Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280980 
Year of Publication: 
2023
Series/Report no.: 
BOFIT Discussion Papers No. 7/2023
Publisher: 
Bank of Finland, Bank of Finland Institute for Emerging Economies (BOFIT), Helsinki
Abstract: 
Education has long been perceived as a great equalizer, but even with universal rises in schooling years, income distribution worsened world-wide. We propose a method for decomposing the contribution of a variable to the change in inequality into mean, dispersion, and price components. The proposed method is then used to investigate the roles of the education variable in driving down China's wage inequality between 2010 and 2018. We find that (1) education accounted for over 30% of total wage inequality in 2010 and 2018; (2) 70% of the overall decline in wage inequality from 2010 to 2018 can be attributed to education expansion, and (3) the 70% inequality-reducing effect was made up of 95% benign dispersion and price components and 25% malign mean component. The benign components are attributable to an improvement in educational equity and a decrease in the college premium.
Subjects: 
Education Expansion
Wage Inequality
Rate of Return to Education
China
JEL: 
I24
I26
J31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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