Raising Juveniles

33 Pages Posted: 12 Jul 2010

See all articles by Clive Bell

Clive Bell

University of Heidelberg - South Asia Institute (SAI)

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Maik T. Schneider

University of Bath

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.

Keywords: family decision-making, youth, human capital, bargaining

JEL Classification: D13, J13, J22, J24

Suggested Citation

Bell, Clive and Gersbach, Hans and Schneider, Maik T., Raising Juveniles. IZA Discussion Paper No. 5036. Available at SSRN: https://ssrn.com/abstract=1638471

Clive Bell (Contact Author)

University of Heidelberg - South Asia Institute (SAI) ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 82 80 (Phone)
+41 44 632 18 30 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Maik T. Schneider

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

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