Growth and inequality: Access to advanced education under credit constraint
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This Master thesis starts by reviewing a wide strand of the literature about the linkage between growth and inequality. It then proposes an overlapping generation model with altruistic agents that are heterogeneous in ability and initial wealth. They go through a two-stage education process, during which the decision of investing in higher education is left to them. Possibility for borrowers to evade debt payments imposes a constraint on credit which will impact human capital accumulation. Quality of the two educational sectors (basic and advanced) depends on public funding which is allocated to each sector. We analyze the impact of initial distribution of wealth on the subsequent achievements of the economy as well as the possible policy recommendations as regards the allocation of resources between the educational sectors.