Persistent Inequality and Private Provision of Public Goods

This paper examines the relationship between the incentive to free ride and inequality by studying the case in which agents invest in human capital and then provide public goods privately. An agent's stock of human capital is affected by his parental stock; the more human capital a parent has, the more effectively his child can learn. Then, the incentives to free ride at provision of public goods in the old period are different among agents. We find that an agent born of a well-educated parent studies harder than an agent born of a less-educated parent, which induces persistent inequality. (JEL Classifications: H41, O15)