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Education and Income Distribution: New Evidence from Cross-country Data

  • José De Gregorio


  • Jong-Wha Lee


This paper presents empirical evidence on how education is related to income distribution in a panel data set of a broad range of countries for a period between 1960 and 1990. The findings indicate that education factors - higher attainment and more equal distribution of education - play a significant role in making income distribution more equal. The result also confirms the Kuznets inverted-U curve for the relationship between income level and income inequality. We also find that government social expenditure contributes to more equal distribution of income. However, a significant proportion of cross-country and over-time variations of income inequality still remain unexplained. Simulation exercises on income distribution show that growth of income and education on their own cannot make income distribution more equal in the short and medium term.

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Paper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number 55.

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Date of creation: 1999
Date of revision:
Handle: RePEc:edj:ceauch:55
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  1. Benabou, R., 1994. "Education, Income Distribution, and Growth: The Local Connection," Working papers 94-16, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
  3. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
  4. Jose De Gregorio & Se-Jik Kim, 1994. "Credit Markets with Differences in Abilities: Education, Distribution, and Growth," IMF Working Papers 94/47, International Monetary Fund.
  5. Acemoglu, Daron, 1996. "Matching, Heterogeneity and the Evolution of Income Distribution," CEPR Discussion Papers 1345, C.E.P.R. Discussion Papers.
  6. Atkinson, A-B, 1996. "Bringing Income Distribution in from the Cold," Economics Papers 117, Economics Group, Nuffield College, University of Oxford.
  7. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
  8. Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998. "Explaining International and Intertemporal Variations in Income Inequality," Economic Journal, Royal Economic Society, vol. 108(446), pages 26-43, January.
  9. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
  10. Roland Bénabou, 1996. "Inequality and Growth," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 11-92 National Bureau of Economic Research, Inc.
  11. Durlauf, S.N., 1992. "A Theory of Persistent Income Inequality," Papers 47, Stanford - Institute for Thoretical Economics.
  12. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
  13. Ahluwalia, Montek S, 1976. "Income Distribution and Development: Some Stylized Facts," American Economic Review, American Economic Association, vol. 66(2), pages 128-35, May.
  14. Galor, O. & Tsiddon, D., 1996. "The Distribution of Human Capital and Economic Growth," Papers 18-96, Tel Aviv - the Sackler Institute of Economic Studies.
  15. 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 218-23, May.
  16. Ram, Rati, 1989. "Can educational expansion reduce income inequality in less-developed countries?," Economics of Education Review, Elsevier, vol. 8(2), pages 185-195, April.
  17. Ram, Rati, 1984. "Population increase, economic growth, educational inequality, and income distribution : Some recent evidence," Journal of Development Economics, Elsevier, vol. 14(3), pages 419-428, April.
  18. Knight, J B & Sabot, R H, 1983. "Educational Expansion and the Kuznets Effect," American Economic Review, American Economic Association, vol. 73(5), pages 1132-36, December.
  19. repec:tpr:qjecon:v:85:y:1971:i:1:p:21-39 is not listed on IDEAS
  20. Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
  21. Marin, Alan & Psacharopoulos, George, 1976. "Schooling and Income Distribution," The Review of Economics and Statistics, MIT Press, vol. 58(3), pages 332-38, August.
  22. Robert J. Barro, 1999. "Inequality, Growth, and Investment," NBER Working Papers 7038, National Bureau of Economic Research, Inc.
  23. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
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