Investments in the Human Capital of the Socially Disadvantaged Children – Effects on Redistribution

24 Pages Posted: 13 Dec 2011 Last revised: 4 Jul 2012

See all articles by Tim Lohse

Tim Lohse

Berlin School of Economics and Law; Max Planck Institute for Tax Law and Public Finance; Berlin Centre for Empirical Economics (BCEE)

Peter F. Lutz

affiliation not provided to SSRN

Christian J. Thomann

INDEK, Royal Institute of Technology (KTH); Stockholm School of Economics - Stockholm School of Economics - Swedish House of Finance, Students

Date Written: October 31, 2011

Abstract

Recently, early investments in the human capital of children from socially disadvantaged environments have attracted a great deal of attention. Programs of such early intervention, aiming at children's health and well-being, are spreading considerably in the U.S. and are currently tested in several European countries. In a discrete version of the Mirrlees model with a parents' and a children's generation we show the intra-generational and the inter-generational redistributional consequences of such intervention programs. It turns out that the parents' generation always loses when such intervention programs are implemented. Among the children's generation it is the rich who always benefit. Despite the expectation that early intervention puts the poor descendants in a better position, our analysis reveals that the poor among the children's generation may even be worse off if the effect of early intervention on their productivity is not large enough.

Keywords: Early intervention, welfare, redistribution, taxation

JEL Classification: I38, J13, H21, I14

Suggested Citation

Lohse, Tim and Lutz, Peter F. and Thomann, Christian J., Investments in the Human Capital of the Socially Disadvantaged Children – Effects on Redistribution (October 31, 2011). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2011-17, Available at SSRN: https://ssrn.com/abstract=1971628 or http://dx.doi.org/10.2139/ssrn.1971628

Tim Lohse (Contact Author)

Berlin School of Economics and Law ( email )

Badensche Strasse 50-51
Berlin, D-10825
Germany

HOME PAGE: http://www.hwr-berlin.de/en/prof/tim-lohse

Max Planck Institute for Tax Law and Public Finance

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/public_economics/research_affiliates/tim_lohse.cfm

Berlin Centre for Empirical Economics (BCEE) ( email )

Peter F. Lutz

affiliation not provided to SSRN ( email )

Christian J. Thomann

INDEK, Royal Institute of Technology (KTH) ( email )

Lindstedtsvägen 30-100 44
Stockholm, SE-100 44
Sweden

Stockholm School of Economics - Stockholm School of Economics - Swedish House of Finance, Students ( email )

111 60 Stockholm
Sweden

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