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Dual Poverty Trap

  • Ryo Horii

    ()

    (Graduate School of Economics, Osaka University)

  • Masaru Sasaki

    ()

    (Graduate School of Economics, Osaka University)

This paper constructs an overlapping generations model of search equilibrium that analyzes intergenerational and coordination traps simultaneously. When parents are uneducated, their children often face difficulty in finishing school, and therefore likely to remain uneducated. In addition, if children expect that other children of the same generation do not receive education, they anticipate that firms will not create enough jobs for educated and thus are discouraged from schooling. These two mechanisms of poverty trap reinforce each other-creating a dual poverty trap. Escaping from the trap requires a combined, not separate, implementation of financial assistance for schooling and policies for changing agentsf expectation.

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File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0612.pdf
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Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 06-12.

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Length: 25 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:osk:wpaper:0612
Contact details of provider: Web page: http://www.econ.osaka-u.ac.jp/Email:


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  1. Ranjan Ray, 2000. "Analysis of child labour in Peru and Pakistan: A comparative study," Journal of Population Economics, Springer, vol. 13(1), pages 3-19.
  2. George Psacharopoulos & Harry Anthony Patrinos, 1997. "Family size, schooling and child labor in Peru - An empirical analysis," Journal of Population Economics, Springer, vol. 10(4), pages 387-405.
  3. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
  4. Acemoglu, Daron, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Wiley Blackwell, vol. 64(3), pages 445-64, July.
  5. Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, vol. 92(1), pages 323-334, March.
  6. Strauss, J. & Thomas, D., 1995. "Empirical Modeling of Household and Family Decisions," Papers 95-12, RAND - Reprint Series.
  7. Hoff, Karla & Pandey, Priyanka, 2004. "Belief systems and durable inequalities : an experimental investigation of Indian caste," Policy Research Working Paper Series 3351, The World Bank.
  8. Burdett, Ken & Smith, Eric, 2002. "The low skill trap," European Economic Review, Elsevier, vol. 46(8), pages 1439-1451, September.
  9. Laing, Derek & Palivos, Theodore & Wang, Ping, 1995. "Learning, Matching and Growth," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 115-29, January.
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