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Dual Poverty Trap: Intra- and Intergenerational Linkages in Frictional Labor Markets

  • Horii, Ryo
  • Sasaki, Masaru

This paper constructs an overlapping generations model with a frictional labor market to explain persistent low education in developing countries. When parents are uneducated, their children often face difficulties in finishing school and therefore are likely to remain uneducated. Moreover, if children expect that other children of the same generation will not receive an education, they expect that firms will not create enough jobs for educated workers, and thus are further discouraged from schooling. These intergenerational and intragenerational mechanisms reinforce each other, creating a serious poverty trap. Escape from the trap requires the well-organized and combined implementation of a subsidy for schooling, the provision of free education, support for disadvantaged children, and public awareness programs.

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File URL: http://mpra.ub.uni-muenchen.de/13484/1/MPRA_paper_13484.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13484.

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Date of creation: 23 Nov 2008
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Handle: RePEc:pra:mprapa:13484
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  2. Jere R. Behrman & Mark R. Rosenzweig, 2005. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation? Reply," American Economic Review, American Economic Association, vol. 95(5), pages 1745-1751, December.
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  8. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
  9. repec:cup:cbooks:9780521001151 is not listed on IDEAS
  10. Basu, Kaushik & Zarghamee, Homa, 2005. "Is Product Boycott a Good Idea for Controlling Child Labor?," Working Papers 05-14, Cornell University, Center for Analytic Economics.
  11. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  12. William Easterly, 2009. "Can the West Save Africa?," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 373-447, June.
  13. Matthias Doepke & Fabrizio Zilibotti, 2005. "The Macroeconomics of Child Labor Regulation," American Economic Review, American Economic Association, vol. 95(5), pages 1492-1524, December.
  14. Takashi KUROSAKI & Seiro ITO & Nobuhiko FUWA & Kensuke KUBO & Yasuyuki SAWADA, 2006. "Child Labor And School Enrollment In Rural India: Whose Education Matters?," The Developing Economies, Institute of Developing Economies, vol. 44(4), pages 440-464.
  15. Acemoglu, Daron, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Wiley Blackwell, vol. 64(3), pages 445-64, July.
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