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Education, Economic Growth and Measured Income Inequality

  • Rehme, Günther

In this paper education simultaneously affects growth and income inequality. More education does not necessarily decrease inequality when the latter is assessed by the Lorenz dominance criterion. Increases in education first increase and then decrease growth as well as income inequality, when measured by the Gini coefficient. There is no clear functional relationship between growth and measured income inequality. The model identifies regimes of this relationship which depend crucially on the production and schooling technology. Conventional growth regressions with human capital and inequality as regressors may miss the richness of the underlying nonlinearities, but viewed as approximations may still provide important information on the nonlinear relationship between growth and education.

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Paper provided by Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL) in its series Darmstadt Discussion Papers in Economics with number 25519.

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Date of creation: Mar 2006
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Publication status: Published in Darmstadt Discussion Papers in Economics . 163 (2006-03)
Handle: RePEc:dar:ddpeco:25519
Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/25519/
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