Human Capital, Heterogeneity and Estimated Degrees of Intergenerational Mobility

We study the parental investment model of intergenerational mobility, where heterogeneity in 'innate' earnings ability and parents' altruism rate is explicitly modelled. We show that heterogeneity increases the difficulty of detecting the existence of borrowing constrained families. Conversely, the presence of heterogeneity means that economic and linear statistical models of inheritance generate similar intergenerational data on consumption and earnings. We also suggest that nay cross-country differences in intergenerational earnings mobility are more readily interpreted according to the heterogeneity of inherited ability, rather than optimal family responses to country-specific institutions for accumulating human capital.     

should Transfers To Poor Families Be Conditional On School Attendance? A Household Bargaining Perspective*

This article considers the welfare implications of transfers to poor families that are conditional on school attendance and other forms of investment in children's human capital. Family decisions are assumed to be the result of (generalized) Nash bargaining between the two parents. We show that, as long as bequests are zero, conditional transfers are better for children than unconditional transfers. The mother's welfare may also be improved by conditional transfers. Thus, conditioning transfers to bequest‐constrained families have potentially desirable intergenerational and intragenerational welfare effects. Conditioning transfers to unconstrained families make every family member worse off.     

Capital markets integration, growth and income distribution

The paper considers a two-country model of overlapping generation heterogenous economies with intergenerational transfers carried out in the form of bequest and investment in human capital. We examine in competitive equilibrium the transitory and long-run effects of capital markets integration. First, we explore how the regime of public education affects the dynamics of the integrated economy. Second, we study the effects of capital markets integration, in equilibrium, on the intragenerational income distribution in both the host and investing country.     

Low level equilibrium trap,unemployment, efficiency of education system,child labour and human capital formation

This paper builds an overlapping generations household economy model to examine the impact of adult unemployment on the human capital formation of a child and on child labour, as viewed through the lens of the adult’s expectations of future employability. The model indicates that the higher the adult unemployment rate in the skilled sector, the lesser is the time allocated by an unskilled adult towards schooling of her child. We also find that an increase in the unskilled adult’s wage may or may not decrease child labour in the presence of unemployment. The model predicts that an increase in child wage increases schooling and human capital growth rate only if the adults in the unskilled sector earn less than subsistence consumption expenditure. As the responsiveness of skilled wage to human capital increases, schooling and human capital growth rates increase. The model dynamics bring out the importance of education efficiency and parental human capital in human capital formation of the child. In the case of an inefficient education system, generations will be trapped into low level equilibrium. Only in the presence of an efficient education system, steady growth of human capital is possible. Suitable policies that may be framed to escape the child labour trap are discussed as well.     

The Intergenerational Overlap and Human Capital Formation*

A new microeconomic explanation for the divergent experiences of economies in forming human capital is proposed. It is suggested that the positive effect of a longer life expectancy on human capital formation arises from two separate effects: a life‐expectancy effect and a prolonged intergenerational overlap effect. It is argued that the duration of the overlap between generations and the associated parental support can affect the marginal cost of human capital formation and hence its level: parental support is cheaper than market financing. The strong correlation between the formation of human capital and life expectancy is thus attributed not merely to a higher marginal benefit arising from a longer payback period but also to a lower marginal cost arising from a prolonged intergenerational overlap. Conditions are provided under which a longer overlap results in a higher level of per capita output.     

Parental nurturing and adverse effects of redistribution

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.     

GROWTH AND BUBBLES WITH CONSUMPTION EXTERNALITIES*

This paper explores the role of consumption externalities in an overlapping generations economy with capital accumulation. If consumers in each generation are concerned with other agents’ consumption behaviours, there exist intergenerational as well as intragenerational consumption externalities. It is the presence of intergenreational consumption externalities that may produce fundamental effects both on equilibrium dynamics and on steady‐state characterization of the economy. This paper demonstrates this fact in the context of a simple model of endogenously growing, overlapping‐generations economy with or without asset bubbles.     

家庭借贷约束、公共教育支出与社会流动性

人力资本投资是增强社会流动性的重要手段,然而借贷约束使得底层家庭无力对子女进行最优的人力资本投资;与此同时,富裕家庭则不受借贷约束的影响,总体结果是社会流动性减弱。利用中国健康与养老追踪调查和全国综合社会调查数据,本文发现,借贷约束确实提高了居民收入和教育的代际传递弹性,降低了社会流动性。在匹配政府公共教育支出数据后发现,公共教育支出可以缓解家庭层面人力资本投资的不足,提高教育水平的代际流动性。     

Human Capital, Study Effort, and Persistent Income Inequality

The paper shows that if an individual's cost of human capital accumulation depends on his parents' human capital and there exists a "raw labor" sector of production, individuals with low parental human capital may devote little effort in study and become unskilled workers. Further, if an individual exerts little effort in study, the human capital he accumulated may be even less than his parents'. Consequently, his children will have even lower parental human capital than him and they will therefore also become unskilled. Thus, the model shows that even when education is free, income inequality can persist across generations.     

