Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/36973
Authors: 
Bell, Clive
Gersbach, Hans
Schneider, Maik T.
Year of Publication: 
2010
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5036
Abstract: 
This paper investigates how families make decisions about the education of juveniles. The decision problem is analyzed in three variations: a 'decentralized' scheme, in which the parents control the purse-strings, but the children dispose of their time as they see fit; a 'hierarchical' scheme, in which the parents can enforce a particular level of schooling by employing a monitoring technology; and the cooperative solution, in which the threat point is one of the two noncooperative outcomes. Adults choose which game is played. While the subgame perfect equilibrium of the overall game is Pareto-efficient when viewed statically, it may yield less education than the hierarchical scheme. Regulation in the form of restrictions on child labor and compulsory schooling generally affects both the threat point and the feasible set of bargaining outcomes, and families may choose more schooling than the minimum required by law.
Subjects: 
Family decision-making
youth
human capital
bargaining
JEL: 
D13
J13
J22
J24
Document Type: 
Working Paper

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