Education and Poverty Reduction

Amory Lionel Gethin

No 11491, Policy Research Working Paper Series from The World Bank

Abstract: This paper surveys the evidence on the role of education in reducing poverty. Education can reduce absolute poverty by increasing productivity, relative poverty by lowering inequality, and multidimensional poverty by improving dimensions of well-being beyond income. Existing research indicates that it contributes to all three. Returns to schooling are large, especially for policies enabling children from disadvantaged backgrounds to acquire more education, and typically exceed the costs of education provision. Education also benefits low-wage workers through labor market spillovers: reducing the share of low-skilled workers in the economy raises their relative wage. The expansion of education has played a major role in reducing extreme poverty and can account for over half of income gains among the world’s poorest individuals since 1980. The non-monetary benefits of schooling are also large and may imply total returns that are twice as high as monetary gains. Substantial educational inequalities persist nonetheless, with important implications for global equity and the trajectory of poverty in the 21st century.

Date: 2026-10-28
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