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We extend the Becker-Tomes model of intergenerational educational mobility to a rural economy characterized by occupational dualism (farm vs. nonfarm) and provide a comparative analysis of rural China and rural India. The model provides a micro-foundation for the widely used linear-in-levels estimating equation. Returns to education for parents and...
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... whether this higher persistence leads to convergence or divergence in schooling attainment of children born into farm and nonfarm households depends on the relative magnitudes of the intercepts. When the intercepts are ψ n 0 > ψ f 0 , the expected schooling is higher for children born into nonfarm households across the distribution of parental schooling, and the gap between the two groups widens as parental education increases (please see figure 1). On the other hand, we can have two sub-cases when the intercepts are: ψ n 0 < ψ f 0 (please see figure 2). ...
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