Constructing a simple model that includes the price of education, this paper shows that the educational expenditure of rich households could prevent poor households from escaping poverty. The paper offers an explanation for persistent inequality

Constructing a simple model that includes the price of education, this paper shows that the educational expenditure of rich households could prevent poor households from escaping poverty. The paper offers an explanation for persistent inequality.

Even if the relatively rich and the poor are initially caught in a poverty trap, the relatively rich can escape poverty by receiving payments from the poor. Further accumulation of wealth by the rich allows the poor to escape poverty.