Economics at your fingertips  

Low level equilibrium trap, unemployment, efficiency of education system, child labour and human capital formation

Kamalika Chakraborty () and Bidisha Chakraborty ()
Additional contact information
Kamalika Chakraborty: Jadavpur University

Journal of Economics, 2018, vol. 125, issue 1, No 4, 69-95

Abstract: Abstract This paper builds an overlapping generations household economy model to examine the impact of adult unemployment on the human capital formation of a child and on child labour, as viewed through the lens of the adult’s expectations of future employability. The model indicates that the higher the adult unemployment rate in the skilled sector, the lesser is the time allocated by an unskilled adult towards schooling of her child. We also find that an increase in the unskilled adult’s wage may or may not decrease child labour in the presence of unemployment. The model predicts that an increase in child wage increases schooling and human capital growth rate only if the adults in the unskilled sector earn less than subsistence consumption expenditure. As the responsiveness of skilled wage to human capital increases, schooling and human capital growth rates increase. The model dynamics bring out the importance of education efficiency and parental human capital in human capital formation of the child. In the case of an inefficient education system, generations will be trapped into low level equilibrium. Only in the presence of an efficient education system, steady growth of human capital is possible. Suitable policies that may be framed to escape the child labour trap are discussed as well.

Keywords: Adult unemployment; Skilled and unskilled sector; Child labour; Human capital; Schooling; Education; Low level equilibrium trap; E24; J21; J22; J24; O15 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1007/s00712-017-0585-x

Access Statistics for this article

Journal of Economics is currently edited by Giacomo Corneo

More articles in Journal of Economics from Springer
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2020-09-05
Handle: RePEc:kap:jeczfn:v:125:y:2018:i:1:d:10.1007_s00712-017-0585-x