Human capital, study effort, and persistent income inequality

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

2 Citations (Scopus)

Abstract

The paper shows that if an individual's cost of human capital accumulation depends on his parents' human capital and there exists a "raw labor" sector of production, individuals with low parental human capital may devote little effort in study and become unskilled workers. Further, if an individual exerts little effort in study, the human capital he accumulated may be even less than his parents'. Consequently, his children will have even lower parental human capital than him and they will therefore also become unskilled. Thus, the model shows that even when education is free, income inequality can persist across generations.
Original languageEnglish
Pages (from-to)311-326
Number of pages16
JournalReview of Development Economics
Volume7
Issue number2
DOIs
Publication statusPublished - 1 Jun 2003

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human capital
income
parents
unskilled worker
capital accumulation
labor
education
costs
cost

Cite this

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title = "Human capital, study effort, and persistent income inequality",
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Human capital, study effort, and persistent income inequality. / FAN, Chengze, Simon.

In: Review of Development Economics, Vol. 7, No. 2, 01.06.2003, p. 311-326.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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AB - The paper shows that if an individual's cost of human capital accumulation depends on his parents' human capital and there exists a "raw labor" sector of production, individuals with low parental human capital may devote little effort in study and become unskilled workers. Further, if an individual exerts little effort in study, the human capital he accumulated may be even less than his parents'. Consequently, his children will have even lower parental human capital than him and they will therefore also become unskilled. Thus, the model shows that even when education is free, income inequality can persist across generations.

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