Evolutionary Pattern and Intergenerational Transmission of Inequality in Human Capital
- 1 Guanghua School of Management, Peking University, Beijing, China
Abstract
This study investigates 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.
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