Education as a way to reducing inequality: Evidence from India

Growing global inequality, particularly in developing countries, has become a major challenge before policy makers. Various policy measures have been suggested: redistributive taxation and transfers, fixing minimum wage, ensuring universal basic income, transferring assets, land reforms, increasing employment opportunities through government sponsored employment schemes and welfare-to-work schemes, and other such policies. Education has also been suggested as an important means to reduce inequality, particularly in developing societies. The impact of education on growth and human development has been well documented; it is also recognized to be a cornerstone for social justice and, hence, an important potential means for reducing inequality. Empirical evidence on the relationship between improvement in educational attainments and earning based inequality, however, shows that the relationship between the two is not simple. If returns to education are convex, then improvement in educational attainments may lead to an increase in earning-based inequality (Lam et al., 2015). In this study, we have used nationally representative unit level data from the Employment and Unemployment survey (68th round, undertaken in 2011-2012 by National Sample Survey Office), to examine the impact of expansion of education on inequality in Indian society. Analysis reveals that education has reduced inequality in the 1970s, and from the 1990s onwards.