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Self‐enforcing Intergenerational Transfers and the Provision of Education
Author(s) -
Anderberg Dan,
Balestrino Alessandro
Publication year - 2003
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/1468-0335.d01-47
Subject(s) - sanctions , human capital , norm (philosophy) , action (physics) , set (abstract data type) , economics , social capital , microeconomics , public economics , political science , economic growth , law , physics , quantum mechanics , computer science , programming language
This paper considers intra‐family financing of human capital under the assumptions that individuals are selfish and binding contracts are not feasible. Cooperation among family members is possible through a family norm (a family ‘social capital’) which prescribes the obligations to be met at each stage in life and sanctions for those who deviate. We characterize the set of self‐enforcing transfers and show that there is a downward bias in the family provision of education. This gives a rationale for public action as a remedy to the lack of commitment between selfish family members.