IDEAS home Printed from https://ideas.repec.org/p/ags/widerw/295364.html
   My bibliography  Save this paper

Investment in Education and Income Inequality

Author

Listed:
  • Honkkula, Juha

Abstract

Income inequality has risen in many parts of the world during the past decades. Rising inequality is no longer a problem of only Latin American and Sub-Saharan African countries. Some OECD countries, and recently also East Asian countries, have experienced widening income differentials. In the 1990s the problem has also become visible in the countries of the former socialist bloc during their transition period towards market economy. Rising income inequality has led to a significant rise in the number of poor people, which makes the issue even more critical.The unfavourable developments of the income distribution can, to a large extent, be blamed on the unequal acquirement of human capital investment. This paper analyses a data set of fifty countries and recognises the influence of educational attainment on inequality. Given the differences in the distribution of physical capital, it can be observed that countries that do not provide sufficient education at the primary level, have more problems in creating an egalitarian society. Especially in developing countries this means that poverty is strongly correlated with unequal supply of education. In developed countries the recent rise in earnings differentials has been a consequence of rising returns to education. This paper examines the impact of post-primary education in general, which is probably not a sufficient indicator of the supply shortages of education. The rise in wage inequality seems to be a problem in certain technical branches and its impact could be better analysed with more specific data on secondary and tertiary education in several areas.

Suggested Citation

  • Honkkula, Juha, "undated". "Investment in Education and Income Inequality," WIDER Working Papers 295364, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:ags:widerw:295364
    DOI: 10.22004/ag.econ.295364
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/295364/files/RIP21.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.295364?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Juha Honkkila, 1997. "Privatization, Asset Distribution and Equity in Transitional Economies," WIDER Working Paper Series wp-1997-125, World Institute for Development Economic Research (UNU-WIDER).
    2. Robert H. Topel, 1997. "Factor Proportions and Relative Wages: The Supply-Side Determinants of Wage Inequality," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 55-74, Spring.
    3. Alesina, Alberto & Perotti, Roberto, 1994. "The Political Economy of Growth: A Critical Survey of the Recent Literature," The World Bank Economic Review, World Bank, vol. 8(3), pages 351-371, September.
    4. Marin, Alan & Psacharopoulos, George, 1976. "Schooling and Income Distribution," The Review of Economics and Statistics, MIT Press, vol. 58(3), pages 332-338, August.
    5. Alesina, Alberto & Perotti, Roberto, 1996. "Income distribution, political instability, and investment," European Economic Review, Elsevier, vol. 40(6), pages 1203-1228, June.
    6. Honkkila, J, 1997. "Privatization, Asset Distribution and Equity in Transitional Economies," Research Paper 125, World Institute for Development Economics Research.
    7. Roberto Perotti, 1993. "Political Equilibrium, Income Distribution, and Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(4), pages 755-776.
    8. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    9. Nafziger, E.W. & Auvinen, J., 1997. "War, Hunger, and Displacement: An Econometric Investigation into the Sources of Humanitarian Emergencies," Research Paper 142, World Institute for Development Economics Research.
    10. Wayne Nafziger & Juha Auvinen, 1997. "War, Hunger, and Displacement: An Econometric Investigation into the Sources of Humanitarian Emergencies," WIDER Working Paper Series wp-1997-142, World Institute for Development Economic Research (UNU-WIDER).
    11. Ping Zhang, 1997. "Income Distribution during the Transition in China," WIDER Working Paper Series wp-1997-138, World Institute for Development Economic Research (UNU-WIDER).
    12. Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-223, May.
    13. Ping, Z., 1997. "Income Distribution during the Transition in China," Research Paper 138, World Institute for Development Economics Research.
    14. Ahluwalia, Montek S, 1976. "Income Distribution and Development: Some Stylized Facts," American Economic Review, American Economic Association, vol. 66(2), pages 128-135, May.
    15. George E. Johnson, 1997. "Changes in Earnings Inequality: The Role of Demand Shifts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 41-54, Spring.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
    2. Klaus Schmidt-Hebbel & José-Carlos Tello, 2014. "The Political Economy of Growth, Inequality, the Size and Composition of Government Spending," Working Papers 19, Peruvian Economic Association.
    3. Christophe Ehrhart, 2009. "The effects of inequality on growth: a survey of the theoretical and empirical literature," Working Papers 107, ECINEQ, Society for the Study of Economic Inequality.
    4. Evans Jadotte, 2006. "Income Distribution and Poverty in the Republic of Haiti," Working Papers PMMA 2006-13, PEP-PMMA.
    5. Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-187, June.
    6. Djahini, Edém & Ayassou, Kokou, 2016. "Quel niveau de transformation économique pour réduire les inégalités de revenu en Afrique ? [What level of economic transformation for income inequality alleviation in Africa?]," MPRA Paper 74944, University Library of Munich, Germany.
    7. Martin Baur, 2010. "Politics and Income Distribution," Chapters, in: Neri Salvadori (ed.), Institutional and Social Dynamics of Growth and Distribution, chapter 3, Edward Elgar Publishing.
    8. Kholeka Mdingi & Sin-Yu Ho, 2023. "Income inequality and economic growth: An empirical investigation in South Africa," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2230027-223, June.
    9. Grossmann, Volker, 2008. "Risky human capital investment, income distribution, and macroeconomic dynamics," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 19-42, March.
    10. Orsetta Causa & Alain de Serres & Nicolas Ruiz, 2015. "Can pro-growth policies lift all boats?: An analysis based on household disposable income," OECD Journal: Economic Studies, OECD Publishing, vol. 2015(1), pages 227-268.
    11. Shinhye Chang & Rangan Gupta & Stephen M. Miller, 2018. "Causality Between Per Capita Real GDP and Income Inequality in the U.S.: Evidence from a Wavelet Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 269-289, January.
    12. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    13. Jakub Bartak & Łukasz Jabłoński, 2020. "Inequality and growth: What comes from the different inequality measures?," Bulletin of Economic Research, Wiley Blackwell, vol. 72(2), pages 185-212, April.
    14. Adelaide Duarte & Marta Simões, 2009. "Channels of transmission of inequality to growth: A survey of the theory and evidence from a Portuguese perspective," GEMF Working Papers 2009-07, GEMF, Faculty of Economics, University of Coimbra.
    15. Branko Milanovic, 2003. "The median voter hypothesis, income inequality and income," HEW 0305001, University Library of Munich, Germany.
    16. Mark Gradstein & Branko Milanovic, 2004. "Does Libertè = Egalité? A Survey of the Empirical Links between Democracy and Inequality with Some Evidence on the Transition Economies," Journal of Economic Surveys, Wiley Blackwell, vol. 18(4), pages 515-537, September.
    17. Demir, Firat, 2006. "Volatility of short term capital flows and socio-political instability in Argentina, Mexico and Turkey," MPRA Paper 1943, University Library of Munich, Germany.
    18. Oded Galor, 2009. "Inequality and Economic Development: An Overview," Working Papers 2009-3, Brown University, Department of Economics.
    19. Patrizio Pagano, 2004. "An empirical investigation of the relationship between inequality and growth," Temi di discussione (Economic working papers) 536, Bank of Italy, Economic Research and International Relations Area.
    20. Bertola, Giuseppe, 2000. "Macroeconomics of distribution and growth," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 9, pages 477-540, Elsevier.

    More about this item

    Keywords

    International Development;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:widerw:295364. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.