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Education, Economic Growth and Measured Income Inequality

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  • GÜNTHER REHME

Abstract

In this paper education simultaneously affects growth and income inequality. More education does not necessarily decrease inequality when the latter is assessed by the Lorenz dominance criterion. Increases in education first increase and then decrease growth as well as income inequality, when measured by the Gini coefficient. There is no clear functional relationship between growth and measured income inequality. The model identifies regimes of this relationship that depend crucially on the production and schooling technology. Conventional growth regressions with human capital and inequality as regressors may miss the richness of the underlying nonlinearities, but may still provide important information on the nonlinear relationship between growth and education. Copyright (c) The London School of Economics and Political Science 2006.

Suggested Citation

  • Günther Rehme, 2007. "Education, Economic Growth and Measured Income Inequality," Economica, London School of Economics and Political Science, vol. 74(295), pages 493-514, August.
  • Handle: RePEc:bla:econom:v:74:y:2007:i:295:p:493-514
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    Cited by:

    1. Petra Sauer & Martin Zagler, 2014. "(In)equality in Education and Economic Development," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(S2), pages 353-379, November.
    2. D Mayston & J Yang, 2008. "A Pecking Order Analysis of Graduate Overeducation and Educational Investment in China," Discussion Papers 08/25, Department of Economics, University of York.
    3. Yu, Nannan & Yu, Bo & de Jong, Martin & Storm, Servaas, 2015. "Does inequality in educational attainment matter for China's economic growth?," International Journal of Educational Development, Elsevier, vol. 41(C), pages 164-173.
    4. Aziz, Babar & Khan, Tasneem & Aziz, Shumaila, 2008. "Impact of Higher Education on Economic Growth of Pakistan," MPRA Paper 22912, University Library of Munich, Germany, revised 2008.
    5. David Mayston & Juan Yang, 2012. "Education, Risk and Efficiency in Human Capital Investment," Discussion Papers 12/15, Department of Economics, University of York.
    6. Ruß, Uwe, 2012. "Bildung, Meritokratie und Ungleichheit: Gibt es einen Zusammenhang zwischen Bildungsungleichheiten, Meritokratieglauben und der Verteilung der Einkommen in fortgeschrittenen Gesellschaften?," Discussion Papers, Research Unit: Skill Formation and Labor Markets SP I 2012-501, Social Science Research Center Berlin (WZB).
    7. Toshiki Tamai, 2015. "Redistributive taxation, wealth distribution, and economic growth," Journal of Economics, Springer, vol. 115(2), pages 133-152, June.
    8. Çoban, Serap, 2008. "The Relationships among Mortality Rates, Income and Educational Inequality in Terms of Economic Growth: A Comparison between Turkey and the Euro Area," MPRA Paper 13296, University Library of Munich, Germany.
    9. V. Chandran Govindaraju & Ramesh Rao & Sajid Anwar, 2011. "Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views," Economic Change and Restructuring, Springer, vol. 44(3), pages 203-219, August.
    10. Fuad Hasanov & Oded Izraeli, 2011. "Income Inequality, Economic Growth, And The Distribution Of Income Gains: Evidence From The U.S. States," Journal of Regional Science, Wiley Blackwell, vol. 51(3), pages 518-539, August.
    11. IBOURK, Aomar & AMAGHOUSS, Jabrane, 2015. "Inequality In Education In The Mena Region: A Macroeconometric Investigation Using Normative Indicators," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 15(2), pages 129-146.
    12. Maru?a Pescu (Beca) & Camelia ?tefan (Baraba?), 2016. "The Effects of Gaps and Disparities on Economic Growth. A Study of 10 Former Socialist Countries from the CEE, Members of the EU," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 18(43), pages 592-592, August.
    13. Fred Argy, 2007. "Distribution Effects of Labour Deregulation," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 14(2), pages 141-155.

    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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