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Impact of Structural Change in Education, Industry and Infrastructure on Income Distribution in Sri Lanka

Ramani Gunatilaka, Duangkamon Chotikapanich and Brett Inder

No 21/06, Monash Econometrics and Business Statistics Working Papers from Monash University, Department of Econometrics and Business Statistics

Abstract: Income inequality increased in Sri Lanka following trade liberalization in 1977. This study applies a semi-parametric method to investigate whether structural changes in education, industry and infrastructure access underlay the change in the distribution. The study finds that while the concentration of people shifted towards higher income ranges at every stage in the distribution between 1985 and 2002, changes in access to infrastructure triggered much of the shift. Higher levels of educational attainment also had an impact. But the middle classes appear to have benefited disproportionately more from the provision of education and infrastructure services than did the poor. The analysis recommends that such services are targeted more effectively towards those in the poorest income deciles to enable them to move out of poverty to higher income ranges.

Keywords: Income inequality; Sri Lanka; education; infrastructure; kernel density decomposition (search for similar items in EconPapers)
JEL-codes: D31 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2006-11
New Economics Papers: this item is included in nep-dev, nep-edu and nep-int
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Citations: View citations in EconPapers (1)

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