Educational Investments in a Dual Economy

36 Pages Posted: 6 May 2005

See all articles by Andrew G. Mude

Andrew G. Mude

Cornell University - Department of Economics

Christopher B. Barrett

Cornell University - Charles H. Dyson School of Applied Economics & Management

John G. McPeak

Syracuse University - Department of Economics

Cheryl R. Doss

University of Oxford - Department of International Development

Multiple version iconThere are 2 versions of this paper

Date Written: October 2004

Abstract

This paper presents a simple two-period, dual economy model in which migration options may affect the informal financing of educational investments. When credit contracts are universally available and perfectly enforceable, spatially varied returns to human capital have no effect on educational investment patterns. But when financial markets are incomplete and informal mechanisms subject to imperfect contract enforcement must fill the breach, spatial inequality in infrastructure or other attributes that affect the returns to education create spatial differentiation in educational lending and consequently, in educational attainment. Although migration options can increase the returns to education, they can also choke off the informal finance on which poorer rural households depend for long-term, lumpy investments like children's education.

Keywords: Poverty traps, Informal finance, Education, Rural-Urban migration

JEL Classification: R23, O15

Suggested Citation

Mude, Andrew G. and Barrett, Christopher B. and McPeak, John G. and Doss, Cheryl R., Educational Investments in a Dual Economy (October 2004). Available at SSRN: https://ssrn.com/abstract=716323 or http://dx.doi.org/10.2139/ssrn.716323

Andrew G. Mude (Contact Author)

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States

Christopher B. Barrett

Cornell University - Charles H. Dyson School of Applied Economics & Management ( email )

315 Warren Hall
Ithaca, NY 14853-7801
United States
607-255-4489 (Phone)
607-255-9984 (Fax)

HOME PAGE: http://aem.cornell.edu/faculty_sites/cbb2/

John G. McPeak

Syracuse University - Department of Economics ( email )

Syracuse, NY 13244-1020
United States

Cheryl R. Doss

University of Oxford - Department of International Development ( email )

3 Mansfield Road
Oxford, OX1 3TB
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
82
Abstract Views
1,158
rank
310,524
PlumX Metrics