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Human Capital and Income Inequality: Some Facts and Some Puzzles

Author

Listed:
  • Amparo Castelló-Climent

    (University of Valencia)

  • Rafael Doménech

    (University of Valencia, BBVA Research)

Abstract

Using a broad number of indicators from an updated data set on human capital inequality for 146 countries from 1950 to 2010, this paper documents several facts regarding the evolution of income and human capital inequality. The main findings reveal that, in spite of a large reduction in human capital inequality around the world driven by a decline in the number of illiterates of several hundreds of millions of people, the inequality in the distribution of income has hardly changed. In many regions, the income Gini coefficient in 1960 was very similar to that in 2005. Therefore, improvements in literacy are not a sufficient condition to reduce income inequality, even though they improve life standards of people at the bottom of the income distribution. Increasing returns to education, external effects on wages of higher literacy rates or the simultaneous concurrence of other exogenous forces (e.g., globalization or skill-biased technological progress) may explain the lack of correlation between the evolution of income and education inequality.

Suggested Citation

  • Amparo Castelló-Climent & Rafael Doménech, 2012. "Human Capital and Income Inequality: Some Facts and Some Puzzles," Working Papers 1201, International Economics Institute, University of Valencia.
    • Handle: RePEc:iei:wpaper:1201
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    File URL: http://iei.uv.es/docs/wp_internos/RePEc/pdf/iei_1201.pdf
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    References listed on IDEAS

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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. 'Inequality: Power vs. Human Capital'
      by Mark Thoma in Economist's View on 2012-12-15 17:10:46
    2. Inequality: power vs human capital
      by chris dillow in Stumbling and Mumbling on 2012-12-15 19:17:23
    3. A case for inequality?
      by chris dillow in Stumbling and Mumbling on 2013-05-08 17:20:03
    4. What can economics explain?
      by ? in Stumbling and Mumbling on 2014-05-08 19:35:00

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    2. Francis Menjo Baye & Boniface Ngah Epo, 2015. "Impact of Human Capital Endowments on Inequality of Outcomes in Cameroon," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(1), pages 93-118, March.

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    More about this item

    Keywords

    Distribution of education; income inequality; human development; panel data;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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