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A General Equilibrium Skill Acquisitions Model of Development for Lesotho
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Abstract
Dual economy, large unemployment, a fixed number of skilled workers, perfect capital mobility, migrant labor force working in South African gold mines, and a cycle of poverty characterize Lesotho. This paper develops a general equilibrium model for Lesotho specifying these absorbing economic characteristics. We are particularly interested in constructing a rising step skill acquisition function, which shows that small infusions of human-capital investment would not pull the economy out of its poverty trap, but a large infusion would.
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