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Education, Economic Growth and Personal Income Inequality Across Countries

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  • Guenther Rehme

    (Technische Universitaet Darmstadt)

Abstract

This paper offers a supply-side explanation of the cross-country variation in long-run growth and inequality. In the model human capital is 'lumpy' and public education simultaneously affects growth and income inequality. More human capital may increase or decrease growth but also measured inequality. These relationships are then discussed in the context of growth regressions. In contrast to some recent results the data show that when controlling for initial income or the educational mix of the labour force, higher (within-country) inequality is associated with lower growth. Furthermore, countries with a more productive education sector have lower inequality. Thus, institutions and policies which generate more high-skilled people or enhance the productivity of the education sector seem to affect long-run income equality and growth in a positive way.

Suggested Citation

  • Guenther Rehme, 2000. "Education, Economic Growth and Personal Income Inequality Across Countries," Econometric Society World Congress 2000 Contributed Papers 1361, Econometric Society.
    • Handle: RePEc:ecm:wc2000:1361
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    Cited by:

    1. Julia Bock-Schappelwein & Rainer Eppel & Ulrike Mühlberger, 2009. "Sozialpolitik als Produktivkraft," WIFO Studies, WIFO, number 35602, Juni.
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    3. Timothy M Smeeding, 2002. "Globalisation, Inequality and the Rich Countries of the G-20: Evidence from the Luxembourg Income Study (LIS)," RBA Annual Conference Volume (Discontinued), in: David Gruen & Terry O'Brien & Jeremy Lawson (ed.),Globalisation, Living Standards and Inequality: Recent Progress and Continuing Challenges, Reserve Bank of Australia.
    4. G nther Rehme, 2002. "(Re-)Distribution of Personal Incomes, Education and Economic Performance across Countries," LIS Working papers 299, LIS Cross-National Data Center in Luxembourg.

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    More about this item

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • I2 - Health, Education, and Welfare - - Education
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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