Is increased public schooling really a policy for equality?: The role of within-the-family education

Empirical findings suggest different causes for higher educational attainment among children of high-income earners, either that poor parents are credit constrained, or that parental human capital per se is important in the educational process. My theoretical results show how these two diverging results can be brought together. Parental and public investments complement each other in the educational process. Because higher educated parents take advantage of increased productivity, educational equality between rich and poor children is not necessarily promoted by further investments in public schooling. Moreover, I show that educational investments in low-skilled parents have spill-over effects on their children, and therefore have an unambiguously positive impact on equality.