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.

We clarify the different effects of elementary and higher education on human capital accumulation and inequality. The productivity of elementary education plays a significant role in the widening of inequality regardless of the existence of multiple steady states. When the productivity of...

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