IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-01885160.html
   My bibliography  Save this paper

Explaining Income Inequalities in Developing Countries:the Role of Human Capital

Author

Listed:
  • Mazhar Yasin Mughal

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

  • Barassou Diawara

Abstract

This paper investigates the relationship between human capital and economic inequality in the developing countries. The paper analyses an unbalanced panel of 64 countries for the period 1970-2005. The results show that primary, secondary and tertiary level education is negatively associated with inequality (primary being the strongest). Besides, average years of education and government expenditure on education are also found to be inequality reducing, both in the immediate and the medium run. Thus, to give citizens better and more equal opportunities, policy-makers in the developing countries and the development agencies need to give higher importance to primary education. Prenant en considération le manque de consensus dans la littérature sur le sujet, notre article étudie la relation entre le capital humain et les inégalités économiques, en abordant le cas particulier des pays en développement ou les inégalités sont flagrantes. Nous analysons un panel non-équilibré constitué de 64 pays pour la période 1970 à 2005. Les résultats montrent une liaison négative entre l'éducation primaire, ainsi que secondaire et tertiaire, et les inégalités économiques. Les autres indicateurs du capital humain contribuent également à la réduction des inégalités. Donc, afin de réduire les inégalités économiques effectivement pour fournir aux citoyens des opportunités égales, les gouvernements des pays en développement et la communauté internationale devraient se concentrer sur l'éducation primaire et supérieur.

Suggested Citation

  • Mazhar Yasin Mughal & Barassou Diawara, 2011. "Explaining Income Inequalities in Developing Countries:the Role of Human Capital," Working Papers hal-01885160, HAL.
    • Handle: RePEc:hal:wpaper:hal-01885160
    Note: View the original document on HAL open archive server: https://hal-univ-pau.archives-ouvertes.fr/hal-01885160
    as

