Memberships and the Dynamics of Human Capital

Giulio Zanella, University of Siena, Department of Economics

We study the accumulation and intergenerational transmission of human capital in a three-story model with social effects, cultural transmission, and sorting. Parents care about their offspring's characteristics such as high or low human capital as well as about their cultural traits, and choose a group and the amount of private resources to allocate to education. Kids choose how much to invest in effort. The first model contains only local fiscal spillovers, the second adds endogenous social interactions, in the form of a peer-group effect on kids' effort. The third adds socially-generated identity effects. The sorting process results into a quest for good social interactions (from the parent's perspective) in order to socialize kids with a specific culture and provide them with incentives to invest in human capital. Equilibrium generates "membership classes", which are self-perpetuating, and may induce persistently low human capital in some groups, a form of poverty trap

About the speaker
Giulio Zanella received a PhD in Economics from the University of Siena, Italy, in 2004 and a MSc in Economics from the University of Wisconsin-Madison in 2006, where he was visiting fellow from 2002 to 2004 and then graduate student from 2004 to 2006. He is assistant professor of economics at the University of Siena since 2006. His research interests include the economics of social interactions, macroeconomics, and applied econometrics.

Venue: Keizer Karelplein 19, Maastricht

Date: 05 April 2007

Time: 16:00