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Wages of regular and irregular workers, the price of education, and income inequality

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  • Hideki Nakamura

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Abstract

In this paper, we develop a model characterized by skill-biased technological change and increasing costs of education to investigate income inequality. Irregular workers cannot escape poverty by commencing investment in education because wage inequality between regular and irregular workers widens and the price of education increases with the average level of education. Moreover, if the productivity of elementary education is low relative to that of higher education, middle-income individuals are eventually unable to pursue higher education because the threshold for education expenditure rises with the price of education. Thus, income inequality may widen, even among regular workers. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Hideki Nakamura, 2013. "Wages of regular and irregular workers, the price of education, and income inequality," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(4), pages 517-533, December.
  • Handle: RePEc:kap:jecinq:v:11:y:2013:i:4:p:517-533
    DOI: 10.1007/s10888-012-9232-5
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    References listed on IDEAS

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    1. Toshiaki Tachibanaki, 2005. "Confronting Income Inequality in Japan: A Comparative Analysis of Causes, Consequences, and Reform," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262201585, January.
    2. Oded Galor & Omer Moav, 2004. "From Physical to Human Capital Accumulation: Inequality and the Process of Development," Review of Economic Studies, Oxford University Press, vol. 71(4), pages 1001-1026.
    3. Nakajima, Tetsuya & Nakamura, Hideki, 2012. "How Do Elementary And Higher Education Affect Human Capital Accumulation And Inequality? A Note," Macroeconomic Dynamics, Cambridge University Press, vol. 16(01), pages 151-158, February.
    4. Nakajima, Tetsuya & Nakamura, Hideki, 2009. "The price of education and inequality," Economics Letters, Elsevier, vol. 105(2), pages 183-185, November.
    5. Oded Galor & Omer Moav, 2000. "Ability-Biased Technological Transition, Wage Inequality, and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 469-497.
    6. Nakamura, Hideki, 2012. "Why does scholastic achievement differ across prefectures in Japan?," Journal of Asian Economics, Elsevier, vol. 23(1), pages 99-106.
    7. Maoz, Yishay D & Moav, Omer, 1999. "Intergenerational Mobility and the Process of Development," Economic Journal, Royal Economic Society, vol. 109(458), pages 677-697, October.
    8. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    9. Takii, Katsuya & Tanaka, Ryuichi, 2009. "Does the diversity of human capital increase GDP? A comparison of education systems," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 998-1007, August.
    10. Moav, Omer, 2002. "Income distribution and macroeconomics: the persistence of inequality in a convex technology framework," Economics Letters, Elsevier, vol. 75(2), pages 187-192, April.
    11. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-834, August.
    12. Maoz, Yishay D. & Moav, Omer, 2004. "Social Stratification, Capital Skill Complementarity, And The Nonmonotonic Evolution Of The Education Premium," Macroeconomic Dynamics, Cambridge University Press, vol. 8(03), pages 295-309, June.
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    Cited by:

    1. Nakamura, Hideki, 2015. "Which education policies can prevent the collapse of the middle-income group?," Japan and the World Economy, Elsevier, vol. 36(C), pages 1-10.

    More about this item

    Keywords

    Regular and irregular workers; Skill-biased technological change; Price of education; Income inequality; I20; O11; O15; O30;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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