We study the interaction between technological innovation, investment in human capital and child labour. In a two-stage game, first firms decide on innovation, then households decide on education. In equilibrium the presence of inefficient child labour depends on parameters related to...

In this paper I show that persistent inequality in the distribution of human capital and a negative relation between initial inequality and steady-state aggregate output may follow from the fact that the poor require relatively higher returns to increase expenditure on education. Moreover, I...