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Education as a driver of income inequality in twentieth-century Africa

Bas van Leeuwen, Jieli Li and Péter Földvári

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we address the issue of how education affected income inequality in twentieth-century Africa. Three channels are identified through which education may affect income inequality. First, an increase in the average educational level is correlated with an increase in average income, which, ceteris paribus, reduces inequality. Second, a reduction in educational inequality may, given a positive correlation between education level and income, reduce income inequality. Thirdly, an increase in the supply of education may decrease the price of skilled labour thus lowering income inequality. We find that in the long-run education does not affect income growth, indicating that in twentieth-century Africa it was inspiration (i.e., Total Factor Productivity [TFP]) rather than perspiration (i.e., education and physical capital) that drove economic development. Testing for the effects of the remaining two channels, we found a significant non-linear relationship between educational and income inequality suggesting that, contrary to the level of education, these two channels were important in determining income inequality in Africa. Taking an example from the end of the twentieth century, if educational equality had been eliminated, then income inequality would decline by no less than 81%.

Keywords: Africa; education; history; inequality; economic growth (search for similar items in EconPapers)
JEL-codes: D6 N1 N17 N3 O55 (search for similar items in EconPapers)
Date: 2012-10-20
New Economics Papers: this item is included in nep-afr, nep-edu, nep-his and nep-lab
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:43574

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