TITLE:
Evolutionary Pattern and Intergenerational Transmission of Inequality in Human Capital
AUTHORS:
Yaqi Sun
KEYWORDS:
Intergenerational Mobility, Inequality in Human Capital, Education Investment, Overlapping Generation Model
JOURNAL NAME:
Modern Economy,
Vol.11 No.8,
July
29,
2020
ABSTRACT: This
studyinvestigates whether the inequality in human
capital persists among generations in the framework of overlapping generation
(OLG) model. Including different expectations for return on
education investment into to OLG model and assuming that an individual’s human
capital is totally determined by education investment, we obtain the
evolutionary pattern of inequality in education investment among successive
generations and conducted numerical simulation. We find that when the rate of diminishing marginal
return on education investment is low, the inequality in human capital persists
in the long run and the human capital is polarized in equilibrium state. When
the rate of diminishing marginal return on education investment is high, there
exists convergence in human capital distribution and the inequality in human capital will disappear in the long run.