Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/21196
Authors: 
Bell, Clive
Gersbach, Hans
Year of Publication: 
2001
Series/Report no.: 
IZA Discussion paper series 338
Abstract: 
We examine economic growth, inequality and education when the wellspring of growth is the formation of human capital through a combination of the quality of child-rearing and formal schooling. The existence of multiple steady states is established, including a poverty trap, wherein children work full-time and no human capital accumulation takes place, with continuous growth at an asymptotically steady rate as an alternative. We show that a society can escape from the poverty trap into a condition of continuous growth through a program of taxes and transfers. Temporary inequality is a necessary condition to escape in finite time, but long-run inequalities are avoidable provided sufficiently heavy, but temporary taxes can be imposed on the better-off. Programs aiming simply at high attendance rates in the present can be strongly non-optimal.
Subjects: 
Child labor
growth and inequality
education
human capital
redistributive policies
poverty traps
JEL: 
H2
I2
O1
O41
Document Type: 
Working Paper

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