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School Choice and the Intergenerational Poverty Trap

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  • Kazuo Nishimura
  • Lakshmi K. Raut

Abstract

This paper formulates a dynamic altruistic model of parental choice of school quality and intergenerational social mobility. It shows that when there are many school qualities, the earnings of children as a function of parental schooling investment is a non-concave function, which leads to multiple steady-state equilibria. The paper studies the intergenerational dynamics of parental schooling investment and gives conditions on the rate of return from parental schooling investment under which some families are stuck in an intergenerational poverty trap. The policy implications are also discussed. Copyright © 2007 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd.

Suggested Citation

  • Kazuo Nishimura & Lakshmi K. Raut, 2007. "School Choice and the Intergenerational Poverty Trap," Review of Development Economics, Wiley Blackwell, vol. 11(2), pages 412-420, May.
  • Handle: RePEc:bla:rdevec:v:11:y:2007:i:2:p:412-420
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    References listed on IDEAS

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    1. Ishikawa, Jota, 2000. "Foreign Monopoly and Trade Policy under Segmented and Integrated Markets," Economic Review, Hitotsubashi University, pages 321-336.
    2. Markusen James R. & Morey Edward R. & Olewiler Nancy D., 1993. "Environmental Policy when Market Structure and Plant Locations Are Endogenous," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 69-86, January.
    3. Norman J. Ireland, 1984. "Dual Equilibria and Discontinuous Response in Monopolistic Competition with Two Classes of Consumers," RAND Journal of Economics, The RAND Corporation, pages 377-384.
    4. Formby, John P & Layson, Stephen & Smith, W James, 1982. "The Law of Demand, Positive Sloping Marginal Revenue, and Multiple Profit Equilibria," Economic Inquiry, Western Economic Association International, vol. 20(2), pages 303-311, April.
    5. Nahata, Babu & Ostaszewski, Krzysztof & Sahoo, P K, 1990. "Direction of Price Changes in Third-Degree Price Discrimination," American Economic Review, American Economic Association, pages 1254-1258.
    6. Markusen, James R. & Morey, Edward R. & Olewiler, Nancy, 1995. "Competition in regional environmental policies when plant locations are endogenous," Journal of Public Economics, Elsevier, pages 55-77.
    7. Michael Rauscher, 1995. "Environmental regulation and the location of polluting industries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 229-244, August.
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    Cited by:

    1. Heckman, James J. & Raut, Lakshmi K., 2016. "Intergenerational long-term effects of preschool-structural estimates from a discrete dynamic programming model," Journal of Econometrics, Elsevier, pages 164-175.
    2. Heckman, James J. & Raut, Lakshmi K., 2016. "Intergenerational long-term effects of preschool-structural estimates from a discrete dynamic programming model," Journal of Econometrics, Elsevier, pages 164-175.
    3. Maldonado, Wilfredo L. & Marques, Isabel M. & Filho, Osvaldo C. da Silva, 2012. "A dynamic model of education level choice: Application to brazilian states," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 66(2), June.
    4. repec:fgv:epgrbe:v:66:n:2:a:5 is not listed on IDEAS

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