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The Paradox of Education or the Good Side of Inequality

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  • Garcia-Penalosa, Cecilia

Abstract

In this paper, the author argues that one of the mechanisms through which inequality may affect long-run growth is through individuals' education possibilities. The cost of education is, therefore, a crucial variable. The author endogenizes this cost and shows that it will be high relative to average wealth in poor countries and relatively low in rich countries. With two-tailed distributions of wealth, this is going to imply that greater inequality increases growth rates in poor economies, while it decreases them in rich economies. Copyright 1995 by Royal Economic Society.

Suggested Citation

  • Garcia-Penalosa, Cecilia, 1995. "The Paradox of Education or the Good Side of Inequality," Oxford Economic Papers, Oxford University Press, vol. 47(2), pages 265-285, April.
  • Handle: RePEc:oup:oxecpp:v:47:y:1995:i:2:p:265-85
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    References listed on IDEAS

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    1. Roberto Perotti, 1993. "Political Equilibrium, Income Distribution, and Growth," Review of Economic Studies, Oxford University Press, vol. 60(4), pages 755-776.
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    Cited by:

    1. Ziesemer, Thomas, 2011. "What Changes Gini Coefficients of Education? On the dynamic interaction between education, its distribution and growth," MERIT Working Papers 053, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Martino, Gaetano & Polinori, Paolo, 2010. "The individual contribution to income inequality: conceptual analysis and empirical investigation," MPRA Paper 34365, University Library of Munich, Germany.
    3. Gylfason, Thorvaldur, 2008. "Development and Growth in Mineral-Rich Countries," CEPR Discussion Papers 7031, C.E.P.R. Discussion Papers.
    4. Cristiano Perugini & Gaetano Martino, 2008. "Income Inequality Within European Regions: Determinants And Effects On Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 373-406, September.
    5. Chol-Won Li., "undated". "Inequality and Growth: A Schumpeterian Perspective," Working Papers 9609, Business School - Economics, University of Glasgow, revised Feb 1998.
    6. Thorvaldur Gylfason & Gylfi Zoega, 2002. "Inequality and Economic Growth: Do Natural Resources Matter?," CESifo Working Paper Series 712, CESifo Group Munich.
    7. Thomas Leoni & Wolfgang Pollan, 2003. "The Impact of Inequality on Economic Growth," WIFO Working Papers 211, WIFO.

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