Educational policy and the economics of the family

This paper analyzes the implications of alternative ways to model decision making by families for educational policy. We show that many of the policy implications associated with credit constraints cannot be distinguished from the implications of models of the family that differ from the conventional Barro-Becker model. We then argue that it is the combination of credit constraints and non-conventional preferences that provides a robust basis for government intervention to promote educational investment. Keywords: Family, Intergenerational Transactions, Education. JEL Classification: O15, O16, D13.