Education and income inequality: New evidence from cross-country data

This paper presents empirical evidence on how education is related to income distribution in a panel data set covering a broad range of countries for the period between 1960 and 1990. The findings indicate that educational factors-higher educational attainment and more equal distribution of education-play a significant role in making income distribution more equal. The results also confirm the Kuznets inverted-U curve for the relationship between income level and income inequality. We also find that government social expenditure contributes to more equal distribution of income. However, a significant proportion of cross-country variation in income inequality remains unexplained.