We consider an Overlapping-generations economy where the aggregative production process uses physical capital and human capital The human capital level of each individual is determined by the direct investment in education and some random ability The parents' investment in the education of their...

We analyze the importance of information about individual skills for understanding human capital accumulation and income inequality. The paper uses the framework of an overlapping generations economy with endogenous investment in human capital. Agents in each generation differ by random...