Dual Poverty Trap

Ryo Horii and Masaru Sasaki ()

No 06-12, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: 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 agents f expectation.

Keywords: overlapping generations model; education; intergenerational externality; job search. (search for similar items in EconPapers)
JEL-codes: J23 J62 O11 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2006-05
New Economics Papers: this item is included in nep-dev and nep-edu
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:0612

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