Should less inequality in education lead to a more equal income distribution?

In this paper, we revisit the question whether inequality in education and human capital is closely related to income inequality. Using the most popular functional forms describing the relationship between, first, output and human capital and, second, education and human capital, we find that the ef...

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Bibliographic Details
Published in:Education economics 2011-12, Vol.19 (5), p.537-554
Main Authors: Földvári, Péter, van Leeuwen, Bas
Format: Article
Language:English
Subjects:
Coefficients
Cross-national analysis
Differences
Distribution
Economics of education
Education Work Relationship
Educational Attainment
educational inequality
Foreign Countries
Gini coefficient
Human Capital
Income
Income distribution
Income inequality
Inequality
Least squares method
Level of education
Statistical Analysis
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Summary:In this paper, we revisit the question whether inequality in education and human capital is closely related to income inequality. Using the most popular functional forms describing the relationship between, first, output and human capital and, second, education and human capital, we find that the effect of inequality in schooling on income inequality is very low, even insignificant in an economic sense. This is confirmed by our empirical analysis, since we find that the Gini coefficient of education yields an insignificant coefficient. If we take care of the possible simultaneity using a two-stage least-squares (2SLS) analysis, we find that there is no relationship in the case of non-OECD countries, but a positive relationship is found in the case of OECD countries. Also, we cannot confirm that a more equal distribution of education leads to higher income per capita, even though this result is sensitive to the choice of data.
ISSN:0964-5292
1469-5782
DOI:10.1080/09645292.2010.488472