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Human Capital Inequality, Life Expectancy and Economic Growth

  • 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
Date of revision:
Handle: RePEc:iei:wpaper:0604
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