CHILD NUTRITION AND MULTIPLE EQUILIBRIA IN THE HUMAN CAPITAL TRANSITION FUNCTION

. An overlapping generation model has been developed in order to analyze the effects of health on the accumulation and intergenerational transmission of human capital. The model shows that the human capital transition function can provide multiple steady states when it is assumed that returns to education are an increasing function of child nutrition. Depending on the initial endowment of human capital, dynasties may find themselves trapped in vicious circle of low human capital, poor health status and high fertility rates. Moreover, human capital could converge to different equilibria depending on child nutrition, regardless of the length of schooling.