Template-Type: ReDIF-Paper 1.0
Author-Name: Dilip Mookherjee
Author-X-Name-First: Dilip
Author-X-Name-Last: Mookherjee
Author-Email: dilipm@bu.edu
Author-Workplace-Name: Institute for Economic Development, Boston University
Author-Name: Debraj Ray
Author-X-Name-First: Debraj
Author-X-Name-Last: Ray
Author-Email: debraj.ray@nyu.edu
Author-Workplace-Name: Department of Economics, New York University
Title:  A Dynamic Incentive-Based Argument for Conditional Transfers 
Abstract: We compare the long-run eects of replacing unconditional transfers to the poor by transfers conditional on the education of children. Unlike the Mirrlees income taxation model, the distribution of skill evolves endogenously. Human capital accumulation follows the Freeman-Ljungqvist-Mookherjee-Ray OLG model with missing capital markets and dynastic bequest motives. Conditional transfers (funded by taxes on earnings of the skilled) are shown to induce higher long run output per capita and (both utilitarian and Rawlsian) welfare, owing to their superior effect on skill accumulation incentives. The result is established both with two skill levels, and a continuum of occupations.
Length: 26 pages
Creation-Date: 2008-04
Revision-Date: 
Publication-Status: 
File-URL:http://www.bu.edu/econ/ied/dp/papers/08cond05f.pdf
File-Format: Application/pdf
File-Function: 
Number: dp-170
Classification-JEL: 
Keywords: 
Handle: RePEc:bos:iedwpr:dp-170