DP11419 Cultural Transmission and Socialization Spillovers in Education
We propose a model of the intergenerational transmission of education where children belong to either high-educated or low-educated families. Children choose the intensity of their social activities while parents decide how much educational effort to exert. We characterize the
equilibrium and show under which condition cultural substitution or complementarity emerges. There is cultural substitution (complementarity) if parents decrease (increase) their education effort when their child socializes more with other children of the same type. By structurally estimating our model to the AddHealth data in the United States, we find that there is cultural complementarity for high-educated parents and cultural substitution for low-educated parents. This means that, for both parents, the more their children interact with kids from high-educated families, the more parents exert educational effort. We also perform some policy simulations. We find that policies aiming at mixing high and low educated children perform well in terms of average educational outcomes. We also show that a policy that gives vouchers to children from high-educated families have a positive and significant impact on the educational outcomes of all children while a policy that gives vouchers to children from low-educated families has a negative effect on the outcomes of both groups.