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Education as a driver of income inequality in twentieth-century Africa

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  • Van Leeuwen, Bas
  • van Leeuwen-Li, Jieli
  • Foldvari, Peter

Abstract

In this paper, we address the issue of how education affected income inequality in twentieth-century Africa. Three channels are identified through which education may affect income inequality. First, an increase in the average educational level is correlated with an increase in average income, which, ceteris paribus, reduces inequality. Second, a reduction in educational inequality may, given a positive correlation between education level and income, reduce income inequality. Thirdly, an increase in the supply of education may decrease the price of skilled labour thus lowering income inequality. We find that in the long-run education does not affect income growth, indicating that in twentieth-century Africa it was inspiration (i.e., Total Factor Productivity [TFP]) rather than perspiration (i.e., education and physical capital) that drove economic development. Testing for the effects of the remaining two channels, we found a significant non-linear relationship between educational and income inequality suggesting that, contrary to the level of education, these two channels were important in determining income inequality in Africa. Taking an example from the end of the twentieth century, if educational equality had been eliminated, then income inequality would decline by no less than 81%.

Suggested Citation

  • Van Leeuwen, Bas & van Leeuwen-Li, Jieli & Foldvari, Peter, 2012. "Education as a driver of income inequality in twentieth-century Africa," MPRA Paper 43574, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43574
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    Cited by:

    1. Jutta Bolt & Jan Luiten Zanden, 2014. "The Maddison Project: collaborative research on historical national accounts," Economic History Review, Economic History Society, vol. 67(3), pages 627-651, August.
    2. Péter Földvári & Bas van Leeuwen, 2014. "Educational and income inequality in Europe, ca. 1870–2000," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 8(3), pages 271-300, September.
    3. Tomasz Serwach, 2022. "The European Union and within-country income inequalities. The case of the New Member States," Working Papers hal-03548416, HAL.
    4. Maria C. Lo Bue & Kunal Sen & Staffan I. Lindberg, 2021. "Clientelism, public goods provision, and governance," WIDER Working Paper Series wp-2021-98, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Africa; education; history; inequality; economic growth;
    All these keywords.

    JEL classification:

    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • D6 - Microeconomics - - Welfare Economics
    • N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania

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