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The Uncertainty of Academic Rent and Income Inequality: The OECD Panel Evidence

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  • Kosta Josifidis
  • Novica Supic

Abstract

The article presents an alternative view on the education—income inequality relationship, which calls into question the neoclassical claim that education increases labor productivity and hence contributes to a higher output, wage and consequently more even income distribution. In the context of public policies, education needs to be seen not only as a factor of income mobility, but also as a “positional good,” which benefits graduates at the expense of non-graduates. Education generates “academic rent,” by which we mean uneven remuneration of workers based on academic signs of distinctions that do not necessarily reflect differences in productivity. Using the robust panel model on a sample of OECD (Organization of Economic Co-operation and Development) countries from 1980 to 2015, we show that investments in human capital lead to lower inequality, but overinvestments tends to increase income inequality, which may be related to academic rent. In discussing this result, we consider that uncertainty of academic rent under the condition of a rapid transformation of the workplace caused by the fourth industrial revolution.

Suggested Citation

  • Kosta Josifidis & Novica Supic, 2019. "The Uncertainty of Academic Rent and Income Inequality: The OECD Panel Evidence," Journal of Economic Issues, Taylor & Francis Journals, vol. 53(2), pages 394-402, April.
    • Handle: RePEc:mes:jeciss:v:53:y:2019:i:2:p:394-402
    DOI: 10.1080/00213624.2019.1594521
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    Cited by:

    1. Irene Marcuzzi & Matteo Podrecca & Marco Sartor & Guido Nassimbeni, 2023. "Out of social accountability: Reasons and alternative paths for SA8000 decertification," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 3140-3158, November.
    2. Vanesa Jorda & Jose M. Alonso, 2020. "What works to mitigate and reduce relative (and absolute) inequality?: A systematic review," WIDER Working Paper Series wp-2020-152, World Institute for Development Economic Research (UNU-WIDER).
    3. Mladen Stamenković, 2023. "Where Did All The Papers Go? A Bibliometric Overview Of Publications In Economics From Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 68(236), pages 29-50, January –.

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