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Educational Investments In A Spatially Varied Economy

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  • Mude, Andrew G.
  • Barrett, Christopher B.
  • McPeak, John G.
  • Doss, Cheryl R.

Abstract

This paper presents a simple two-period, dual economy model in which migration options may affect the informal financing of educational investments. When credit contracts are universally available and perfectly enforceable, spatially varied returns to human capital have no effect on educational investment patterns. But when financial markets are incomplete and informal mechanisms subject to imperfect contract enforcement must fill the breach, spatial inequality in infrastructure or other attributes that affect the returns to education create spatial differentiation in educational lending and consequently, in educational attainment. Although migration options can increase the returns to education, they can also choke off the informal finance on which poorer rural households depend for long-term, lumpy investments like children's education.

Suggested Citation

  • Mude, Andrew G. & Barrett, Christopher B. & McPeak, John G. & Doss, Cheryl R., 2003. "Educational Investments In A Spatially Varied Economy," Working Papers 14737, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:14737
    DOI: 10.22004/ag.econ.14737
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    References listed on IDEAS

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    5. Besley, Timothy, 1995. "Savings, credit and insurance," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 36, pages 2123-2207, Elsevier.
    6. Strauss, John & Thomas, Duncan, 1995. "Human resources: Empirical modeling of household and family decisions," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 34, pages 1883-2023, Elsevier.
    7. Oded Stark, 1991. "The Migration of Labor," Blackwell Books, Wiley Blackwell, number 1557860300, May.
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    Cited by:

    1. Christopher B. Barrett, 2005. "Rural poverty dynamics: development policy implications," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 45-60, January.

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