Human capital and income inequality

This study investigates empirically how human capital, measured by educational attainment, is related to income distribution. The regressions, using a cross-country data between 1980 and 2015, show that a more equal distribution of education contributes significantly to reducing income inequality. E...

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Bibliographic Details
Published in:Journal of the Asia Pacific economy 2018-10, Vol.23 (4), p.554-583
Main Authors: Lee, Jong-Wha, Lee, Hanol
Format: Article
Language:English
Subjects:
Economic models
Education
Educational attainment
Educational inequality
Equality
Expenditures
Globalization
Human capital
Income distribution
Income inequality
inequality
Openness
Technological change
Technological progress
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Summary:This study investigates empirically how human capital, measured by educational attainment, is related to income distribution. The regressions, using a cross-country data between 1980 and 2015, show that a more equal distribution of education contributes significantly to reducing income inequality. Educational expansion is a major factor in reducing educational inequality and thus income inequality. Social benefits spending and price stability contribute to reducing income inequality, while public education spending helps to reduce educational inequality. In contrast, higher per capita income, greater trade openness and faster technological progress tend to make both income and education distribution more unequal. The calibration of empirical results shows that we can attribute the rising income inequality within East Asian economies in recent decades to the unequalizing effects of fast income growth and rapid progress in globalization and technological change, which have surpassed the income-equalizing effects from improved equality in the distribution of educational attainment.
ISSN:1354-7860
1469-9648
DOI:10.1080/13547860.2018.1515002