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Could an Increase in Education Raise Income Inequality? Evidence for Latin America

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  • Diego Battistón
  • Carolina García-Domench
  • Leonardo Gasparini

Abstract

This paper explores the direct ef fect of an education expansion on the level of earnings inequality by carrying out microsimulations for most Latin American countries. We find that the direct ef fect of the increase in years of education in the region in the 1990s and 2000s was unequalizing; this result is expected to hold for future expansions if increases in education are not highly progressive. Both facts are closely linked to the convexity of returns to education in the labor market. On average, the estimated impact of the education expansion remains unequalizing when allowing for changes in returns to schooling, although the ef fect becomes smaller.

Suggested Citation

  • Diego Battistón & Carolina García-Domench & Leonardo Gasparini, 2014. "Could an Increase in Education Raise Income Inequality? Evidence for Latin America," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 51(1), pages 1-39, May.
  • Handle: RePEc:ioe:cuadec:v:51:y:2014:i:1:p:1-39
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    Cited by:

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    2. Fernández, Manuel & Messina, Julián, 2018. "Skill premium, labor supply, and changes in the structure of wages in Latin America," Journal of Development Economics, Elsevier, vol. 135(C), pages 555-573.
    3. Lustig, Nora & Lopez-Calva, Luis F. & Ortiz-Juarez, Eduardo, 2013. "Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico," World Development, Elsevier, vol. 44(C), pages 129-141.
    4. Fernandez Sierra, Manuel & Messina, Julián, 2017. "Skill Premium, Labor Supply and Changes in the Structure of Wages in Latin America," IZA Discussion Papers 10718, Institute for the Study of Labor (IZA).
    5. Guillermo Cruces & Gary S. Fields & David Jaume & Mariana Viollaz, 2015. "The growth-employment-poverty nexus in Latin America in the 2000s: Argentina country study," WIDER Working Paper Series 069, World Institute for Development Economic Research (UNU-WIDER).
    6. Guillermo Cruces & Gary S. Fields & David Jaume & Mariana Viollaz, 2015. "The growth-employment-poverty nexus in Latin America in the 2000s: Brazil country study," WIDER Working Paper Series 071, World Institute for Development Economic Research (UNU-WIDER).
    7. Roy, Pronoy & Husain, Zakir, 2019. "Education as a way to reducing inequality: Evidence from India," MPRA Paper 93907, University Library of Munich, Germany.
    8. Shao-Hsun Keng & Peter F. Orazem, 2019. "Performance pay, the marriage market and rising income inequality in Taiwan," Review of Economics of the Household, Springer, vol. 17(3), pages 969-992, September.
    9. Nora Lustig, 2020. "Inequality and Social Policy in Latin America," Working Papers 2011, Tulane University, Department of Economics.
    10. Guillermo Cruces & Gary S. Fields & David Jaume & Mariana Viollaz, 2015. "The growth-employment-poverty nexus in Latin America in the 2000s: Argentina country study," WIDER Working Paper Series wp-2015-069, World Institute for Development Economic Research (UNU-WIDER).
    11. Malena Arcidiácono, 2015. "Salario Mínimo y Distribución salarial: Evidencia para Argentina 2003 – 2013," CEDLAS, Working Papers 0192, CEDLAS, Universidad Nacional de La Plata.
    12. Guillermo Cruces & Gary S. Fields & David Jaume & Mariana Viollaz, 2015. "The growth-employment-poverty nexus in Latin America in the 2000s: Brazil country study," WIDER Working Paper Series wp-2015-71, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Education; inequality; earnings; Latin America;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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