    Download full text from publisher

    File URL: https://hal-univ-pau.archives-ouvertes.fr/hal-01885160/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. José De Gregorio & Jong–Wha Lee, 2002. "Education and Income Inequality: New Evidence From Cross‐Country Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 395-416, September.
    3. de Melo, Jaime, 1988. "Computable general equilibrium models for trade policy analysis in developing countries: A survey," Journal of Policy Modeling, Elsevier, vol. 10(4), pages 469-503.
    4. Sylwester, Kevin, 2002. "Can education expenditures reduce income inequality?," Economics of Education Review, Elsevier, vol. 21(1), pages 43-52, February.
    5. Adams, Richard Jr. & Page, John, 2005. "Do international migration and remittances reduce poverty in developing countries?," World Development, Elsevier, vol. 33(10), pages 1645-1669, October.
    6. Checchi, D., 2000. "Does Educational Achievement Help to Explain Income Inequality?," Research Paper 208, World Institute for Development Economics Research.
    7. Branko Milanovic & Lyn Squire, 2007. "Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence," NBER Chapters, in: Globalization and Poverty, pages 143-182, National Bureau of Economic Research, Inc.
    8. Wouterse, F. S., 2008. "Migration, poverty, and inequality: Evidence from Burkina Faso," IFPRI discussion papers 786, International Food Policy Research Institute (IFPRI).
    9. Saint-Paul, Gilles & Verdier, Thierry, 1993. "Education, democracy and growth," Journal of Development Economics, Elsevier, vol. 42(2), pages 399-407, December.
    10. Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
    11. Robert J. Barro, 1999. "Inequality, Growth, and Investment," NBER Working Papers 7038, National Bureau of Economic Research, Inc.
    12. Kremer, Michael & Chen, Daniel L, 2002. "Income Distribution Dynamics with Endogenous Fertility," Journal of Economic Growth, Springer, vol. 7(3), pages 227-258, September.
    13. Eckstein, Zvi & Zilcha, Itzhak, 1994. "The effects of compulsory schooling on growth, income distribution and welfare," Journal of Public Economics, Elsevier, vol. 54(3), pages 339-359, July.
    14. Thorbecke, Erik & Charumilind, Chutatong, 2002. "Economic Inequality and Its Socioeconomic Impact," World Development, Elsevier, vol. 30(9), pages 1477-1495, September.
    15. Hongyi Li & Heng‐fu Zou, 1998. "Income Inequality is not Harmful for Growth: Theory and Evidence," Review of Development Economics, Wiley Blackwell, vol. 2(3), pages 318-334, October.
    16. Kevin Sylwester, 2003. "Enrolment in Higher Education and Changes in Income Inequality," Bulletin of Economic Research, Wiley Blackwell, vol. 55(3), pages 249-262, July.
    17. Khoo, L. & Dennis, B., 1999. "Income Inquality, Fertility Choice, and Economic Growth: Theory and Evidence," Papers 687, Harvard - Institute for International Development.
    18. Bourguignon, Francois & Morrisson, Christian, 1998. "Inequality and development: the role of dualism," Journal of Development Economics, Elsevier, vol. 57(2), pages 233-257.
    19. Stephanie Kremer & Alexander Bick & Dieter Nautz, 2013. "Inflation and growth: new evidence from a dynamic panel threshold analysis," Empirical Economics, Springer, vol. 44(2), pages 861-878, April.
    20. Wan, Guanghua, 2004. "Accounting for income inequality in rural China: a regression-based approach," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 348-363, June.
    21. Perotti, Roberto, 1994. "Income distribution and investment," European Economic Review, Elsevier, vol. 38(3-4), pages 827-835, April.
    22. Daniel Chen & Michael Kremer, 1999. "Income-Distribution Dynamics with Endogenous Fertility," American Economic Review, American Economic Association, vol. 89(2), pages 155-160, May.
    23. Park, Kang H., 1996. "Educational expansion and educational inequality on income distribution," Economics of Education Review, Elsevier, vol. 15(1), pages 51-58, February.
    24. Gupta, Sanjeev & Pattillo, Catherine A. & Wagh, Smita, 2009. "Effect of Remittances on Poverty and Financial Development in Sub-Saharan Africa," World Development, Elsevier, vol. 37(1), pages 104-115, January.
    25. Sylwester, Kevin, 2000. "Income inequality, education expenditures, and growth," Journal of Development Economics, Elsevier, vol. 63(2), pages 379-398, December.
    26. Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2007. "Finance, inequality and the poor," Journal of Economic Growth, Springer, vol. 12(1), pages 27-49, March.
    27. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    28. Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-187, June.
    29. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    30. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-834, August.
    31. Meschi, Elena & Vivarelli, Marco, 2009. "Trade and Income Inequality in Developing Countries," World Development, Elsevier, vol. 37(2), pages 287-302, February.
    32. Wagle, Udaya R., 2007. "Are Economic Liberalization and Equality Compatible? Evidence from South Asia," World Development, Elsevier, vol. 35(11), pages 1836-1857, November.
    33. Li, Hongyi & Zou, Heng-fu, 1998. "Income Inequality Is Not Harmful for Growth: Theory and Evidence," Review of Development Economics, Wiley Blackwell, vol. 2(3), pages 318-334, October.
    34. Jimenez, Emmanuel, 1986. "The Public Subsidization of Education and Health in Developing Countries: A Review of Equity and Efficiency," World Bank Research Observer, World Bank Group, vol. 1(1), pages 111-129, January.
    35. Daniele Checchi, 2000. "Does educational achievement help to explain income inequality?," Departmental Working Papers 2000-11, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    36. 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.
    37. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amar Iqbal Anwar & Mazhar Yasin Mughal, 2012. "Remittances, inequality and poverty in Pakistan: macro and microeconomic Evidence [Centre d'Analyse Théorique et de Traitement des données économiques REMITTANCES, INEQUALITY AND POVERTY IN PAKISTA," Working Papers hal-01885153, HAL.
    2. Dagim Tadesse Bekele, 2020. "Effect of Macroeconomic, Demographic, and Governance Factors on Income Inequality of Selected sub-Saharan Africa Countries," Journal of Economic Development, Environment and People, Alliance of Central-Eastern European Universities, vol. 9(1), pages 60-70, September.
    3. Vachaspati Shukla & Udaya S. Mishra, 2020. "Expansion in Education and Its Impact on Income Inequality: Cross-sectional Evidence from India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(2), pages 331-362, June.
    4. Vachaspati Shukla & Udaya S. Mishra, 0. "Expansion in Education and Its Impact on Income Inequality: Cross-sectional Evidence from India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 0, pages 1-32.

