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Altruism, education subsidy and growth.

Armellini, Mauricio and Basu, Parantap (2011) 'Altruism, education subsidy and growth.', Working Paper. Durham University, Durham.


An optimal education subsidy formula is derived using an overlapping generationsmodel with parental altruism. The model predicts that public education subsidy isgreater in economies with lesser parental altruism because a benevolent governmenthas to compensate for the shortfall in private education spending of less altruisticparents with a finite life. On the other hand, growth is higher in economies withgreater parental altruism. Cross-country regressions using the World Values Surveyfor altruism lend support to our model predictions. The model provides insights aboutthe reasons for higher education subsidy in richer countries.

Item Type:Monograph (Working Paper)
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Status:Not peer-reviewed
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Record Created:07 Dec 2012 10:36
Last Modified:16 Oct 2013 13:26

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