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Education Enrollment Level and Income Inequality: A Case of SAARC Economies

Author

Listed:
  • Noman Arshed

    (University of Management and Technology)

  • Awais Anwar

    (Shandong University)

  • Nabeela Kousar

    (Government College University)

  • Samra Bukhari

    (University of Management and Technology)

Abstract

This study is based on the idea that education forms a quadratic relationship with the income inequality. To evaluate it for South Asian Association for Regional Cooperation (SAARC) countries, this study uses the panel data from 1990 to 2015. Long run panel data necessitated the use of panel co-integration approach, followed up with fully modified OLS model to generate long-run coefficients. The results depict that initially primary and secondary enrollment increases inequality while tertiary enrollment decreases it. However, after a certain threshold level of enrollment (76% for primary, 42% for secondary and 7% for tertiary), their effect reverses. Thus, it makes inverted U shape for primary and secondary enrollment and U shape for tertiary enrollment. Hence education shows diminishing marginal return effect. Only the countries of India, Sri Lanka, Maldives and Nepal in SAARC economies have high enough education enrollments to cause a negative effect on income inequality.

Suggested Citation

  • Noman Arshed & Awais Anwar & Nabeela Kousar & Samra Bukhari, 2018. "Education Enrollment Level and Income Inequality: A Case of SAARC Economies," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 140(3), pages 1211-1224, December.
    • Handle: RePEc:spr:soinre:v:140:y:2018:i:3:d:10.1007_s11205-017-1824-9
    DOI: 10.1007/s11205-017-1824-9
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    More about this item

    Keywords

    Education; Income inequality; DMR; Panel co-integration; Panel FMOLS;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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