    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. Vachaspati Shukla & Udaya S. Mishra, 0. "Expansion in Education and Its Impact on Income Inequality: Cross-sectional Evidence from India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 0, pages 1-32.
    2. Vachaspati Shukla & Udaya S. Mishra, 2020. "Expansion in Education and Its Impact on Income Inequality: Cross-sectional Evidence from India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(2), pages 331-362, June.
    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. Grabiella Berloffa & Maria Luigia Segnana, 2004. "Trade, inequality and pro-poor growth: Two perspectives, one message?," Department of Economics Working Papers 0408, Department of Economics, University of Trento, Italia.
    5. Andrés Rodríguez‐Pose & Vassilis Tselios, 2009. "Education And Income Inequality In The Regions Of The European Union," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 411-437, August.
    6. Gravier-Rymaszewska, Joanna & Tyrowicz, Joanna & Kochanowicz, Jacek, 2010. "Intra-provincial inequalities and economic growth in China," Economic Systems, Elsevier, vol. 34(3), pages 237-258, September.
    7. Stephen J. Turnovsky, 2013. "The relationship between economic growth and inequality," New Zealand Economic Papers, Taylor & Francis Journals, vol. 47(2), pages 113-139, August.
    8. Salwa Trabelsi, 2019. "The governance threshold effect on the relationship between public education financing and income inequality," Economics Bulletin, AccessEcon, vol. 39(2), pages 1057-1075.
    9. Asplund, Rita, 2004. "A Macroeconomic Perspective on Education and Inequality," Discussion Papers 906, The Research Institute of the Finnish Economy.
    10. Kirill Borissov & Stefano Bosi & Thai Ha-Huy & Leonor Modesto, 2017. "Heterogeneous Human Capital, Inequality and Growth: The Role of Patience and Skills," EUSP Department of Economics Working Paper Series 2017/03, European University at St. Petersburg, Department of Economics.
    11. Martin Ravallion, 2012. "Why Don't We See Poverty Convergence?," American Economic Review, American Economic Association, vol. 102(1), pages 504-523, February.
    12. Adam, Antonis & Kammas, Pantelis & Lapatinas, Athanasios, 2015. "Income inequality and the tax structure: Evidence from developed and developing countries," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 138-154.
    13. Gründler, Klaus & Scheuermeyer, Philipp, 2015. "Income inequality, economic growth, and the effect of redistribution," W.E.P. - Würzburg Economic Papers 95, University of Würzburg, Chair for Monetary Policy and International Economics.
    14. Marrero, Gustavo A. & Rodríguez, Juan G., 2013. "Inequality of opportunity and growth," Journal of Development Economics, Elsevier, vol. 104(C), pages 107-122.
    15. Vincenzo Lombardo, 2008. "Income distribution and Growth: A Critical Survey," Working Papers 11_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    16. Arsham Reisinezhad, 2018. "Economic Growth and Income Inequality in Resource Countries: Theory and Evidence," Working Papers halshs-01707976, HAL.
    17. Verónica Amarante & Gioia de Melo, 2004. "Crecimiento económico y desigualdad: una revisión bibliográfica," Documentos de Trabajo (working papers) 04-02, Instituto de Economia - IECON.
    18. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    19. Köse, Seyit & Güven, Aytekin, 2007. "Government education expenditures and income inequality: evidence from provinces of Turkey," SEER Journal for Labour and Social Affairs in Eastern Europe, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 10(1), pages 79-101.
    20. Thomas Leoni & Wolfgang Pollan, 2003. "The Impact of Inequality on Economic Growth," WIFO Working Papers 211, WIFO.

    More about this item

    Keywords

    Developing countries; Inequality; Human capital; Education;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:hal:wpaper:hal-01885160. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.