Schooling, learning on-the-job, earnings and inequality

Why might people in poor countries leave school earlier and invest less in learning on-thejob than people in rich ones? How do these human capital decisions impact on inequality? To give quantitative answers to these questions, I build an overlapping generations model with optimal human capital accumulation and a given distribution of abilities. Variation in mortality and population growth rates can generate large variability in schooling decisions, earnings profiles and measures of inequality. High mortality and population growth rates are shown to produce comparatively little investment in human capital, flat earnings profiles and low inequality, both within and across cohorts.