Dual Poverty Trap: Intra- and Intergenerational Linkages in Frictional Labor Markets
AbstractThis paper constructs an overlapping generations model with a frictional labor market to explain persistent low education in developing countries. When parents are uneducated, their children often face difficulties in finishing school and therefore are likely to remain uneducated. Moreover, if children expect that other children of the same generation will not receive an education, they expect that firms will not create enough jobs for educated workers, and thus are further discouraged from schooling. These intergenerational and intragenerational mechanisms reinforce each other, creating a serious poverty trap. Escape from the trap requires the well-organized and combined implementation of a subsidy for schooling, the provision of free education, support for disadvantaged children, and public awareness programs.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 13484.
Date of creation: 23 Nov 2008
Date of revision:
overlapping generations model; education; poverty trap; job search; coordination failure;
Other versions of this item:
- Ryo Horii & Masaru Sasaki, 2012. "Dual Poverty Trap: Intra‐ and Intergenerational Linkages in Frictional Labor Markets," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(1), pages 131-160, 02.
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-28 (All new papers)
- NEP-DEV-2009-02-28 (Development)
- NEP-DGE-2009-02-28 (Dynamic General Equilibrium)
- NEP-LAB-2009-02-28 (Labour Economics)
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