CEU Electronic Theses and Dissertations, 2015
| Author | Szilléry, Mirjam |
|---|---|
| Title | Investing in Education: A Sequential Model with Neighborhood-Effects |
| Summary | In this paper I analyze the impact of family background on schooling outcomes in the presence of neighborhood-effects. I build a sequential model of educational decisions of the parents and the children. Parents make initial investments in early childhood development and the children later choose the optimal schooling level. Costs of schooling are influenced by the average neighborhood schooling outcome, while returns are affected by initial parental investment and family background. The agent have correct expectations regarding the average schooling outcome and the parents properly anticipate how the child will decide as a function of the early investment level. I find that in the subgame perfect equilibrium of this model, the direct effect of the neighborhood and family background on schooling outcome are multiplied through expectations of the parent. Furthermore, I find that on the long run the initial family background can determine the dynamics of schooling outcomes through generations, where with a low initial level of family background a poverty trap might occur. |
| Supervisor | Szeidl, Adam |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2015/szillery_mirjam.pdf |
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