Program > Program by speaker > Racionero Maria

Optimal education policy when parental time investments matter
Pierre Pestieau  1@  , Maria Racionero  2@  
1 : Center of Research in Public Economics and Population Economics, Université de Liège; CORE, TSE and CEPR  (CREPP ULg, CORE, TSE and CEPR)  -  Website
7, Boulevard du Rectorat, Université de Liège, B-4000 Liège (Belgium) -  Belgium
2 : Research School of Economics, Australian National University  (ANU RSE)  -  Website
Research School of Economics ANU College of Business and Economics H.W. Arndt Building 25a Room 2010 The Australian National University ACT 2601 Canberra -  Australia

Parents typically invest both time and money in the education of their children. We study the implications for the optimal education policy of taking parental time investments in children's education into account. The children's human capital production function depends on both parental time investments and formal education, either privately purchased or publicly provided. We assume that parents differ in their unobservable ability and that the productivity of the time spent with their children depends on their ability. In the second-best, we assume that the domestic time investment is always unobservable but explore the implications of alternative assumptions on the observability of private purchases of education. We show that the sign of the cross derivative between informal and formal education plays a critical role in the second best optimal education policy.


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