Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/52796
Authors: 
Rehme, Günther
Year of Publication: 
2002
Series/Report no.: 
WIDER Discussion Papers // World Institute for Development Economics (UNU-WIDER) 2002/34
Abstract: 
In many OECD countries income inequality has risen, but surprisingly redistribution has as well. The theory attributes this partly to the redistributive effect of education spending. In the model income inequality and growth depend in an inverted U-shaped way on education. To maintain a given level of human capital it is shown that a less efficient schooling technology requires more resources, which lowers pretax and posttax income inequality as well as growth. Using consistently defined income data from the Luxembourg Income Study suggests that there is a negative relationship between growth and income inequality in rich countries. It is argued that using some unadjusted inequality measures in growth regressions may yield estimates that are biased upwards. The evidence suggests that a rich country would raise growth with lower pretax and posttax inequality if it spent more on education. – growth ; redistribution ; inequality ; education
JEL: 
O4
ISBN: 
9291901911
Document Type: 
Working Paper

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