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Does educational achievement help to explain income inequality?

  • Daniele Checchi

    ()

In this paper we propose to measure inequality of educational achievements by constructing a Giniindex on educational attainments. We then use the proposed measure to analyse the relationshi between inequality in incomes and educational achievements (in terms of both the average attainments and its concentration). Even if theoretical considerations suggest a non-linear relationship between these two measures of inequality, actual data indicate that average years of education have a stronger negative impact on measured income inequality. Multivariate regressions also prove that, once we take into account the negative correlation between average educational achievement and its dispersion, the relationship between income inequality and average years of schooling is U-shaped, with a lower turning point at 6. 5 years. Income inequality is also negatively related to per capita income and positively related to capital/output ratio and government expenditure in education. Looking at relative contribution of education to income inequality, we find that it contributes to explain a portion of variance enclosed between 3% and 16%, but this fraction is higher in developed countries and shows a rising trend.

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File URL: http://wp.demm.unimi.it/files/wp/2000/DEMM-2000_011wp.pdf
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Paper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2000-11.

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Date of creation: 01 Jan 2000
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Handle: RePEc:mil:wpdepa:2000-11
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