This paper analyzes the effect of juvenile imprisonment on educational investment incentives. The model shows that if some adolescents are likely to be in trouble with law, their chances to complete education and thus the expected value of investment in their human capital are negatively affected. As a consequence, their parents not only optimally invest less in the offspring's education but also give birth to more children. The analysis helps to understand why some minority groups who for exogenous reasons are more likely to be convicted of crime exhibit higher reproduction rates and lower levels of education. It also demonstrates that prison education may have unintended adverse consequences.
- Economic growth
- Human capital