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Human capital and income inequality

Author

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  • Jong-Wha Lee
  • Hanol Lee
Abstract
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.

Suggested Citation

  • Jong-Wha Lee & Hanol Lee, 2018. "Human capital and income inequality," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 23(4), pages 554-583, October.
    • Handle: RePEc:taf:rjapxx:v:23:y:2018:i:4:p:554-583
    DOI: 10.1080/13547860.2018.1515002
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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