beneficialeffects income transfers sharply lower social welfare.