In this paper education simultaneously affects growth and income inequality. More education does not necessarily decrease inequality when the latter is assessed by the Lorenz dominance criterion. Increases in education first increase and then decrease growth as well as income inequality, when measured by the Gini coefficient. There is no clear functional relationship between growth and measured income inequality. The model identifies regimes of this relationship which depend crucially on the production and schooling technology. Conventional growth regressions with human capital and inequality as regressors may miss the richness of the underlying nonlinearities, but viewed as approximations may still provide important information on the nonlinear relationship between growth and education.
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References listed on IDEAS
Hongyi Li & Lyn Squire & Heng-fu Zou, 1998. "Explaining International and Intertemporal Variations in Income Inequality ," CEMA Working Papers 73, China Economics and Management Academy, Central University of Finance and Economics.
Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics ," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.