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(In)equality in Education and Economic Development

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  • Petra Sauer
  • Martin Zagler

Abstract

This paper investigates the relationship between the level and the distribution of education and economic development. We contribute to the literature by introducing an interaction term between the education Gini coefficient and average years of schooling. In a dynamic panel over 55 years and 134 countries we provide, on the one hand, strong evidence that more schooling is good for growth, but the coefficient is variable and substantially declining in the degree of inequality. The aggregate benefit to education thus depends on a country's position in the education distribution. On the other hand, we find a slight transitional increase in education inequality to be beneficial at a very low average level of schooling, but detrimental for growth at a relatively high average level. Allowing for the macroeconomic return to education to be heterogeneous with respect to the degree of inequality is therefore paramount in understanding the relationship between education and development.

Suggested Citation

  • 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.
  • Handle: RePEc:bla:revinw:v:60:y:2014:i:s2:p:s353-s379
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    File URL: http://hdl.handle.net/10.1111/roiw.12142
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    Cited by:

    1. Guido Neidhöfer, 2016. "Intergenerational Mobility and the Rise and Fall of Inequality: Lessons from Latin America," CEDLAS, Working Papers 0196, CEDLAS, Universidad Nacional de La Plata.
    2. Raggl, Anna K., 2014. "Economic growth in Ghana : determinants and prospect," Policy Research Working Paper Series 6750, The World Bank.
    3. Thomas Ziesemer, 2016. "Gini Coefficients of Education for 146 Countries, 1950-2010," Bulletin of Applied Economics, Risk Market Journals, vol. 3(2), pages 1-8.
    4. Wilfried Altzinger & Jesus Crespo Cuaresma & Petra Sauer & Alyssa Schneebaum & Bernhard Rumplmaier, 2015. "Education and Social Mobility in Europe: Levelling the Playing Field for Europe’s Children and Fuelling its Economy," WWWforEurope Working Papers series 80, WWWforEurope.
    5. Kanwal, Ayesha & Munir, Kashif, 2015. "The Impact of Educational and Gender Inequality on Income Inequality in South Asia," MPRA Paper 66661, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I00 - Health, Education, and Welfare - - General - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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