Two Sources of low-development traps from a human capital perspective

LONDON, SILVIA; SANTOS, MARÍA EMMA

Medellin, Colombia

Jornada; Jornadas Latinoamericanas de Teoria Economica; 2007

Departamento de Economia de la Universidad EAFIT

In this paper we analyze two possible sources of low-development traps related to human capital accumulation. The first one comes from segmentation in the educational system, such that the children of better educated parents receive a sensible higher quality education than the children of less educated parents. The second one comes from a mismatch between the skills workers have acquired through their formal education and the skills demanded by firms in the labor market. Two different models are presented in which each of these sources cause, correspondingly, dual economies and low-development traps.