Human Capital and Income Inequality: Some Facts and Some Puzzles

Amparo Castello-Climent and Rafael Domenech

No 1201, Working Papers from International Economics Institute, University of Valencia

Abstract: Using a broad number of indicators from an updated data set on human capital inequality for 146 countries from 1950 to 2010, this paper documents several facts regarding the evolution of income and human capital inequality. The main findings reveal that, in spite of a large reduction in human capital inequality around the world driven by a decline in the number of illiterates of several hundreds of millions of people, the inequality in the distribution of income has hardly changed. In many regions, the income Gini coefficient in 1960 was very similar to that in 2005. Therefore, improvements in literacy are not a sufficient condition to reduce income inequality, even though they improve life standards of people at the bottom of the income distribution. Increasing returns to education, external effects on wages of higher literacy rates or the simultaneous concurrence of other exogenous forces (e.g., globalization or skill-biased technological progress) may explain the lack of correlation between the evolution of income and education inequality.

Keywords: Distribution of education; income inequality; human development; panel data (search for similar items in EconPapers)
JEL-codes: I24 I25 O15 O50 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2012-10
New Economics Papers: this item is included in nep-his and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:iei:wpaper:1201

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