Educational Investments in a Spatially Varied Economy
نویسندگان
چکیده
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 childrens education. We thank seminar participants at Cornell University for helpful discussions and comments on preliminary results. This work was supported by the Pastoral Risk Management Project of the Global Livestock Collaborative Research Support Program, funded by the Office of Agriculture and Food Security, Global Bureau, United States Agency for International Development (USAID), under grants DAN-1328-G-00-0046-00 and PCE-G-98-00036-00, and by the Rural Markets, Natural Capital and Dynamic Poverty Traps Project of the BASIS Collaborative Research Support Program funded by USAID. The opinions expressed do not necessarily reflect the views of the U.S. Agency for International Development. Any remaining errors are solely our responsibility. © Copyright 2003 by Andrew G. Mude, Christopher B. Barrett, John G. McPeak and Cheryl Doss. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies.
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Educational Investments in a Dual Economy
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 imp...
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