Intergenerational contracts, demographic transitions and the 'quantity-quality' trade-off: children, parents and investing in the future

This paper explores why so many children remain outside the schooling system, despite the current emphasis on education as a form of human capital and as a basic human right. The value given to investments in education partly depends on the extent to which such investments fit in with the implicit inter-generational contracts between parents and children, particularly in societies where there are few alternatives to the family as sources of welfare and security in old age. When the decision to educate a child remains private, the interests of parents' security in old age will dominate over the long-term interests of the child. To explore the circumstances under which parents would be persuaded to invest in their children's education, the paper suggests a series of stylized ‘transitions’ in the inter-generational contract, each associated with increasing willingness on the part of parents to invest resources in their children.