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

Listed author(s):
  • 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: https://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
Handle: RePEc:pra:mprapa:13484
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  1. 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.
  2. Basu, Kaushik, 2000. "The Intriguing Relation between Adult Minimum Wage and Child Labour," Economic Journal, Royal Economic Society, vol. 110(462), pages 50-61, March.
  3. Matthias Doepke & Fabrizio Zilibotti, 2005. "The Macroeconomics of Child Labor Regulation," American Economic Review, American Economic Association, vol. 95(5), pages 1492-1524, December.
  4. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-298, April.
  5. 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.
  6. Omer Moav, 2005. "Cheap Children and the Persistence of Poverty," Economic Journal, Royal Economic Society, vol. 115(500), pages 88-110, January.
  7. Daron Acemoglu, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 445-464.
  8. William Easterly, 2009. "Can the West Save Africa?," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 373-447, June.
  9. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
  10. 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.
  11. Acemoglu, Daron, 2001. "Good Jobs versus Bad Jobs," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 1-21, January.
  12. Derek Laing & Theodore Palivos & Ping Wang, 1995. "Learning, Matching and Growth," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 115-129.
  13. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, number 9780521001151, December.
  14. Blonigen, Bruce A. & Davies, Ronald B. & Waddell, Glen R. & Naughton, Helen T., 2007. "FDI in space: Spatial autoregressive relationships in foreign direct investment," European Economic Review, Elsevier, vol. 51(5), pages 1303-1325, July.
  15. Katsuya Takii, 1997. "Jobs, education and the underdevelopment trap," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 6(1), pages 29-42.
  16. 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.
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