Abstract
This chapter relies on an economic model in which consumers maximize their utility to show why once a gap in human capital appears, it persists if there are no market forces working to level it off. The model explains the rationality of intergenerational transmission of human capital and how public policies can alter market outcomes. This conclusion explains why per capita income gaps appearing in the 19th century were not eroded by market mechanisms thereafter. It is a complement to the nonconvergence of per capita income of Chapter 3. Data in Chapter 4 is worked out again, under assumptions built from conclusions of the model, to show that current human capital disparities account for most of the inequality in per capita gross domestic product between Brazil and each of the benchmark countries.
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