Appropriation, Human Capital, and Mandatory Schooling

Abstract

Reduced inequality in human capital may reduce appropriation from the rich. They may therefore favor policies such as income transfers and mandatory schooling which equalize human capital. Comparing several such policies, we find that mandatory schooling leads to higher incomes for both the rich and the poor, and increases the welfare of all. Moreover, it is the optimal policy for the rich, even when they fully pay for the education.

JEL Classification: H23, I21