【RIEM Seminar Series No.270】Parental Time Investment in Early Education and Endogenous Labor Supply
Title: Parental Time Investment in Early Education and Endogenous Labor Supply Speaker: Xiaoyan Youderian, Xavier University Host: Jingjing Ye, Associate professor, RIEM Time: 15:30-16:30, May 22, Friday Venue: Yide Building H503, Liulin Campus Abstract: This paper considers parental time investment in early childhood as an education input and explores the impact of early education policies on labor supply and human capital. I develop a twelve-period overlapping generations model where human capital formation is a multi-stage process. An agent's human capital is accumulated through early and late childhood. Parents make income and time allocation decisions in response to government expenditures and parental leave policies. The model is calibrated to the U.S. economy so that the generated data matches some key aggregate statistics and parental education investment behavior in the U.S. The general equilibrium environment shows that subsidizing private education spending is most effective in increasing human capital. This policy incentivizes parents to increase both physical and time investment. Direct government spending has a crowding-out effect on private spending and this effect is larger more among the rich. As a result, inequality and income persistence decrease most with this policy. In addition, low-wage earners are most responsive to parental leave policy by working less and the increase in their human capital is relatively large.
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