Intergenerational transfer,human capital and long-term growth in China under the one child policy

We suggest that the demographic changes caused by the one child policy (OCP) may not harm China's long-term growth. This is because of the higher human capital accumulation induced by the intergenerational transfer arrangements under China's poor-functioning formal social security system. Parents raise their children and depend on them for support when they reach an advanced age. A decrease in the number of children prompted by the OCP results in parents investing more in their children's education to ensure retirement consumption. In addition, decreased childcare costs strengthen educational investment through an income effect. Using a calibrated model, a benchmark with the OCP is compared to three counterfactual experiments without the OCP. Output in 2025 without OCP decreases about 4% under moderate estimates. The output gain comes from a greatly increased educational investment driven by fewer children (11.4 years of schooling rather than 8.1). Our model sheds new light on the prospects of China's long-term growth by emphasizing the OCP's growth enhancing role through human capital formation under intergenerational transfer arrangements.     

Welfare Analysis of Pension Reforms in an Ageing Japan

This paper uses a computable general equilibrium model with overlapping generations to explore the effects of different public pension schemes on economic welfare, and intergenerational and intragenerational equity. Besides the benchmark case based on the 2004 public pension reform, the present paper considers two alternative reforms: financing the basic pension benefit through a consumption tax, and eliminating the earnings‐related pension benefit. The simulation results suggest that even the consumption‐tax financing of only the basic pension, namely, the combination of both reforms, might not improve overall economic welfare, although it increases economic output by inducing capital formation.     

Survival of the gene,intergenerational transfers and precautionary saving

This paper provides a model of bequest and investment in children's human capital at low incomes. It posits that parents and children are linked through their common concern of grandchildren and intergenerational transfers provide a material basis for the perpetuation of the family line. The model characterizes intergenerational strategic interactions in a dynamic game theoretical framework. Moreover, it explores intergenerational uncertainty as a source of precautionary saving. In contrast with the existing literature, the model implies that there are qualitative differences between precautionary saving from one's own income uncertainty and precautionary bequests from children's income uncertainty.     

Within-family inequalities in human capital accumulation in India

We investigate within-family inequalities in human capital accumulation in India. Indicators of the children's current stock of human capital and of investment into their continued human capital accumulation are analyzed, distinguishing between time investments and pecuniary investment into school quality. We employ a within-family model using sibship fixed effects, and find mostly negative birth order effects; that is, earlier-born children are better off. However, for time investments there is a tendency toward more positive birth order effects, especially in poor and large families. This suggests that that opportunity cost of child time matters; in poor and large families the older, more productive, siblings often need to work. The most plausible explanation for negative birth order effects in general is resource dilution at an early age. Older siblings were only children at an early age, and therefore benefited from more parental resources.     

家族企业代际传递促进了企业创新吗？ ——来自创业板市场的经验证据

摘要：家族企业代际传承究竟会给企业创新带来什么样影响是一个重要且仍具争议的话题。本文试图从人力资本视角，发掘家族企业二代接班者对企业创新行为的重要影响。结果显示：家族企业二代接班者更倾向于激励企业创新行为，这一激励不仅有利于促进企业加大内部研发投入而且还会通过资本运作来实现企业外延式创新，上述研究结论在削弱内生性问题又依旧保持稳健。本文的研究发现为家族企业代际传递与创新问题提供理论验证，对家族企业创新实践和人力资本管理具有一定的启示意义。     

The role of intergenerational mobility in internal migration

This paper investigates the role of intergenerational mobility in the internal migration decisions of families. The geographic variation in intergenerational mobility suggests that if parents value their children's human capital accumulation and future outcomes, they would have an incentive to move to areas with a higher upward mobility. To identify the effect of intergenerational mobility on family migration, we first use an instrumental variable approach, based on a heteroskedastic covariance restriction, which addresses measurement-error and omitted-variable biases. Then, we apply the semiparametric maximum score estimation method to our empirical model, which yields a consistent estimator when families' choice sets are partially observed. We find that highly educated families with school-aged children choose areas that favor upward mobility. Our welfare analysis indicates that a unit increase in the absolute upward mobility of a commuting zone is equivalent to approximately a $722 higher mean wage in the local labor market.     

