Economic and political inequality and the quality of public goods

Purpose - To formalize and test the hypotheses that economic and political inequality tend to lower the quality of public education and thereby the overall quality of education in developing countries. Design/methodology/approach - The paper uses both international cross‐section data and panel data from almost 100 countries to test these hypothesized effects of the two types of inequality on educational quality. Three different indicators of school quality, all at the primary level, are used. The paper tests the robustness of the findings to different estimation methods, specifications and the use of instruments for a potentially endogenous variable. Findings - There is clear empirical support for the hypothesized negative effects of political inequality and ethnic fragmentation on educational quality. The evidence for the hypothesized effect of income inequality, however, is very weak at best. Research limitations/implications - The educational quality measures are crude and the analysis is at the country level. Future work can use more direct, achievement‐based measures of quality and data at the district or county levels. Practical implications - Redistribution of income and democratization can have beneficial effects on educational quality. Originality/value - The paper provides a theoretical model that formalizes the hypothesis that economic and political inequality can lower the quality of public education and thereby the overall quality of education. It empirically tests this model using panel and cross‐sectional data.