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Education and household inequality change: a decomposition analysis for India

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  • Pieters, Janneke

    (Groningen University)

Abstract

Previous studies show that rising returns to education have lead to higher wage inequality in developing countries. However, given the importance of non-wage employment and indirect effects of education through labour supply and fertility choices, a similar relationship does not necessarily hold for inequality between households. Based on a decomposition analysis for India, we find counteracting impacts of education on household expenditure inequality. Declining returns to education of household heads reduced inequality, driven by the self-employed. In contrast, rising returns to spouses? education increased inequality in urban areas. We also find that changes in education levels increased rural and urban inequality, due to persistently high illiteracy. Finally, the indirect effect on fertility had a small equalizing impact in urban areas, but slightly increased inequality in rural areas.

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File URL: http://irs.ub.rug.nl/ppn/325608415
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Paper provided by Groningen Growth and Development Centre, University of Groningen in its series GGDC Research Memorandum with number GD-114.

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Date of creation: 2010
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Handle: RePEc:dgr:rugggd:gd-114

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