Gender gap,capital accumulation and the demographic transition

This paper focuses on explaining the demographic transition and some of the broad patterns that are associated with it. We present an endogenous growth model that incorporates altruism and son preference within the family as well as gender wage gap and gender wage discrimination in the labour market. We show that with the accumulation of physical capital and human capital, the output share of mental labour increases and the gender wage gap narrows. In the early stages of economic development, gender discrimination is becoming prevalent and the substitution effect of capital accumulation, which raises the cost of child rearing, is dominated by the income effect, so the growth rate of population increases with income. When the degree of gender wage discrimination starts to decline, the increased cost of child rearing induces families to invest more in the human capital of children and the growth rate of the population falls. The quantitative analysis shows that gender wage discrimination is indeed an important contributor to the demographic transition.     

CHILD POVERTY, INVESTMENT IN CHILDREN AND GENERATIONAL MOBILITY: THE SHORT AND LONG TERM WELLBEING OF CHILDREN IN URBAN CHINA AFTER THE ONE CHILD POLICY

China's One Child Policy (OCP), introduced in 1979, changed fundamentally the nature of both existing and anticipated marriage arrangements and influenced family formation decisions in many dimensions, especially with respect to the number of and investment in children. The policy coincided with the Economic Reforms of 1979 and the trend toward greater urbanization, all of which may have influenced the wellbeing of children. This paper examines the mobility status consequence of children in urban China since the introduction of the OCP and the economic reforms using data drawn from urban household surveys in China. The analysis first makes the comparison between child poverty in Canada, the United Kingdom and urban India, where it was found that both status and trends of child poverty are very different among the countries, with children not being over-represented in the poverty group in urban China. The extent to which the policies influenced investment in children is next examined by studying the way in which the relationship between the educational attainment of children and family characteristics changed within families formed prior to and after 1979. We found that the impact of household income and parental educational attainment increased significantly over time, with a positive gender effect where girls advanced more than boys. Applying new techniques for measuring mobility, we observe the reduction in intergenerational mobility. This phenomenon is found to be particularly prevalent in the lower income quantiles, reinforcing a dynastic notion of poverty.     

Parental human capital investment and old-age transfers from children: Is it a loan contract or reciprocity for Indonesian families?

This paper proposes two alternative models of intergenerational transfers linking parental investment in human capital of children to old-age support. The first model formulates these transfers as a pure loan contract and the second model as self-enforcing reciprocity. Both models predict neutrality of intergenerational redistribution of resources within the family, also known as the “difference in income transfer derivatives property”. Two models, however, provide different reasons for the failure of this property, and yield different policy implications for parental human capital investment and provision of old-age support. Specification tests on the Indonesian Family Life Survey data reject the pure loan model in favor of the reciprocity model. The estimated difference in income transfer derivatives for this data is found to be significantly higher than the difference estimated by Altonji, Hayashi and Kotlikoff Altonji et al. (1992) [Altonji, J.G., Hayashi, F. and Kotlikoff, L.J. (1992). Is the Extended Family Altruistically Linked? Direct Tests Using Micro Data. The American Economic Review, vol. 82(5): 1177–98.] for the U.S. PSID data.     

Bounded rationality,expectations, and child labour

This paper develops a model with overlapping generations, where the household's optimal fertility, child labour, and education decisions depend on the parents’ expectations or beliefs about the return to education. It is shown that there exists a range of parental income where the fertility rate is high and children participate in the labour market and receive an incomplete education if a parent believes the return to education is low. The act of participating in the labour market reduces the child's ability to accumulate human capital; thus, the action of sending a child into the labour market is sufficient to ensure that the parents’ initially pessimistic expectations are fulfilled. It is then shown that a one‐time policy intervention, such as banning child labour and mandatory education, can be enough to move a country from the positive child labour equilibrium to an equilibrium with no child labour.     

To draft or not to draft? Inefficiency, generational incidence, and political economy of military conscription

We study the military draft as a form of intergenerational redistribution, taking into account endogenous human capital formation. Introducing the military draft initially benefits the older generation while it harms the young and all future generations. As it distorts human capital formation more severely than an equivalent intergenerational transfer using public debt or pay-as-you-go pensions, the draft can be abolished in a Pareto-improving way if age-dependent taxes are available. In the absence of age-specific taxes, the political allure of the draft can be explained by the specific intergenerational incidence of its costs and benefits.