The Design Of Optimal Education Policies When Individuals Differ In Inheritedwealth And Ability

In this paper I consider the role of education poli-cies in redistribution of income when individuals differ in two aspects: abiliTY and inherited wealth. I discuss the extent to which the rules that emerge in unidimensional settings apply also in the bidimen-sional setting considered in this paper. The main conclusion is that, subject to some qualifi cations, the same type of rules that determine optimal edu-cation policies when only abiliTY heterogeneiTY is considered apply to the case where both parameters of heterogeneiTY are considered. The qualifi cations pertain to the implementation of the optimal alloca-tion of resources to education and not the way the optimal allocations fi rst- and second-best differ.

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