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Human capital Kuznets curve with subsistence consumption level

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  • Matsuo, Miki
  • Tomoda, Yasunobu
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    Abstract

    We examine the human capital Kuznets curve in a simple model that does not assume increasing returns to scale in human capital formation. With a utility function that specifies a subsistence consumption level, consumption is a necessary good and education is a luxury good. As the children of poor households receive a low level of education, the gap in human capital endowments expands between poor and rich households. Eventually, economic development increases income and expenditure for education, and income inequality declines.

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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 116 (2012)
    Issue (Month): 3 ()
    Pages: 392-395

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    Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:392-395

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    Web page: http://www.elsevier.com/locate/ecolet

    Related research

    Keywords: Human capital; Kuznets curve; Subsistence consumption level; Luxury goods;

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    1. Glomm, Gerhard & Ravikumar, B., 1998. "Increasing returns, human capital, and the Kuznets curve," Journal of Development Economics, Elsevier, vol. 55(2), pages 353-367, April.
    2. Galor, Oded & Tsiddon, Daniel, 1996. "Income Distribution and Growth: The Kuznets Hypothesis Revisited," Economica, London School of Economics and Political Science, vol. 63(250), pages S103-17, Suppl..
    3. Mausumi Das, 2002. "Persistent Inequality: An Explanation Based on Limited Parental Altruism," Working papers 101, Centre for Development Economics, Delhi School of Economics.
    4. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    5. Oded Galor, 2011. "Inequality, Human Capital Formation and the Process of Development," Working Papers 2011-7, Brown University, Department of Economics.
    6. Petra Sauer & Martin Zagler, 2012. "Economic Growth And The Quantity And Distribution Of Education: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 26(5), pages 933-951, December.
    7. De Gregorio, Jose & Lee, Jong-Wha, 2002. "Education and Income Inequality: New Evidence from Cross-Country Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 395-416, September.
    8. Amparo Castello & Rafael Domenech, 2002. "Human Capital Inequality and Economic Growth: Some New Evidence," Economic Journal, Royal Economic Society, vol. 112(478), pages C187-C200, March.
    9. Mani, Anandi, 2001. " Income Distribution and the Demand Constraint," Journal of Economic Growth, Springer, vol. 6(2), pages 107-33, June.
    10. Audrey Siew Kim LIM & Kam Ki TANG, 2008. "Human Capital Inequality And The Kuznets Curve," The Developing Economies, Institute of Developing Economies, vol. 46(1), pages 26-51.
    11. Moav, Omer, 2002. "Income distribution and macroeconomics: the persistence of inequality in a convex technology framework," Economics Letters, Elsevier, vol. 75(2), pages 187-192, April.
    12. Steger, Thomas M., 2000. "Economic growth with subsistence consumption," Journal of Development Economics, Elsevier, vol. 62(2), pages 343-361, August.
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    Cited by:
    1. Stefan Baumgaertner & Moritz A. Drupp & Martin F. Quaas, 2013. "Subsistence and substitutability in consumer preferences," Working Paper Series in Economics 290, University of L√ľneburg, Institute of Economics.

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