Regional Income Distribution and Human Capital Formation:  A Model of Intergenerational Education Transfer in a Global Context

The demographic problems in developed countries are getting more and more important. Very low fertility rates especially among skilled individuals will soon become relevant for a country’s economy. Also of importance is education of children. Since there is an increasing demand for skilled workers, the positive correlation between social background and education worsens the situation. Therefore family planning as well as fertility providing and educational measures are of major importance for regional decision makers. We define in our model the optimal number of children considering the income and education of their parents by using a Cobb–Douglas utility function which implies that children and con-sumption are complementary goods. Children are considered to be a differentiated good wit