Intergenerational Mobility, Human Capital Composition and Distance to Technological Frontier

The focus of this study is to analyze the relation between intergenerational mobility (upward and downward mobility) and wage inequality (between skilled and unskilled workers) in a dynamic endogenous skill-biased growth framework where credit market is imperfect. Upward mobility captures the probability of becoming educated given that parent did not has formal education and downward mobility implies probability of not getting a formal education given that parent was educated. This study provides a theoretical set up which elucidate some empirical substantiation of high inequality associated with low mobility in the process of development.