2017/12/08 by David Coady, Allan Dizioli · 132 citations
Economics, Econometrics and Finance · Mathematics · Social Sciences · #Demographic economics #Econometrics #Economic inequality #Economics #Endogeneity #Estimation #Fiscal Policy and Economic Growth #Income inequality metrics #Income, Poverty, and Inequality #Inequality #Intergenerational and Educational Inequality Studies #Mathematics #Panel data #Persistence (discontinuity)
paper · doi:10.1080/00036846.2017.1406659
published in Applied Economics 50(25), 2747-2761 (Taylor & Francis)
openalex publication_date 2017/12/08 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/30
This article presents new results on the relationship between income inequality and education expansion – that is, increasing average years of schooling and reducing inequality of schooling. When dynamic panel estimation techniques are used to address issues of persistence and endogeneity, we find a large, positive, statistically significant and stable relationship between inequality of schooling and income inequality, especially in emerging and developing economies and among older-age cohorts. The relationship between income inequality and average years of schooling is positive, consistent with constant or increasing returns to additional years of schooling. While this positive relationship is small and not always statistically significant, we find a statistically significant negative relationship with years of schooling of younger cohorts. Statistical tests indicate that our dynamic estimators are consistent and that our identifying instruments are valid. Policy simulations suggest that education expansion will continue to be inequality reducing. This role will diminish as countries develop, but it could be enhanced through a stronger focus on reducing inequality in the quality of education.