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Human Capital Inequality, Life Expectancy and Economic Growth

Listed author(s):
  • Amparo Castello-Climent

    ()

    (International Economics Institute, University of Valencia)

  • Rafael Domenech

    ()

    (International Economics Institute, University of Valencia)

This paper presents a model in which inequality affects per capita income when individuals decide to invest in education taking into account their life expectancy, which depends to a large extent on the human capital of their parents. Our results show the existence of multiple steady states depending on the initial distribution of education. The low steady state is a poverty trap in which children raised in poor families have low life expectancy and work as non-educated workers. The empirical evidence suggests that the life expectancy mechanism explains a major part of the relationship between inequality and human capital accumulation.

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File URL: http://iei.uv.es/docs/wp_internos/RePEc/pdf/iei_0604.pdf
File Function: First version, 2006
Download Restriction: no

Paper provided by International Economics Institute, University of Valencia in its series Working Papers with number 0604.

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Length: 31 pages
Date of creation: Sep 2006
Handle: RePEc:iei:wpaper:0604
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Web page: http://iei.uv.es
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  1. Bertola, Giuseppe, 1993. "Factor Shares and Savings in Endogenous Growth," American Economic Review, American Economic Association, vol. 83(5), pages 1184-1198, December.
  2. Jie Zhang & Junsen Zhang, 2005. "The Effect of Life Expectancy on Fertility, Saving, Schooling and Economic Growth: Theory and Evidence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 45-66, 03.
  3. Amparo Castello & Rafael Domenech, 2002. "Human Capital Inequality and Economic Growth: Some New Evidence," Economic Journal, Royal Economic Society, vol. 112(478), pages 187-200, March.
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