Addressing the education puzzle : the distribution of education and economic reform
AbstractNo country has achieved sustained economic development without substantially investing in human capital. Previous studies have shown the handsome returns to various forms of basic education, research, training, learning-by-doing, and capacity-building. But education by itself does not guarantee successful development, as history has shown in the former Soviet bloc, Sri Lanka, the Philippines, and the Indian states of Kerala and West Bengal. The question is, when and how does education bring high payoffs? Although theory has suggested a strong causal link between education and growth, the empirical evidence has not been unanimous and conclusive. The authors examine two explanatory factors. First, who gets educated matters a good deal, but the distribution of education is complex and not much has been written about it. They construct an asset allocation model that elucidates the importance of the distribution of education to economic development. Second, how education affects growth is greatly affected by the economic policy environment. Policies determine what people can do with their education. Reform of trade, investment, and labor policies can increase the returns from education. Using panel data from 12 Asian and Latin American countries for 1970-94, they investigate the relationship between education, policy reform, and economic growth. Their empirical results are promising. First, the distribution of education matters. Unequal distribution of education tends to have a negative impact on per capita income in most countries. Moreover, controlling for human capital distribution and the use of appropriate functional form specifications consistent with the asset allocation model makes a difference for the effect of average schooling on per capita income. Controlling for education distribution leads to positive and significant effects of average schooling on per capita income, while failure to do so leads to insignificant, even negative effects, of average education. Second, the policy environment matters a great deal. Our results indicate that economic policies that suppress market forces tend to dramatically reduce the impact of human capital on economic growth. Investment in human capital can have little impact on growth unless people can use education in competitive and open markets. The larger and more competitive these markets are, the greater are the prospects for using education and skills.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 2031.
Date of creation: 31 Dec 1998
Date of revision:
Curriculum&Instruction; Economic Theory&Research; Decentralization; Public Health Promotion; Health Monitoring&Evaluation; Health Monitoring&Evaluation; Teaching and Learning; Curriculum&Instruction; Economic Theory&Research; Gender and Education;
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Ben Crow & Nichole Zlatunich & Brian Fulfrost, 2009. "Mapping global inequalities: Beyond income inequality to multi-dimensional inequalities," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(8), pages 1051-1065.
- Ziesemer, Thomas, 2011.
"What Changes Gini Coefficients of Education? On the dynamic interaction between education, its distribution and growth,"
UNU-MERIT Working Paper Series
053, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology.
- Ziesemer, Thomas, 2011. "What Changes Gini Coefficients of Education? On the dynamic interaction between education, its distribution and growth," UNU-MERIT Working Paper Series 053, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology.
- Andres Rodriguez-Pose & Vasileios Tselios, 2006.
"Education and Income Inequality in the Regions of the European Union,"
ERSA conference papers
ersa06p370, European Regional Science Association.
- Andrés Rodríguez-Pose & Vassilis Tselios, 2009. "Education And Income Inequality In The Regions Of The European Union," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 411-437.
- Andrés Rodríguez-Pose & Vassilis Tselios, 2008. "Education and Income Inequality in the Regions of the European Union," SERC Discussion Papers 0011, Spatial Economics Research Centre, LSE.
- Andrés Rodríguez-Pose & Vassilis Tselios, 2007. "Education and income inequality in the regions of the European Union," Working Papers 2007-17, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
- Rodríguez-Pose, Andrés & Tselios, Vassilis, 2007. "Education and Income Inequality in the Regions of the European Union," Papers DYNREG09, Economic and Social Research Institute (ESRI).
- Frankema, Ewout & Bolt, Jutta, 2006. "Measuring and Analysing Educational Inequality: The Distribution of Grade Enrolment Rates in Latin America and Sub-Saharan Africa," GGDC Research Memorandum GD-86, Groningen Growth and Development Centre, University of Groningen.
- Stefano Paternostro & Anand Rajaram & Erwin R. Tiongson, 2007.
"How Does the Composition of Public Spending Matter?,"
Oxford Development Studies,
Taylor and Francis Journals, vol. 35(1), pages 47-82.
- Paternostro, Stefano & Rajaram, Anand & Tiongson, Erwin R., 2005. "How does the composition of public spending matter?," Policy Research Working Paper Series 3555, The World Bank.
- Daniele Checchi, 2001. "Education, Inequality and Income Inequality," STICERD - Distributional Analysis Research Programme Papers 52, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Jesus Crespo Cuaresma & Samir K.C. & Petra Sauer, 2013. "Age-Specific Education Inequality, Education Mobility and Income Growth," WWWforEurope Working Papers series 6, WWWforEurope.
- Andrés Rodríguez-Pose & Vassilis Tselios, 2010.
"Inequalities in income and education and regional economic growth in western Europe,"
The Annals of Regional Science,
Springer, vol. 44(2), pages 349-375, April.
- Rodríguez-Pose, Andrés & Tselios, Vassilis, 2008. "Inequalities in Income and Education and Regional Economic Growth in Western Europe," Papers DYNREG34, Economic and Social Research Institute (ESRI).
- Thomas, Vinod & Wang, Yan & Fan, Xibo, 2001. "Measuring education inequality - Gini coefficients of education," Policy Research Working Paper Series 2525, The World Bank.
- David E. Sahn & Stephen D. Younger, 2006. "Changes in inequality and poverty in Latin America: Looking beyond income to health and education," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 215-234, November.
- Jean-Claude Berthélemy, 2004. "To what extent are African education policies pro-poor ?," Cahiers de la Maison des Sciences Economiques bla04003, Université Panthéon-Sorbonne (Paris 1).
- Mohamed Ben Mimoun & Asma Raies, 2009. "Education and economic growth: the role of public expenditures allocation," Economics Bulletin, AccessEcon, vol. 29(3), pages 2404-2416.
- Petri, Peter & Thomas, Vinod, 2013. "Development Imperatives for the Asian Century," ADB Economics Working Paper Series 360, Asian Development Bank.
- Jean-Claude Berthélemy, 2006. "To What Extent are African Education Policies Pro-poor?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(3), pages 434-469, September.
- Lugo, Maria Ana, 2011. "Heterogenous peer effects, segregation and academic attainment," Policy Research Working Paper Series 5718, The World Bank.
- Rossana Patrón, 2006. "Enhancing the Public Provision of Education: The Economics of Education Reform in Developing Countries," Documentos de Trabajo (working papers) 1106, Department of Economics - dECON.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.